Village-Owned Enterprises, commonly known as BUMDes, were established by the Indonesian government to strengthen rural economies by managing local businesses, utilizing village assets, and creating sustainable sources of income for rural communities. Although many villages have successfully developed BUMDes, others have struggled because of weak management, limited community involvement, and inadequate institutional support. Maloang Village represents one such case, where an enterprise initially welcomed with optimism eventually collapsed despite the village's abundant natural resources.
Recognizing this challenge, researchers from Universitas Pattimura examined why BUMDes Maloang failed and how it could be successfully revitalized. They argue that community participation cannot be separated from local culture, social values, and indigenous institutions. Rather than introducing entirely new organizational structures, village development should build upon the strengths, traditions, and social capital that already exist within the local community.
The research adopted a qualitative approach, using field observations, in-depth interviews, and document analysis in Maloang Village. The study involved 11 key informants, including the village head, village secretary, BUMDes managers, the chairman of the Village Consultative Body (BPD), farmers, and fishermen who had direct experience with the establishment and operation of BUMDes Maloang. The collected data were analyzed through data reduction, presentation, and conclusion drawing to identify the factors behind the enterprise's failure and opportunities for its revitalization.
Village Enterprise Survived Only Two Years
The findings reveal that BUMDes Maloang was established in 2016 with an initial investment of Rp50 million from the village government. The capital was allocated to several economic activities, including:
Revolving business loans for local residents.
Grocery store operations.
Retail fuel sales.
Trading agricultural commodities by connecting local farmers directly with markets.
In 2017, the village government provided an additional Rp100 million, which was used to purchase ten cattle. However, after 2018 no further capital support was provided, and by early 2019, all BUMDes business activities had completely ceased.
Interestingly, the study concludes that the failure was not caused by a lack of economic potential. Maloang Village possesses abundant agricultural and fisheries resources, including coconuts, cloves, nutmeg, cocoa, sago, bananas, and various marine products. Instead, the researchers found that organizational weaknesses and limited managerial capacity were the primary reasons behind the enterprise's collapse.
Five Major Factors Behind the Failure
Based on interviews with community members and stakeholders, the researchers identified five key factors responsible for the failure of BUMDes Maloang.
First, limited managerial capacity among BUMDes administrators. Although many managers had completed high school or university education, they lacked entrepreneurial experience and practical business management skills.
Second, low local purchasing power, which slowed the circulation of capital, particularly in grocery and fuel retail businesses.
Third, underdeveloped marketing networks, making it difficult to consistently sell agricultural products beyond the village.
Fourth, the community's economic orientation remained centered on farming and fishing, with entrepreneurship not yet becoming part of the local culture.
Fifth, BUMDes was still a relatively unfamiliar institution for many villagers. Limited public outreach meant that many community members neither fully understood its purpose nor felt sufficiently involved in its development.
Local Institutions Offer a Sustainable Solution
Instead of establishing new organizations, the researchers propose a revitalization model that strengthens existing local institutions.
According to the study, customary organizations, family clans, churches, and the village government possess strong social legitimacy within the community. These institutions should therefore become strategic partners of BUMDes through cooperative investment and joint business management. Such collaboration would strengthen public trust while encouraging greater community ownership of the enterprise.
Under the proposed model, assets owned by customary institutions, churches, and the village government could be invested to expand BUMDes operations. Business profits would then be distributed through an agreed profit-sharing mechanism: 40 percent for investors and 60 percent for BUMDes. Of the BUMDes share, 50 percent would become Village Original Revenue (PAD), 20 percent would finance operational costs, and the remaining 30 percent would be reinvested to expand business activities.
The researchers also recommend positioning BUMDes as a collecting point for agricultural commodities. Under this arrangement, farmers would sell their products directly to BUMDes at competitive prices, while BUMDes would market the commodities to larger regional markets. This system is expected to create mutual economic benefits for both farmers and the village enterprise while strengthening local agricultural value chains.
Human Resource Development Remains Essential
The study emphasizes that institutional reform alone is insufficient without improving the quality of human resources. BUMDes managers require continuous training in business administration, financial management, production techniques, work ethics, and entrepreneurship.
The researchers suggest that such training should be facilitated by village governments, religious institutions, agricultural extension officers, and other competent organizations. Continuous capacity-building would help transform managerial mindsets from traditional subsistence thinking toward future-oriented entrepreneurship capable of sustaining village economic development.
According to Yance Z. Pariela, Jacobus P. Saija, and Pieter Hendra Manuputty, revitalizing Village-Owned Enterprises requires more than financial investment. Success depends on mobilizing the community's existing social capital, strengthening cooperation among local institutions, and empowering local people to actively participate in village economic development. Such an approach can transform BUMDes into sustainable socioeconomic institutions that improve rural prosperity over the long term.
Author Profiles
Dr. Yance Z. Pariela is a researcher at Universitas Pattimura specializing in rural sociology, community development, and social empowerment.
Dr. Jacobus P. Saija is an academic at Universitas Pattimura with expertise in community development, social institutions, and village development policy.
Dr. Pieter Hendra Manuputty is a lecturer and researcher at Universitas Pattimura, focusing on sociology, community empowerment, rural development, and local institution-based development strategies.
Research Source
Article Title: Community Participation Model Based on Local Potential in the Development (Revitalization) of BUMDes Maloang, East Taniwel District, West Seram Regency
Authors: Yance Z. Pariela, Jacobus P. Saija, Pieter Hendra Manuputty
Affiliation: Universitas Pattimura
Journal: International Journal of Applied and Scientific Research (IJASR)
Volume: 4, Issue 7 (2026)
Pages: 413–428.
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