THE ROLE OF VILLAGE OWNED ENTERPRISE IN IMPROVING THE RURAL ECONOMY

Nurika Restuningdiah Puji Handayati Mika Marsely

Universitas Negeri MalangEmail: nurikarestu@gmail.com

ABSTRACT. The purpose of this study is to empirically test the role of Village Owned Enterprise in improving the rural economy in Pakis Village, District Trowulan Mojokerto Regency. Data analysis used in this research is SWOT analysis. The SWOT analysis is used to derive a fundamental view of the strategies required to achieve a particular goal, in this case, an assessment of the role of Village Owned Enterprise in improving the rural economy. The results of the research showed that the existence of Village Owned Enterprise in Pakis Village could increase the village revenue of Pakis Village. Village revenue of Pakis increased by 8.5% compared to the previous year (2016), from Rp 157,000,000 to Rp 170,500,000.-. Surely the amount of increase in village revenue of 8.5% is a considerable number, considering the new Village Owned Enterprise establish for approximately one year. Village Owned Enterprise Revenue until now is only obtained from the savings and loan business unit. There are still some potential villages that have not been included in the Village Owned Enterprise business unit, among them the management of the Majapahit Kingdom heritage, the glass fiber craft, and the World Peace Plans Surya Majapahit (TPDSM). If the potential of the village is well managed, it is sure that the income of Village Owned Enterprise and Village revenue will increase.

Keywords: Village Owned Enterprise, Economy, Rural.

INTRODUCTION

Village Owned Enterprise is a village business entity managed by the

community and village administration to strengthen the village economy. Village

Owned Enterprise is formed based on the needs and potential of the village and

aims to improve the welfare of the community. To improve the health of the

community, the Indonesian government through the Ministry of Village,

Development of Disadvantaged Regions and Transmigration (Kemendes PDTT)

established a financial institution, namely Village Owned Enterprise. The

previous district / municipal governments created local regulations on guidelines

for the formation and management of Village Owned Enterprise and subsequently

village government established Village Owned Enterprise with village regulations

based on local regulation. According to Law Number 32 Year 2004 regarding

Regional Government, Village Owned Enterprise was established among others in

the framework of increasing the Village Original Income (Village revenue).

Village Owned Enterprise is expected to stimulate and drive the wheels of

the economy in the rural area. The economic assets in the village must be fully

managed by the villagers. The substance and philosophy of Village Owned

Enterprise must be imbued with the spirit of togetherness and self-help as an

effort to strengthen the institutional, economic aspect. At this stage, Village

Owned Enterprise will move in tandem with efforts to increase the sources of

Rural Original Income as well as mobilize the financial activities of the

community. According to Nurcholis (2011, 88) this effort is also essential in the

framework of reducing the role of free-riders who often increase transaction costs

in the economic activities of the community through rent-seeking practices.

Village Owned Enterprise in its operations is supported by the village

financial institution (financing unit) as a unit that performs financial transactions

in the form of credit and savings. If the economic institutions are strong and

supported by adequate policies, then economic growth coupled with the equitable

distribution of assets to the people will be able to cope with various financial

problems in rural areas. The ultimate goal, Village Owned Enterprise is expected

to be the prime mover in bridging the efforts of economic strengthening in the

countryside. But in its operation Village, Owned Enterprise is plagued by capital.

Seeing the condition of the village that has been so minimal budget then it is

difficult to realize the products of the village plan as well as increasing the apathy

of the community.

As one of the economic institutions operating in rural areas, Village

Owned Enterprise must have differences with the economic institutions in

general. It is intended that the existence and performance of Village Owned

Enterprise can contribute significantly to the improvement of the welfare of the

people. In the development of Village Owned Enterprise (Village Owned

Enterprise) is also not free from the competition that it faces with other economic

actors. To compete, strategic and tactical steps are needed to integrate the

potential, market needs, and design of Village Owned Enterprise design into a

plan. Also, it is necessary to consider local potentials as well as policy support

(goodwill) from the above government (supra desa) to eliminate the low surplus

of village economic activities caused by the lack of economic sector development

in rural areas.

About planning and establishment, Village Owned Enterprise is built on

community initiatives, and based on cooperative, participatory, transparent,

emancipative, accountable and sustainable principles with a base member and

self-help mechanism. Of all that is important is that the management of Village

Owned Enterprise should be done professionally and independently.

