The Legal Status of Village-Owned Enterprises (BUMDes) in the National Economic System: Between Village-Owned Entities and Private Enterprises

Abstract

This study examines the legal status of Village-Owned Enterprises (BUMDes) within Indonesia’s national economic framework, emphasizing their dual nature as both public legal entities and private economic actors. BUMDes were established under Law Number 6 of 2014 concerning Villages and further reinforced by Government Regulation Number 11 of 2021, positioning them as hybrid institutions that integrate public accountability with market-oriented operations. Through a normative juridical approach, this article analyzes the intersection between public and private law in the governance of BUMDes, highlighting its sui generis legal character that cannot be strictly categorized within existing legal classifications. The findings demonstrate that while BUMDes are created and supervised under public law, their economic activities operate under civil law principles, creating a complex structure of accountability and legal responsibility. This hybrid nature allows BUMDes to function as agents of inclusive rural economic development, bridging the gap between state regulation and local entrepreneurship. However, the study also identifies ongoing challenges such as regulatory ambiguity, weak institutional capacity, and inconsistent oversight mechanisms that hinder optimal performance. Therefore, it is crucial to establish a more coherent legal framework that provides certainty regarding BUMDes’ authority, asset status, and dispute resolution mechanisms. Strengthening the governance and legal clarity of BUMDes is essential to realizing their role as instruments of economic democracy and social justice, in line with the constitutional mandate of Article 33 of the 1945 Constitution of the Republic of Indonesia.