The Regulatory Framework of Village-Owned Enterprise in Indonesia: Does It Conform with Good Corporate Governance Principles?

Sukarja, Detania; Siregar, Mahmul; Lubis, Tri Murti

doi:10.2991/assehr.k.200306.184

Cited by 4 publications

(7 citation statements)

References 9 publications

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“…In the aspect of the structure of law, the main challenge is the capacity of BUM Desa organizers/manager. The capacity problem has also been confirmed by a number of studies that have been carried out, including the results of the study by Anggraeni (2016) [12] and Sukarja, et.al (2019) [13]. BUM Desa were seen to be established and management arrangements formed without a strong business feasibility study, but rather for pragmatic purposes, such as obtaining the distribution of the use of the Village Fund.…”

Section: The Establishment Of Village-owned Enterprises For Economic Resiliencementioning

confidence: 83%

Legal Implication of Law No.11/2020 Concerning Job Creation on Village-Owned Enterprises in Indonesia

Sukarja¹,

Siregar²,

Lubis³

2021

Proceedings of the 1st International Conference on Education, Humanities, Health and Agriculture, ICEHHA 2021, 3-4 June 2021, R

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The enactment of Law No.11/2020 concerning Job Creation ("Job Creation Law") is one of the most controversial issues in Indonesia towards the end of 2020. Village-owned enterprise ("BUM Desa") is one of the aspects that fall within the scope of this new law. This law changes the legal definition of BUM Desa. The change is not only important because it confirms the status of BUM Desa as a legal entity, but it also removes the concept of ownership criteria provisions as stipulated in the 2014 Village Law. The new definition also removes the concept of 'separated wealth' (kekayaan yang dipisahkan), which is the basic characteristic of public companies like BUMN and BUMD, as well as BUM Desa before the enactment of the Job Creation Law. Based on normative legal research, this paper seeks to identify the legal implication of issuance of the Job Creation Law on the legal aspects of BUM Desa. It aims to clarify to what extent the law addresses the various legal problems of BUM Desa and provides legal certainty for related stakeholders. The paper concludes that the Job Creation Law contains a number of provisions that have implications for the legal aspects of BUM Desa, among which: (1) the clarity and confirmation of the status of BUM Desa legal entities as stated in the new operational definition of BUM Desa; (2) The removal of ownership criteria from the operational definition of BUM Desa may open the possibility for BUM Desa to be controlled by private capital and dissolves the concept of village community ownership of BUM Desa; (3)The provisions regarding BUM Desa in the Job Creation Law has not clarified the misconception of BUM Desa as stipulated in the Village Law and the derivative regulations, but instead contains conflicting provisions that may spark further debate and maintain legal uncertainty in BUM Desa management and development. The implementing regulations relating to BUM Desa under the Job Creation Law to await finalization of the draft Law on BUM Desa to ensure consistency.

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Section: The Establishment Of Village-owned Enterprises For Economic Resiliencementioning

confidence: 83%

Legal Implication of Law No.11/2020 Concerning Job Creation on Village-Owned Enterprises in Indonesia

Sukarja¹,

Siregar²,

Lubis³

2021

Proceedings of the 1st International Conference on Education, Humanities, Health and Agriculture, ICEHHA 2021, 3-4 June 2021, R

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“…Nevertheless, the previous legal framework for BUM Desa did not make any explicit reference to any of these general GCG principles. Our previous study concluded that the previous regulation contained provisions which mirror aspects of the GCG or have, in essence, aimed to implement parts of the GCG, but lacked comprehensiveness [2].…”

Section: (Ii) Clearer Governance Principlesmentioning

confidence: 99%

“…However, in reality musdes is not attended by all members of the community. Our previous qualitative study on 10 BUM Desa in North Sumatera found that community access to governance information is accommodated in various ways, such as through community activities, publications through banners that are displayed in areas attended by the community, or through a website/blog for BUM Desa that have implemented digitization in their governance [21].…”