The existence of Village Owned Enterprise is expected to support the re-

emergence of social democracy in the villages by increasing the capacity of

village communities on sustainable management of Village Owned Enterprise,

and the participation of village communities against Village Owned Enterprise is

no longer reduced. On the other hand, the village government is also able to

produce creative and innovative patterns in dominating village economic activities

through ownership of Village Owned Enterprise to build the local economy

needed to create new jobs, generate substitution goods and services, increase

regional inter-regional trade and provide optimal service for consumers.

Furthermore, Village Owned Enterprise can stand with the goal of being a

regional development agent and be a driver for the creation of the corporate sector

in the countryside but with the cost of production and management that is not too

high.

In East Java, efforts to render the village as a basis for strengthening the

local economy by developing Village Owned Enterprise have been ongoing since

the legalization of the Village Owned Enterprise itself. Almost every district in

East Java region has a pilot project of Village Owned Enterprise. The

establishment of Village Owned Enterprise itself is adapted to local characteristics

and existing village economic capacity, such as village market management,

village tourism, saving-loan activities, community craft development and so on.

Efforts to realize the concept of establishing Village Owned Enterprise, pioneered

by optimizing the capacity and economic operations that have been run and

managed by the village.

Village Owned Enterprise as a legal entity established based on the

prevailing laws and regulations, and by the agreement developed in the village

community. Thus, the Village Owned Enterprise form can vary in every village in

Indonesia. These various types are corresponding to the local characteristics,

potentials, and resources of each village. Based on the description above, the

researchers are interested in examining the role of Village Owned Enterprise in

improving the village economy with the title "Village Owned Enterprise Role in

Improving Rural Economy in Pakis Village, Trowulan District –Mojokerto

Regency."

LITERATURE REVIEW

Village Owned Enterprise

According to Permendesa No.4 of 2015 Article 1 Village-Owned

Enterprise, from now on called Village Owned Enterprise, is a business entity

which is overall or partly owned by the Village through direct participation

derived from village's wealth separated to manage assets, services, and other

efforts to maximize the welfare of the village community. While in Permendesa

No.4 Year 2015 Article 2 mentioned that the establishment of Village Owned

Enterprise is intended as an effort to accommodate all activities in the field of

economy and/or public services managed by the Village and/or inter-village

cooperation. According to Law Number 32 Year 2004 regarding Regional

Government, Village Owned Enterprise was established among others in the

framework of increasing the Village Original Income (village revenue). Departing

from this perspective, if the original income of the village can be obtained from

the Village Owned Enterprise, it will encourage every Village Government to

provide "goodwill" in responding to the establishment of Village Owned

Enterprise. As one of the economic institutions operating in rural areas, Village

Owned Enterprise must have differences with the economic institutions in

general. It is intended that the existence and performance of Village Owned

Enterprise can contribute significantly to improving the welfare of the villagers. It

is also designed to avoid developing a capitalistic business system in rural areas

that can lead to disruption of social life values.

There are 7 (seven) main characteristics that distinguish Village Owned

Enterprise with commercial, economic institutions in general are: 1) The

enterprise is owned by the village and managed jointly; 2) The business capital is

sourced from the village (51%) and from the community (49%) through equity

participation (share or share); 3) Operationalization using business philosophy

rooted in local culture (local wisdom); 4) The field of business undertaken is

based on the potential and results of market information; 5) The benefits gained

are aimed at improving the welfare of members (capital attendants) and the

community through village policies; 6) Facilitated by the Government : provincial

government, district government, and village government; 7) Implementation of

jointly controlled operations (village government and Village Consultative

Body).

The Purpose Of Establishing Village Owned Enterprise

Based on Permendesa No.4 Year 2015 Article 3, there are 8 primary

objectives of establishing Village Owned Enterprise, among which are: 1)

Improving the village economy; 2) Optimizing village assets to be useful for

village welfare; 3) Improving community efforts in managing the economic

potential of the Village; 4) Developing business cooperation plans between

villages and/or with third parties; 5) Creating market opportunities and networks

that support citizen's public service needs; 6) Opening employment; 7) Improving

the welfare of the people through improvements in public services, growth and

equity of the village economy; and 8) Increase the income of the village

community and the village's original income

The establishment and management of a Village Owned Enterprise is a

manifestation of village productive economic management that is carried out

cooperatively, participative, emancipative, transparently, accountably and

sustainably. Therefore, serious efforts are needed to make the control of the

business entity work effectively, efficiently, professionally and independently.

