Hello, KH Friend! Have you ever heard the term BUMD? Local governments
In this article, Friend KH will get a deeper understanding of the characteristics of BUMD. Let’s thoroughly discuss BUMD, starting from the definition to the source of funds. With a deep understanding, KH pals will more clearly see the crucial role of BUMD in driving the regional and national economy.
Definition of BUMD
To understand the characteristics of BUMD, the first step is to understand its definition. Regionally-Owned Enterprises (BUMD) is a company established by the local government with the purpose of running a business that aims to improve the welfare of the community and support the regional economy. Law No. 23/2014 on Regional Government states that BUMD functions as a business entity to support regional development through economic activities.
BUMDs have a very strategic role in the regional economy, where they are tasked to manage important sectors that relate to the needs of the local community, such as clean water, electricity, transportation, and others. In general, BUMDs act as a tool for local governments to manage economic resources in the region more effectively and efficiently.
Characteristics of BUMD
After understanding the basic definition of BUMD, let’s discuss further about the characteristics of BUMD that distinguish it from other business entities. Here are some characteristics of BUMD which is important for KH Friend to know:
1. Established by the Local Government
The main feature of a BUMD is that at both the provincial and district/city level, the local government establishes and owns the BUMD. The local government fully manages the BUMD and is not owned by private individuals or groups.
2. Primary Objective: Community Wellbeing
Unlike private companies whose main objective is to earn maximum profit, BUMDs have the main objective of improving the welfare of the community. Although BUMDs also pursue profits to support their operational continuity, their main focus is to provide public services and meet the basic needs of the local community, such as the provision of clean water, electricity, or public transportation.
3. Independently Managed
Although owned by the local government, BUMDs are managed independently like any other business entity. Government Regulation No. 54/2017 on BUMD explains that BUMDs have freedom in running their business operations, where the local government acts as the owner of the shares or capital. However, professional management appointed under applicable regulations take care of day-to-day operations.
4. Origin of BUMD Capital
Capital used by BUMD comes from the Regional Government. Pemerintah daerah mengalokasikan anggaran daerah untuk membiayai operasional BUMD yang baru didirikan. Selain itu, Article 334 of Law Number 23 Year 2014 also stipulates that BUMDs can obtain additional capital from corporate profits, issuance of shares, or loans.
5. Role in Increasing Regional Revenue
In addition to providing services to the community, another characteristic of BUMDs is their contribution to increasing Regional Original Revenue (PAD). Dengan menjalankan berbagai kegiatan usaha, BUMD menyumbangkan pendapatan kepada pemerintah daerah.
6. Subject to Local Regulations
As they are owned and supervised by the local government, BUMDs are subject to applicable local regulations. This includes regulations regarding the establishment, operation and supervision of BUMDs. The local government has the right to issue specific regulations or policies related to BUMDs that aim to improve the efficiency and effectiveness of the company’s operations.
7. Can Involve Third Parties
In carrying out its operations, BUMD can also cooperate with third parties, both private companies and BUMN. This cooperation aims to improve the competitiveness and quality of BUMD services. Article 340 of Law Number 23 Year 2014 allows BUMDs to establish cooperation or joint venture with third parties as long as it is beneficial for regional interests.
Types of BUMD
In addition to knowing the characteristics of BUMDs, we also need to understand that local governments establish several types of BUMDs. Based on the type of business, we can distinguish BUMD into the following categories:
1. Public Service BUMD
This type of BUMD is tasked with providing vital public services to the community, such as clean water, electricity, gas and public transportation. PDAM (Perusahaan Daerah Air Minum)
2. BUMD Industry and Trade
BUMDs engaged in the industry and trade sector aim to develop the potential of industry and trade in the area. Examples are regional companies engaged in processing agricultural products or managing local natural resources.
3. BUMD Finance
Financial BUMDs are usually engaged in the banking sector or other financial services. Local governments establish financial BUMDs to facilitate access to capital for communities and small and medium enterprises in their regions. The most recognizable example is the Regional Development Bank (BPD).
Benefits of BUMD for Society and Local Government
After knowing the characteristics of BUMD and its types, your KH Friend might be wondering, what are the real benefits of BUMD for the community and local government? Here are some of the main benefits of BUMDs:
1. Improving Community Welfare
By providing quality public services, BUMDs directly improve the welfare of the people in their areas. By managing services such as clean water, electricity, and public transportation, local governments provide more affordable prices to the people.
2. Provide Employment
BUMDs also play a role in creating jobs for the local community. Each BUMD establishment opens up opportunities for local labor to work in the company, either as permanent or contract employees.
3. Increase Regional Revenue
As discussed earlier, profits earned by BUMDs from business activities contribute significantly to local revenues. The local government then uses this revenue to finance various development programs and public services in the area.
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Friend KH, BUMD BUMD is one of the important pillars in the regional economy that has a major role in improving community welfare and regional income. The characteristics described above
If you have any needs related to the establishment of BUMD, or would like to consult on the legalities and regulations related to business entities in Indonesia, please do not hesitate to contact KH. Contract Law. Tim kami siap memberikan bantuan profesional dalam berbagai aspek hukum yang berkaitan dengan badan usaha, mulai dari pendirian hingga pengelolaan bisnis secara legal. Hubungi kami sekarang juga untuk mendapatkan konsultasi terbaik yang sesuai dengan kebutuhan bisnis Anda!
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