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Countless village enterprises, few skilled managers
Money spinner: A visitor has fun in Ponggok Spring in Klaten, Central Java
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oney spinner: A visitor has fun in Ponggok Spring in Klaten, Central Java. The recreation spot has become a success story demonstrating how a well-managed village-owned enterprise can be profitable.(Antara/Akbar Nugroho Gumay)
When drawing up village development plans, top officials set a modest target of 5,000 village-owned enterprises (BUMdes) to be established by the end of 2018. In the most recent year-end review, they were surprised to find that 39,000 enterprises had sprung up nationwide.
For government bureaucrats, village-owned enterprises are one good sign of a thriving economy at the lowest administrative level. The experimental business ventures were launched in 2015 in an effort to empower villages and eventually reduce their dependence on the government.
BUMdes are started with money deducted from the financial assistance provided by the central government under the village funds program to spur the economy of 75,400 villages.
“The government wants BUMdes to fire up village economies,” says Anwar Sanusi, secretary-general of the Villages, Disadvantaged Regions and Transmigration Ministry.
In 2018, the government disbursed Rp 60 trillion (US$4.2 billion) in village funds and will raise the amount to
Rp 70 trillion this year.
In passing, 39,000 BUMdes may sound a great deal but performance-wise, only half of them are functional. Most struggle from a lack of skilled personnel and business management know-how. They live a hand-to-mouth existence, ministry spokesman Bonivasius Prasetya Ichitianto acknowledges.
“They can start the BUMdes but they do not know head or tail about managing the business,” he said. Issues surrounding human resources have mostly been reported in poor eastern provinces.
For example, in East Bolaang Mongondow regency, North Sulawesi, officials disclosed in October last year that 30 out of 70 BUMdes were not working because of human resource problems.
Aware of the common issues, the government has been providing BUMdes management training in the regions. However, the remedy has yet to show any result because the government does not have adequate trainers for all enterprises.
Initially, the Villages, Disadvantaged Regions and Transmigration Ministry in collaboration with state-owned banks had aimed at holding training on financial management for 1,500 villages a year.
“Suppose the target is achieved, it would need 10 years to train 15,000 villages,” Minister Eko Putro Sandjojo said.
To expedite the project, the ministry created akademi desa 4.0 (village academy 4.0), an online video platform that village officials can access to learn about management from experts.
Aziz Setya Wijaya, an entrepreneur and business consultant, suggests that the government take more serious measures to make more BUMdes professional.
“BUMdes managements need intensive entrepreneurship training involving seasoned businesspeople,” he says. “Taobao and Alibaba in China started as village-based businesses. They started from scratch. China’s economy is testament to the village business.”
But not all BUMdes are business flops. Some have thrived. A standard bearer is Tirta Mandiri, an enterprise owned by Ponggok village in Klaten, Central Java.
The neighborhood of 2,300 people has seen the revenue of its BUMdes, which started as a fishing tackle
shop, rising from Rp 6.1 billion in 2015 to Rp 10.3 billion in 2016 and Rp 12 billion in 2017.
Tirta Mandiri runs different businesses with the most profitable being a swimming pool called Umbul Ponggok, which attracts visitors who want to take underwater photographs with odd backgrounds, such as motorcycles and televisions. The tourist attraction was built in 2012 in an old spring.
Among the impressed top bureaucrats is Finance Minister Sri Mulyani Indrawati. She visited Ponggok in 2017 in recognition of the enterprise’s success. Since then, bureaucrats have come from far and wide to learn about the success story.
Aziz has some advice: BUMdes must be run professionally and kept away from politicians who may abuse them for their own benefit like they do with regional-owned companies.
“BUMdes can make villages prosper, but they need to be managed professionally.”