To achieve the purpose of Village Owned Enterprise is done by fulfilling

the needs (productive and consumptive) of society through service distribution of

goods and services managed by the community and Pemdes. The fulfillment of

this requirement is not to burden the community, considering that Village Owned

Enterprise will become the most dominant village business in mobilizing the

village economy. This institution is also required to provide services to

nonmembers (outside the village) by placing prices and services applicable market

standards. It means that there is a mutually agreed institutional / regulatory

mechanism, to avoid distorting the rural economy due to the business run by the

Village Owned Enterprise. It is stated in the Act that Village Owned Enterprise

can be established according to the needs and potential of the village. The

meaning of "village needs and potential" is : 1). The needs of the community,

especially in the fulfillment of basic needs; 2). Available village resources that

have not been utilized optimally, especially the village's wealth and there is

demand in the market; 3). Available human resources capable of managing

business entities as assets driving the economy of the community; 4). The

existence of business units which are economic activities of the community that

are managed partially and less accommodated; 5). Village Owned Enterprise is a

vehicle to run business in the village.

The meaning of "village business" is a type of business covering village

economic services, such as a). The financial services business, land and water

transportation services, village electricity, and other similar businesses; b).

Distribution of nine essential economic goods of the village; c). Trading of

agricultural products includes food crops, plantations, livestock, fisheries, and

agribusiness; d).Industry and people's crafts. The mechanism of village-owned

enterprise establishment according to the Minister of Home Affairs Regulation

Number 39 of 2010 is as follows: 1). Village deliberations (Rembug desa) to

produce the agreement; 2). The agreement outlined in the AD / ART which at

least contains: organization and work procedures, determination of personnel,

accountability and reporting system, profit sharing, and bankruptcy; 3) Proposal

of agreement material as the draft of village regulations; 4). Issuance of village

regulations.

After all of the requirements of establishing Village Owned Enterprise

have been fulfilled, then Village Owned Enterprise is legalized and established by

village regulations. Further rules relating to the procedure of developing and

managing Village Owned Enterprise according to Government Regulation No. 72

of 2005 submitted to local governments throughout Indonesia. It means that the

establishment of Village Owned Enterprise in each region is different from each

other, depending on the needs and potential of each area.

The involvement of the village government as the most significant

shareholder of the Village Owned Enterprise or a co-founder of the community is

expected to meet the Minimum Service Standards (SPM), which is manifested in

the form of protection (protection) of adverse interventions from third parties

(both within and outside the village). Similarly, the village government played a

role in establishing Village Owned Enterprise as a legal entity based on the

prevailing rules of law, as well as by the agreement developed in the village

community. Further regulation of Village Owned Enterprise is regulated through

the Local Regulation (Perda) after considering the above rules. Through "self-

help" and "member-base" mechanisms, Village Owned Enterprise is also a

manifestation of the participation of villagers as a whole, so as not to create a

dominated business model by specific groups at the village level. That is, this rule

is manifested in a robust institutional mechanism. Strengthening the institutional

capacity will be directed to the existence of rules that bind all members (one for

all).

Legal Foundation Village Owned Enterprise

The establishment of Village Owned Enterprise based on Law no. 32 of

2004 on Regional Government, PP. 72 of 2005 on Village and Village Regulation

No. 4 year 2015 on Establishment, Management and Management, and

Dissolution of Village Owned Enterprises. In detail, these three Village Owned

Enterprise legal bases are:

1. Law no. 32 of 2004 on Regional Government; Article 213 paragraph

(1) "Villages may establish Village Owned Enterprises by village needs and

potential."

2. PP. 72 of 2005 on Villages:

a. Article 78

1) In increasing the income of the community and the village, the

Village Government may establish a Village Owned Enterprise by the needs and

potential of the Village.

2) Establishment of Village Owned Enterprises as referred to in

paragraph (1) shall be stipulated by Village Regulation based on laws and

regulations.

3) The form of Village-Owned Enterprises as referred to in paragraph (1)

shall be legal entities.

b. Article 79

1) Village-Owned Enterprises as referred to in Article 78 paragraph (1)

shall be village enterprises managed by the Village Government.

2) The capital of Village-Owned Enterprises may come from:

a. Village government;

b. Community savings;

c. Government Assistance, Provincial Government, and District / City

Government;

d. Loan; and;

e. The participation of other parties' equity or profit-sharing cooperation

by mutual benefit.

c. Article 80

1). Village-Owned Enterprises can undertake loans by the laws and

regulations.