Section: (Iii) Standardization Of Bum Desa Articles Of Association An...mentioning

confidence: 99%

“…Findings of our previous research have highlighted that many Village Heads dominated BUM Desa governance and acted as if they owned the companies. This mentality also resulted in the constrain of managers in exercising their authorities and duties [21]. Kurniasih and Wijaya (2017) resonate the same tone in their research, concluding that the inability of BUM Desa management to provide added value for village income is due to BUM Desa management still considering itself subordinate to the village government and, thus, lacking the authority to make innovations [23].…”

Section: (I) the Domination Of Village Heads In Bum Desa Governancementioning

confidence: 99%

“…Our previous studies have highlighted the regulatory challenges and deficiencies of BUM Desa governance, inquiring to what extent provisions conformed with the principles of good corporate governance and provided legal certainty in the governance of BUM Desa [2]. The enactment of PP 11/2021 is expected to overcome some of these issues.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

An Analysis of The New Regulation on The Governance of Village-Owned Enterprises

Sukarja¹,

Siregar²,

Lubis³

2022

Proceedings of the 4th International Conference on Indonesian Legal Studies, ICILS 2021, June 8-9 2021, Semarang, Indonesia

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The enactment of Law No.11/2020 concerning Job Creation, followed by Government Regulation No.11/2011 on Village-Owned Enterprises introduces a new regulatory framework to the management of Village-Owned Enterprises (Badan Usaha Milik-"BUM Desa"). The regulation is expected to improve the management and productivity of BUM Desa. This paper aims to examine how this new regulation addresses some of the legal challenges and deficiencies identified under the previous regulations. The analysis draws from a combination of a normative research method, a survey and qualitative interviews with respondents from a small purposive sample of BUM Desa. Based on the analysis of the new regulation outlined, the paper concludes that the new regulation addresses a number of previous challenges and puts in place provisions that have the potential to further professionalize BUM Desa. However, the regulation risks placing requirements that may be too onerous on BUM Desa given that one of the main challenges for BUM Desa relates to their limited human resource capacity. Although the new regulation promotes good corporate governance practices and BUM Desa development, on the other hand, it could also be a burden that may hinder the development of BUM Desa themselves.

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The strategy of promoting effective management and accountability in village-owned enterprises through governance

Setyorini,

Susilowati,

Sukardi

et al. 2023

CBSR

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The objectives of this study are twofold. The first objective is to assess the degree to which governance principles are implemented in village-owned enterprises, VOEs (Badan Usaha Milik Desa, BUMDes) within the Cilacap regency. Identifying the obstacles to the successful implementation of governance practices in BUMDes is the second objective. A mixed-methods approach was used in the research technique, which combined quantitative and qualitative descriptive analyses. The quantitative component involved the administration of a questionnaire to eighty respondents, including BUMDes managers, village chiefs, and oversight bodies. The qualitative component consisted of focus group discussion (FGD), and observations to gather additional insights and perspectives. The primary findings of the study indicate that the application of governance principles exceeds fifty percent, indicating implementation that ranges from effective to extremely effective. However, the study also identified a number of barriers, such as a lack of synergy between the village government, BUMDes, and the community, limited human resource capacity, the absence of legal entity status for BUMDes, and ineffective governance mechanisms, which are similar to Lauwo et al. (2022) research. The significance of this study rests in the fact that research outcomes can direct efforts to overcome obstacles and improve the administration and accountability of BUMDes in the Cilacap regency and other regions with comparable characteristics.

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The Regulatory Framework of Village-Owned Enterprise in Indonesia: Does It Conform with Good Corporate Governance Principles?

Cited by 4 publications

References 9 publications

Legal Implication of Law No.11/2020 Concerning Job Creation on Village-Owned Enterprises in Indonesia

Legal Implication of Law No.11/2020 Concerning Job Creation on Village-Owned Enterprises in Indonesia

An Analysis of The New Regulation on The Governance of Village-Owned Enterprises

The strategy of promoting effective management and accountability in village-owned enterprises through governance

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