Critique of the Indonesian Omnibus Law Regime: Misguided Interpretation in Narrating “Village Owned Enterprises”

Abstract

The COVID-19 pandemic led the Indonesian government to initiate the Omnibus Law, which has impacted all Indonesian legal frameworks, specifically in regard to economic law. As mentioned in the Governmental Regulation Number 11 of 2021, one breakthrough that has been proposed by the Government of Indonesia to accelerate economic growth is the narrative of Village-Owned Enterprise (or BUMDes). However, the regulation has become a polemic as it has deviated from the essence of Indonesia’s economic democracy. While the Constitution of Indonesia has clearly mandated the development of Indonesia’s economy through cooperativism, the government is instead focused on capital accumulation in the development of BUMDes. This chapter sheds light on the concept of BUMDes and how the village's economic independence can be achieved through law. This research article expounds on the subject in question in seven consecutive narratives. First, it explains the general background of the omnibus in lieu of law. It then expounds on the sudden shift that occurs in village economic policy because of the economic shock introduced by the COVID-19 pandemic. It then explains the original design of economic democracy in Indonesia’s constitution. The fourth part elaborates on the structure of village-owned enterprises (BUMDes) as shaped by relevant regulations while the fifth part explains BUMDes’ status as a legal entity and a relevant problem regarding it. The last part presents cooperatives as a healthy alternative to and a recommended framework for BUMDes. The research finds that BUMDes was constructed to be similar to a limited company and is focused on the capital dimension and concluded that a reflection on cooperatives as values and institutional ideas is needed to construct BUMDes as an economic tool truly based on cooperativism.