2). Loans, as referred to in paragraph (1), shall be made after obtaining

approval from BPD.

d. Article 81

1) Further provisions concerning Procedures for Establishment and

Management of Village Owned Enterprises shall be governed by a Regency / City

Regulation.

2) District / City Regulations as referred to in paragraph (1) shall at least

include:

a. The forms of legal entity;

b. Stewardship;

c. Rights and obligations;

d. Capital;

e. Profit sharing or profits;

f. Cooperation with third parties;

g. Mechanism of management and accountability

3. Village regulation No. 4 year 2015 on Establishment, Management

And Management Dissolution of Village Owned Enterprises:

Management Principles of Village Owned Enterprise

The principles of managing the Village Owned Enterprise are essential to

elaborate or described to be understood and perceived in the same way by village

government, members (capital supplicants), BPD, district government, and the

community. There are 6 (six) principles in managing Village Owned Enterprise

that is:

1) Cooperative, All components involved in Village Owned Enterprise

must be able to do a good cooperation for the development and business survival.

2) Participatory. All elements included in the Village Owned Enterprise

must be volunteered or encouraged to provide support and contribution that can

drive the progress of the Village Owned Enterprise business.

3) Emancipative. All components involved in the Village Owned

Enterprise should be treated the same regardless of group, ethnicity, and religion.

4) Transparent. Activities that affect the interests of the general public

must be known by all segments of society quickly and openly.

5) Accountable. All business activities must be accountable technically

and administratively.

6) Sustainable. Business activities should be developed and conserved

by the community in a Village Owned Enterprise scope.

Associated with the implementation of Village Fund Allocation (ADD),

then the process of strengthening the village economy through Village Owned

Enterprise is expected to be more empowered. It is due to the support of the

village budget funds are getting bigger. To enable the availability of adequate

capital, for the establishment of Village Owned Enterprise. If this applies in line,

there will be an increase in Village revenue which can then be used for village

development activities. The main things that are important in the effort of

strengthening the village economy are to strengthen cooperation (cooperative),

build togetherness/build adherence in all layers of village communities. So, it

becomes a steam engine in efforts to alleviate poverty, unemployment, and open

market access.

Role of Village Owned Enterprise

Village Owned Enterprise as a village business entity is very influential on

improving the welfare of the community. Village Owned Enterprise as a program

designed by the government to improve the living standards of a better society.

Village business entity must be managed jointly for the common interest. Village

Owned Enterprise becomes a source of community effort in maximizing the

potential in the village.

The role of Village Owned Enterprise includes (1) identification of village

potency; (2) mapping the village's flagship business; (3) building integrated

economic centers; and (4) marketing village superior products. Therefore, a

village economic development strategy must build by involving the role of

Village Owned Enterprise in it as one of the pillars of sustainable village

development.

According to Seyadi (2003: 16) the role of Village Owned Enterprise is as

follows: building and developing the economic potential and economic ability of

rural communities, in general to improve their economic and social welfare, play

an active role in efforts to enhance the quality of human life and society, the basis

of strength and resilience of the national economy with Village Owned Enterprise

as its foundation, seeks to realize and develop the economy of rural communities

and helping the people to increase their income so as to increase the revenue and

prosperity of the community.

METHODS

In the series of data collection in this study, there are three processes of

activities that has been carried out:

1. The process of entering the research location (Getting In)

In order for the process of collecting data from the information

goes well, the researcher first prepares everything necessary, both

administrative completeness and all the issues related to the setting and

subject of research and look for the initial relationship. In entering the

location of the research, researchers took a formal and informal approach

and establish good relations with informants (Moleong, 2004: 128). So in

this stage the researcher entered the location of the study in order to obtain

a description of its activities by carrying a research permit from the

Faculty of Economics, State University of Malang. Furthermore, the

researchers conducted a discussion with informants to dig up the

information which then processed as supporting data from this research.

2. When Being in Research Sites (Getting Along)

At this stage, the researchers conducted initial interviews and

observations to find complete and precise information and capture the

meaning of the essence of information and phenomena obtained about the

role of Village Owned Enterprise in improving the rural economy.

Data Collection Techniques (Logging the Data)

After both step above, then the researchers conducted data collection, where the

techniques used are:

1. In-depth interview (Indepth Interview)

In-depth interviews were conducted to obtain information on

activities carried out by Village Owned Enterprise of Pakis Village,

Trowulan District – Mojokerto Regency.

