Corporate Social Responsibility for the Development of Village-Owned Enterprises: Legal Opportunities and Challenges

DOI

10.2991/assehr.k.220204.056How to use a DOI?

Keywords

CSR; village-owned enterprise; BUMDes; rural development

Abstract

The enactment of Government Regulation No. 11 of 2021 (“PP 11/2021”) following the passage of the Job Creation Law emphasizes the role of Village-Owned Enterprises (Badan Usaha Milik Desa—”BUM Desa”) in Indonesia’s economic and development strategy. Successful BUM Desa are viewed as supporting village economic independence. Since the passage of the Village Law and the subsequent investment in BUM Desa, there has been extensive analysis of the challenges and opportunities offered by this strategy. One of those lessons relates to the sustainability of on-going use of public funds (in particular the Dana Desa) for BUM Desa. Given these questions, there is a need to further assess opportunities for BUM Desa to access alternative sources of funds, such as those provided through Corporate Social Responsibility (“CSR”) programs of the private sector. This paper aims to examine the potential of companies CSR program to support BUM Desa and the legal opportunities and challenges for the implementation. The analysis of this paper is based on a normative research method supported by qualitative interviews with 2 (two) BUM Desa in North Sumatera. Based on the discussion, the paper found that CSR practice in building partnership with UMKM has the potential to be a similar means for developing BUM Desa and the law has provided the legal basis for the involvement of companies (SOE or Non-SOE) to support BUM Desa through CSR program in various forms. Financial support for BUM Desa through companies CSR program can be either in the form of equity participation, soft loan or non-binding aid or support (such as grants or other forms). In practice, many companies have channelled their CSR to BUM Desa. PP 11/2021 provides more option for CSR distribution scheme for BUM Desa. Companies can choose the method that best suits them or the best interest of the village and BUM Desa. The CSR program for BUM Desa must be designed in a targeted and strategic manner so that it can be effective and not just a donation. Moreover, the usage of CSR programs for funding BUM Desa, in particular where it involves the contribution of funds or acquisition of assets, needs to be managed with accountability as laid out by law.

Copyright

© 2022 The Authors. Published by Atlantis Press SARL.

Open Access

This is an open access article under the CC BY-NC license.

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TY  - CONF
AU  - Detania Sukarja
PY  - 2022
DA  - 2022/02/15
TI  - Corporate Social Responsibility for the Development of Village-Owned Enterprises: Legal Opportunities and Challenges
BT  - Proceedings of the Second International Conference on Public Policy, Social Computing and Development (ICOPOSDEV 2021)
PB  - Atlantis Press
SP  - 370
EP  - 378
SN  - 2352-5398
UR  - https://doi.org/10.2991/assehr.k.220204.056
DO  - 10.2991/assehr.k.220204.056
ID  - Sukarja2022
ER  -