Minister: “Village-Owned Enterprises are the vanguard of rural economic rebound”

Minister of Villages, Development of Disadvantaged Regions, and Transmigration Abdul Halim Iskandar. (Photo: KEMENDESA)

IO – Minister of Villages, Development of Disadvantaged Regions, and Transmigration Abdul Halim Iskandar has a specific standard concerning the regulations issued by his Ministry. Any regulation made must include a Village Summary, in the same way that any report submitted by a First Echelon Official to him must include an Executive Summary. 

The Minister learned about this from his experience as the Speaker of the Regional House of Representatives (Dewan Perwakilan Rakyat Daerah – “DPRD”) of Jombang, when he frequently received long, complicated, and difficult instructions and regulations from the Government. “This is obstructive. Even we, intelligent, highly-educated lawmakers in the DPRD have trouble reading and understanding these many, thick regulations – what about villagers and village officials? Therefore, I request that all regulations from the Ministry of Villages be accompanied with a Village Summary, which will make it easier for the village staff and villagers who are going to implement them to understand and execute,” Minister Halim stated during a Village-Owned Enterprise (“VOE”) College Public Lecture held at the Multipurpose Hall of the PGRI Dewantara’s College of Economics, Jombang, on Saturday (05/12/2020). 

The Public Lecture was attended by the Vice Regent of Jombang, Sumrambah, and the current Speaker of the DPRD of Jombang, H. Mas’ud Zuremi. Also present online and offline were VOE management staff, local college students, and Village Guides. 

The Minister further states that new VOEs must choose business cores that villagers in their region have not dealt in, or that no other local VOEs handle. New VOEs should have business cores that support the village’s economic cycle instead of obstructing it. In fact, they should serve as the vanguard of the rebound of village economy. Job Creation Law Number 11 of 2020 Article 117 stipulates that VOEs as Legal Entities are established for the utmost welfare of the citizenry. With the legal basis and protection of the Job Creation Law, VOEs are now acknowledged as Legal Entities and can have better access to capital and credit. “VOEs are now defined as Legal Entities with the validation of the Job Creation Law. This is something everyone has been waiting for – we are working fast to generate a Government Regulation Draft by inviting the Ministry of Law and Human Rights to provide us with inputs, suggestions, and ideas about VOEs’ position as Legal Entities,” he said. 

After Cross-Ministerial meetings and discussions, it is finally agreed that after the Job Creation Law is validated, VOEs are defined as New Type Legal Entities with a legal position equal to Limited Liability Companies (Perseroan Terbatas – “PT”) at business level, with State-Owned Enterprises (“SOEs”) at national level, and with Region-Owned Enterprises (“ROEs”) at regional level. “VOEs’ position as Legal Entities will be completely separate from the position of Village Headman as an official, or from any other political processes in the villages. Therefore, the Government Regulation Draft sets the term of VOE leadership differently from that of Village Headman leadership term. The completed Government Regulation Draft contains more definitive rules about VOEs. For example, VOEs have the right to establish Legal Entity Business Units like Limited Liability Companies. The Government Regulation Draft rules that Village Regulations generated by Village Meetings are a sufficient legal basis for VOE establishment,” the Minister said. 

However, as VOEs require national- scaled rules of the game, they must be registered at the Ministry of Villages, Development of Disadvantaged Regions, and Transmigration in order to prevent common business obstacles such as having the same name. Therefore, all VOEs must be registered along with the names of their home village in the registration. When they have registered to the Ministry of Villages, Development of Disadvantaged Regions, and Transmigration, VOEs must then register at the Ministry of Law and Human Rights, because they can establish new Legal Entities for their business, for example Limited Liability Companies. 

Minister Halim reiterates that each village can only establish a single VOE. Therefore, the maximum total number of VOEs will be the same as number of villages in Indonesia (74,953 units). “However, each VOE can establish as many Business Units as they need in compliance with applicable rules and regulations. This is why we do not talk about the disbandment of VOEs in the Government Regulation Draft, but only suspension of troublesome VOEs. When the relevant problems are resolved, the suspension will be revoked,” he said. “If necessary, two or more villages can establish one or more Joint Village-Owned Enterprise (“JVOEs”) based on a joint decision made by the relevant Village Headmen. JVOEs can be established without considering Zoning and territory limits.” (Dan)