2. Documentation

Documentation techniques are carried out to obtain secondary data

conducted by collecting relevant data on the role of Village Owned

Enterprise in improving the rural economy.

3. Observation

This technique is done to reveal and get the full description with

direct observation with the board, supervisors, and the community as a

consumer Village Owned Enterprise.

4. FGD (Focus Group Discussion)

This technique is done to find the meaning of a theme according to

the understanding of a group. This technique is used to reveal the meaning

of a group based on the results of the discussion centered on a particular

problem. FGD is also intended to avoid the wrong meaning of a researcher

on the focus of the problem under study.

Data Analysis

The data that has been collected, processed and analyzed descriptively by

using SWOT analysis tool which is a qualitative analysis conducted by reviewing

internal and external factors. Internal factors in this case are Strength (strength or

potential) and Weakness (weakness or constraint). External factors consist of

Opportunity and Threat. The SWOT analysis is used to derive a basic view of the

strategies required to achieve a particular goal, in this case an assessment of the

role of Village Owned Enterprise in improving the rural economy.

According Rangkuti (2008: 19), corporate or organizational performance

can be determined by a combination of internal and external factors. Both factors

should be considered in the SWOT analysis. SWOT analysis compares the

external factors that are opportunities and threats with internal factors that are

strengths and weaknesses. The combination of internal factors with external

factors are:

1. SO Strategy (Strengths Opportunities)

SO strategy is a strategy that is based on the way of thinking object,

namely by using all the power to seize and take advantage of opportunities

as much as possible.

2. ST Strategy (Strengths Threats)

Strategy ST is a strategy that uses the strength of the object to overcome

the threat.

3. WO Strategy (Weaknesses Opportunities)

This WO strategy is based on the utilization of existing opportunities by

minimizing existing weaknesses.

4. WT Strategy (Weaknesses Threats)

The WT strategy is based on defensive activities and seeks to minimize

existing weaknesses and avoid threats.

RESEARCH FINDINGS

Potential of Pakis Village

1. Patirtan Kahuripan

Patirtan Kahuripan is located in the suburb area of Pakis Village, Trowulan

District. Patirtan Kahuripan is a source of continuous flow of water even during

the dry season. Patirtan Kahuripan is Begawan Tunggul Manik petilasan, a poet in

the Majapahit Kingdom. The mystical springs outlet is so that these springs are

trusted by the surrounding community has a property in curing various diseases.

When the water is washed to the face will make our face young and also if we

shower with springs that make us quickly can match. Many activities of religious

ritual activities are done here and patirtan kahuripan also has a promising natural

scenery. This place has the potential to become a promising tourist attraction.

2. Tomb of Patih Angkot Boto

Makam Patih Angkot Boto is located in Pakis Village, Trowulan District.

He is the Patih of Minak Jinggo King from Blambangan Kingdom captured by

Majapahit Kingdom, because the Blambangan King rebelled during the reign of

Queen Kencono Wungu.

3. Tomb of Panji Karang of Pakis village

Tomb of Mbah Panji Karang Pakis Village is located in Pakis Village,

District of Trowulan. According to stories and beliefs. Community, he was a

tumenggung during the Majapahit Kingdom.

4. Fiberglass craft center

Various types of handicrafts from fiberglass produced by Pakis Village

craftsman, including souvenirs, caligraphy, trophies, food models and children's

toys. The handicraft of fiberglass in Pakis village started around the mid of 90's.

At that time, some residents attended free training of ceramics and ceramic skills

from Mojokerto Regency Government. From this training, some villagers of Pakis

then continue until now.

5. Banyu urip ritual tour

Banyu urip ritual tour is one of the tourist sites in the village of Pakis is

crowded visited by many people, both from the community of Pakis Village itself

or even people outside Mojokerto. The public believes that water in banyu urip

ritual tours is a source of livelihood. Some even believe that if someone drinking

the water it will recover from the disease and or ageless. Although the actual ritual

banyu urip tour is one of the media for us to be more able to blend or get closer to

nature.

