KH friends may be familiar with the term BUMN. However, do you know about the definition of BUMD? This business entity is managed by the local government, unlike BUMN which is managed by the central government.
Not only that, BUMD or Regional Owned Enterprises have an important role in driving the regional economy and improving the welfare of the community.
Local governments form BUMDs to fulfill regional needs and provide services to the community.
Thus, BUMDs have distinctive characteristics and strategic functions in regional development.
Well, to understand more about the definition, role, characteristics, and examples of BUMD, let’s just see the following discussion.
Definition of BUMD
Article 1 of PP No 54 Year 2017 explains that BUMD is a business entity that is owned by the region, with all or most of its capital. Furthermore, Article 7 of PP No 54 Year 2017 mentions several objectives of BUMD, including providing benefits for regional economic development. In addition, BUMD aims to organize public benefits by providing various types of goods and services to meet the needs of the community according to the potential, characteristics, and conditions of the region. Thus, BUMD also seeks to earn profit or profit.
What is the Role of BUMD?
BUMDs play an important role in the economy and require good management.
The role of BUMDs in increasing the prosperity of the people, among others:
- Increase economic growth in the region
- As one of the sources of regional income
- Meet the needs of the regional community
- Open employment opportunities to absorb labor in the region
- Equalizing development
- Encouraging the role of the community in various fields of business in the region
- Implementing local government policies in the field of development and economy
- Cultivate funds to finance regional development
- Help increase production in the region
What are the Characteristics of BUMD?
The following are the characteristics of BUMD according to the Government Regulation replacing Law No. 2 of 2022 on Job Creation:
- The local government established this business entity.
- This business entity is owned by one or more local governments, or one local government together with other parties.
- Its capital comes from separated regional assets.
- This business entity does not function as a regional apparatus organization.
- This business entity is managed in accordance with the principles of the business world.
If more than one local government owns a BUMD, one of the regions must own more than 51% of the shares.
Example of BUMD
Launching from the Kumparan page, there are around 1056 official BUMDs in Indonesia.
Some examples of these are:
- PDAM Tirta Kerta Raharja: A regional drinking water company in Bogor Regency that provides access to clean water for the community.
- Regional Development Bank (BPD): Local governments own this financial institution, which functions as a commercial bank to serve local communities.
- City Transport Regional Company: Responsible for the provision of public transport services within the city, such as city buses or other transportation.
- Regional Slaughterhouse Company: Operates in the livestock and meat processing sector to provide safe meat to the public.
- Transjakarta: PT Transportasi Jakarta manages the Bus Rapid Transit (BRT) System and provides public transportation services in Jakarta.
KH Contact
Understanding and implementing the roles and functions of BUMDs well is very important to support regional development and improve the welfare of the community.
With this knowledge, we can contribute to local economic development, create jobs, and effectively meet the needs of the community.
For KH friends who need assistance in managing BUMD or need business consulting, Kontrak Hukum is ready to help.
We offer Digital Business Assistant (DiBA) services that provide efficient solutions in one subscription package, for only Rp7 million/month.
For more information, visit KH Services – DiBA. Jika ada pertanyaan, Sobat KH juga bisa berkonsultasi gratis di Ask KH or send a direct message (DM) to Instagram @kontrakhukum. Kontrak Hukum also invites you to join the Business Community, a gathering place for entrepreneurs and business people to share important information about legality and licensing. The best part? It’s free and open to everyone! Come on, don’t miss this opportunity, register now through
