Utilization Of Village-Owned Enterprises In Economic Recovery After The Covid-19 Outbreak

KEY MESSAGES

• The rural economy makes a significant contribution to the national economy. At present, the impact of the Covid-19 pandemic is felt more in urban areas. Due to the high mobility of seasonal rural workers commuting between their home villages and cities, however, the impact on the rural economy needs to be anticipated promptly.
• In village territories, micro and small enterprises (MSEs) can be empowered to help the recovery of the national economy, however, MSEs are currently facing a great challenge in terms of funding to develop their business.
• Under the Law on Villages, villages have a strong role and the financing capacity of rural development becomes significant. The Village Fund is one source of financing that will promote rural economic potential through the establishment and investment of capital in Village-Owned Enterprises (Badan Usaha Milik Desa: BUMDes). Furthermore, BUMDes can be empowered to support the development of MSEs, particularly in addressing funding and marketing issues they encounter.
• The Covid-19 pandemic has had a significant impact on the pace and dynamics of the economy and the impact has also been felt in rural areas. BUMDes can be beneficial for the government to optimize, sustain and reinforce MSEs.
• In the short term, the government can priorities the establishment of BUMDes engaging in financial business that meet the needs of MSEs run by rural business operators. The government needs to set up a steering committee involving relevant ministries and institutions to define the various requirements for rural economic recovery.