6. The plan to build Surya Majapahit World Peace Park (TPDSM)

Pakis Village will be transformed into a revitalization center of Majapahit

culture and conservation forest by Surya Majapahit institution and East Java

Provincial Government in the future. The plan of this project will take trillion

rupiah. It is, therefore, expected to bring great benefits to society at large. This

TPDSM development plan is not merely a development project but rather a public

awareness of the importance of history as the foundation of nationalist

nationalism and as a marker of the continuation of previous civilizations. The

selection of location in Pakis Village is based on the history where the kingdom of

Majapahit kingdom which capitalized in Trowulan moved the location up to

twelve times according to the number of kings / ran and in the village of Pakis is

the palace of the kingdom to VIII and there the king with the nickname Brawijaya

I (Sri Kertawijaya) led Majapahit. Moreover, both the Surya Majapahit

Foundation and the East Java Provincial Government hope that this project could

have a positive impact on the economic growth of the people in the surrounding

area and the wider community. Deddy Endarto as the head of the historical

research team as well as the consultant at the Department Tourism of East Java

stated that "Our hope, people's economy can increase. Not only the community in

Trowulan area but the people of Mojokerto regency in particular and East Java in

general as well as the world of Indonesian tourism nationwide. In essence, the

archipelago re-discovered its heyday ". Certainly this great discourse is a very

tempting potential for the people of Pakis Village that can be managed by Village

Owned Enterprise Pakis Village.

Village Owned Enterprise is a locomotive-level economic development

locomotive in the village. Therefore, the government should encourage the

legality of Village Owned Enterprise. Village Owned Enterprise Pakis Village has

obtained the legality of the village with the legalization of Village Regulation

(Perdes) Pakis Kec. Trowulan Kabupaten Mojokerto No. 3 year 2016 concerning

the Establishment of Village Owned Enterprise. In addition to Village Owned

Enterprise managers and supervisors, a Decree (SK) has been made by the village

head. Based on Perdes No.3 of 2016 it is stated that the Village Owned Enterprise

management should not come from elements of village apparatus, BPD or

members of the village head's family. This is intended to maintain the

independence of Village Owned Enterprise management. Village Owned

Enterprise Manager is selected for 3 years term and when replaced there must be 1

person from the old manager who remains in the Village Owned Enterprise

management. However, managers may be reimbursed before the term expires if

they pass away, withdraw, be found to have deviated Village Owned Enterprise

management or have not performed for 6 consecutive months.

Village Owned Enterprise Manager holds Annual Members Meeting at the

end of each year as a forum of accountability report of the Manager as well as

preparation of strategic plan of Village Owned Enterprise Empowerment.

However, because, it was only established ± 1 year old, Village Owned Enterprise

of Pakis Village is not too well known citizens. Based on survey results, residents

who know the existence of Village Owned Enterprise Pakis Village only about

50%.

The initial capital of Village Owned Enterprise of Pakis Village originally

came from the grant program of Jalan Menuju Mandiri and Sejahtera (JALIN

MATRA) consisting of Rp 100,000,000, - originated from East Java Provincial

Government (Pemprov Jatim). Based on the agreement, the fund of Rp

10,000,000, - used for the operation of Village Owned Enterprise and Rp

90,000,000, - is used for saving and loan capital. Meanwhile, for 2017 Village

Owned Enterprise Pakis Village receives a capital injection of Rp 50,000,000, -

from Pakis Village government taken from the Village Fund (DD). The plan will

be used to develop a savings and loan business unit.

The form of village involvement in the supervision of Village Owned

Enterprise includes the village secretary occupying the position of the verification

team of savings and loan activities. Meanwhile, for the head of the village served

as the supervisor of the road of Village Owned Enterprise activities and BPD

(Village Consultative Board) served as a builder of Village Owned Enterprise.

The Village Owned Enterprise's own office has also stood to be one location with

the village office. However, because the activities are still small so that managers

are rarely in the Village Owned Enterprise office, the majority are still done at

home. Up to now, the honor received by each Village Owned Enterprise

management is Rp 100,000 per month.

Village Owned Enterprise business activities for the moment that are

savings and loan and PPOB (Payment Point Online Bank). The initial capital of

savings and loans for the first time is Rp 90.000.000, - channeled to 4 pokmas

(community groups) consisting of a collection of mothers. Each pokmas consists

of 8-10 people. The amount of credit granted per person ranges from Rp 500,000,

- to Rp 3,000,000. Pokmas is entirely from the village community of Pakis. Loans

granted to communities in the form of business development credit (productive

economic credit). Services provided to each Pokmas is 1.5% per month or 15%

per annum with a loan term of 10 months. Meanwhile, each pokmas is charged an

administrative fee of 1% of the loan amount and is paid at the time of

disbursement. On the other hand, pokmas also must deposit frozen deposits, ie

savings that must be paid by members or prospective members who get a loan

from Village Owned Enterprise of 5% of the loan value and will be given after the

member repay the loan or can be drawn by the Village Owned Enterprise if the

member at maturity still have arrears to Village Owned Enterprise.

