Optimize Village Economy Potential

KOMPAS/FERGANATA INDRA RIATMOKO

The Umbul Ponggok tourist attraction is seen from the air on Sunday (17/6/2018) in Ponggok village, Polanharjo, Klaten, Central Java. The natural spring contributes 60 percent of the revenues of the Tirta Mandiri village-owned enterprise (BUMDes), which is managed by the local community. BUMDes made Rp 13 billion in revenues in 2017.

JAKARTA, KOMPAS – A number of villages have been able to accelerate their local economies by exploring and nurturing their own potential. Apart from innovation, creativity and proper management, the village fund is an important part of the efforts to improve village welfare through nurturing and empowering village-owned enterprises (BUMDes).

Locals in Tamansari village in Banyuwangi regency, East Java, for instance, have successfully developed the local economy through managing potential local resources. The villagers, who were originally farmers and sulfur miners, can now obtain additional income from setting up tourist services.

Businesses like homestays are profitable not only for home owners but also for village-owned enterprises. In 2017, the BUMDes Tamansari booked a gross income of Rp 800 million (US$54,031.68) while its annual revenue surged from Rp 10 million in 2015 to Rp 45 million in 2016 and beyond.

Majasari and Juntinyuat villages in Indramayu regency, West Java, manage their respective village funds to empower former migrant workers (TKI) and their families. The village administration provides various training for former migrant workers, including making shrimp paste and accessories as well as sewing.

Gemar Karya Migran, a community of former migrant workers established by the Juntinyuat village administration in collaboration with Migrant Care, originally had only 20 members in 2016. Now, it has 40 members. It now exports its shrimp paste and gains Rp 10 million a month from it.

Meanwhile, the Majasari village administration in Sliyeg district, Indramayu regency, trains former migrant workers on making crochet bags and banana chips as well as raising cattle.

“In 2016, we got Rp 100 million from the village fund to purchase five cows. Now, we have 11 cows. In 2017, we got more funding to purchase 43 cows,” said Majasari’s Tunggal Rasa Farmers Group chair Slamet Setiyadi.

The cows are cared for by families of migrant workers. The village administration stipulates that 30 percent of the revenue from cattle sales is for BUMDes Majasari and another 30 percent is for the farmers.

“Previously, my wife became a migrant worker to bring in money for the family. Now, it is my turn. My wife is now home and my children are in college,” Slamet said.

Funding support

Ponggok village in Polanharjo district, Klaten regency, Central Java, is another success story in managing local potentials to improve locals’ welfare. Ponggok village secretary Yani Setiadi said on Wednesday (12/9/2018) that Ponggok was once a disadvantaged village. In 2001, the village administration only had Rp 14 million in its budget and a 14,000-square-meter land.

However, Ponggok has an abundance of water springs, including Umbul Ponggok. At first, the plan was to rent the water springs at Rp 5 million per year. However, interest was lacking. The village administration then requested Gadjah Mada University in Yogyakarta for help on how to plan, manage and optimize village potentials.

Umbul Ponggok was then turned into a tourist destination in 2011. It was managed by a village-owned enterprise named BUMDes Tirta Mandiri. Some 330 of the village’s 639 families invested Rp 5 million each. The collected money was then used to improve Umbul Ponggok’s infrastructure. In 2015, BUMDes Tirta Mandiri booked an income of Rp 6.4 billion, which increased to Rp 10.3 billion in 2016 and Rp 14.2 billion in 2017.

Ponggok village head Junaedi Mulyono said that Ponggok had successfully developed its local potential before the village fund scheme was established. Therefore, he said other villages should be able to explore and optimize their own potential with funding support from the village fund program.

“With the village fund, there is no excuse for village not to explore all of its potential to empower locals and improve their welfare,” he said.

The Villages, Disadvantaged Regions and Transmigration Ministry’s director general of villagers’ development and empowerment, Taufik Madjid, said the country now had 31,000 village-owned enterprises. He said many villagers were now aware of the importance to develop the local economy by using the village fund.

Priority programs

After focusing on infrastructure development from 2015 to 2017, the village fund program will be aimed to develop village economy this year and next year. However, villages may still use the village fund for infrastructure development.

With regard to this, the Villages, Disadvantaged Regions and Transmigration Ministry plans to launch a Village Priority Products program that categorizes villages’ economic potential. Village administrations are encouraged to determine between one and three priority commodities that can developed on a massive scale. Such products may include agriculture commodities or tourism objects. The ministry plans to connect villages and local governments with state-owned enterprises, private companies and banks. Hopefully, this will focus production and open up market access.

President director Braman Setyo of the Agency for Revolving Fund Management for Cooperatives and Small and Medium Enterprises (LPDB-KUKM) said that efforts to empower village economy should involve cooperatives.

“Regulation-wise, cooperatives have everything. It is a legal entity and also a business entity,” he said.

(GER/IKI/RWN/CAS/RTG/WHO/NAD)