The Village Owned Enterprise loan is only used to finance productive

economic activities that are considered feasible. Lending is only given in groups

through pokmas with joint responsibility system. In a joint responsibility system

all decisions must go through a deliberative process and be decided jointly.

Therefore, it is decided together, the consequences of the decision must also be

shared. Yet, it can be exemplified as if there is one member in a group that

suffered congestion in loan repayment, then the other group members must cover

the arrears / congestion on the loan. Services amounting to 1.5% of the loans

granted to pokmas are income for the Village Owned Enterprise. Distribution of

revenue earned by Village Owned Enterprise is at a maximum of 30% for

operational costs (honorarium, office station, office household, member deposit

service, etc.), and the development of Village Owned Enterprise's businesses and

enterprises at least 70%.

Distribution of Operating Income (SHU) Village Owned Enterprise Pakis

Village is 35% for working capital, 30% for management fund, supervisor and

supervisor, 10% for development and training costs, 15% for community services,

and 5% for social funds. For accounting recording done by Village Owned

Enterprise of Pakis Village is still very simple, that is only record receipts,

expenses and balances only. Meanwhile, the detailed records of loans granted to

pokmas are carried out on credit cards and savings / saving cards held by Village

Owned Enterprise administrators.

DISCUSSION

The existence of Village Owned Enterprise is regulated in Law no.

32/2004 on Regional Government, Law no. 6 Year 2014 on Village and Village

Ministerial Regulation No. PDTT. 4 Year 2015 on the Establishment,

Management, Management and Dissolution of Village Owned Enterprises. As an

economic institution, Village Owned Enterprise is built on the initiative of citizens

and adheres to an independent principle. Village Owned Enterprise differs from

economic institutions in general, as it only focuses on improving the welfare of

villagers, as stated by the PDTT Village Ministry, where Village Owned

Enterprise must have the following characteristics: "Owned by the village and

managed jointly. The business capital comes from the village including the village

fund and from the community through capital participation. It is based on the

principles of kinship and cooperation and is rooted in the values of the community

(local wisdom). The field of business undertaken is based on village potential and

market information. The Village Owned Enterprise workforce is the work force in

the village. Benefits gained to improve the welfare of rural communities and

capital accompanists. Decision-making and problem solving are conducted

through village meetings. Village Owned Enterprise rules are run as village

policies. Facilitated by central, provincial, district and village governments. The

road BUM Desa is supervised jointly by the Village Government, BPD and

members ".

Village Owned Enterprise is basically a pillar of economic activity in the

village that serves as a social institution (social institution) and commercial

(commercial institution). Village Owned Enterprise as a social institution must

take sides with the interests of the community through its contribution in the

provision of social services. While as a commercial institution aims to seek profits

through the supply of local resources (goods and services) to the market. This is in

accordance with the purpose of establishing a Village Owned Enterprise in

general, namely: (1) Improving the Village's Economy, (2) Increasing Village's

Original Income, (3) Improving Management of village potentials in accordance

with community needs, and (4) Becoming the backbone of growth and equity of

village economy. All of the above can be done by optimizing the potential owned

by the village, either the potential of natural resources, human resources,

infrastructure resources and structural resources.

The results of the research have shown that the existence of Village

Owned Enterprise in Pakis Village proved able to increase the original income of

Desa (Village revenue) Pakis. Village revenue Pakis increased by 8.5% compared

to the previous year (2016), from Rp 157,000,000 to Rp 170,500,000.-. Surely the

amount of increase in village revenue of 8.5% is a considerable number,

considering the new Village Owned Enterprise is established for ± 1 year. Based

on the observation of the researchers, of course, Village Owned Enterprise Pakis

Village business activities can still grow more rapidly. There are still some

potential villages that have not been included in the Village Owned Enterprise

business unit, among them the management of the Majapahit Kingdom heritage,

the glass fiber craft, and the World Peace Plans Surya Majapahit (TPDSM).

If the potential of the village is well managed, then, it can be ascertained

that the income of Village Owned Enterprise and Village revenue will also

increase. One of the important things that Village Owned Enterprise needs to do is

to improve the business governance as well as the financial statement. It is

intended that Village Owned Enterprise in the future can access capital from

related financial institutions. Because of course Village Owned Enterprise will not

be able to be great by itself without any help from other parties. Surely, such a

step can not be done instantly. Managers and supervisors and supervisors of

Village Owned Enterprise must also get coaching and training either from the

local government or from academics to be able to run and raise the Village Owned

Enterprise well. Based on the mutual agreement contained in the Articles of

Association and Bylaws (AD / ART) Village Owned Enterprise (SHU) Village

Owned Enterprise Pakis Village allocation of 35% for working capital, 30% for

management fund, supervisor and supervisor, 10% for training and coaching fee,

15% for services pokmas, and 5% for social funds. However, for the allocation of

social funds has not been channeled in 2016 because based on the agreement of

Annual Members Meeting of social funds will be given at the end of 2017 or in

2018. Therefore,nominal could become larger.

Table 1.SWOT Analysis on the Role of Village Owned Enterprise at Pakis

Village in Improving Village’s Economy

InternExtern

Strength (S)- Potential of natural

resources such as water resources

Weaknesses (W) Village Owned Enterprise

managers are not experienced in managing profit-oriented and social

- Tourism potential in the form of graves of Majapahit kingdom members

- Fiberglass craft center- The plan to build Surya

Majapahit World Peace Park (TPDSM)

businesses Lack of guidance from the

village government as village government knowledge of Village Owned Enterprise is also lacking

Lack of capital to develop Village Owned Enterprise

Absence of experts in giving guidance on developing Village Owned Enterprise

Opportunities (O) Profitable

investment from Mojokerto regency, East Java provincial government and private parties to promote tourism potential in Pakis Village

Market potential from natural resources and tourist attractions that can be optimized

Support from the village government, Mojokerto and East Java Provincial Government in developing the potential of Pakis Village

S-O Strategies Creating a business unit in

the form of Bottled Drinking Water (AMDK) whose source is derived from Patirtan Kahuripan and the source of Banyu Urip like other AMDK producers

Arrangement of better, tidy, orderly and attractive of tourist sites (graves) without diminishing the sides of its sanctity.

Development of centers / shopping centers fiberglas to be able to display souvenirs typical Pakis village in the form of fiberglass

If TPDSM has been established then Village Owned Enterprise together with the village government should build a food court with an interesting layout and menu. It is intended that tourists who visit do not need all the way to be able to relax and enjoy the food after they are satisfied around the tourist sites and historic sites Majapahit Kingdom

Establishment of

W-O Strategies Coaching and strengthening

training of Village Owned Enterprise both from the local government and academia for the manager, supervisor and supervisor of Village Owned Enterprise

Submission of funds to third parties to increase the Village Owned Enterprise's capital

Optimizing the performance of Village Owned Enterprise with technology development

Procurement of expert resources

Development of a savings and loan unit

partnership business with other parties

Establishment of a Village Owned Enterprise information service center

Threats (T) Loans which have

been given to pokmas have congestion

Village Owned Enterprise managers are reluctant to develop Village Owned Enterprise because the nominal incentive received is very small

S-T Strategies Strict enforcement of rules

concerning at least 70% of Village Owned Enterprise revenue is used for capital cultivation

Implementation of 5c (character, capacity, capital, condition, collateral) and 7p (personality, party, purpose, prospect, payment, profitability, protection) analysis to prospective borrowers

Village Owned Enterprise management incentives will increase as Village Owned Enterprise grows

W-T Strategies Cooperation ties with

Dinas Pariwisata, Dinas Koperasi and UMKM or other development agencies

Provision of access to information both in the areas of activity and the Village Owned Enterprise financial statements online in order to increase community and stakeholder trust

CONCLUSION

Based on the results of data analysis, it can be concluded that the existence of

Village Owned Enterprise can contribute to the improvement of the rural

economy. It can be seen by the increase in Village revenue by 8.5% of the profit

of Village Owned Enterprise. From Village revenue of Rp 157,000,000.00 in

2016, increased to Rp 170,500,000.00 in 2017. The operating income is obtained

through savings and loan activities. The contribution of 8.5% is a significant

number seeing the period of establishment of Village Owned Enterprise that is

relatively quite new, only one year. Based on the observation of the researcher,

there are still many potentials that have not been developed by Village Owned

Enterprises such as the Majapahit Kingdom heritage tourism area, fiberglass craft

center, and Surya Majapahit World Peace Park (TPDSM). If the potential of the

village is well managed, then it is certain that the income of Village Owned

Enterprise and Village revenue will also increase even more.

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