Ranking Analysis of Village Owned Enterprises/Joint Village Owned Enterprises

Abstract

This paper reviews the ranking formula used to evaluate the performance of Village-Owned Enterprises (BUM Desa) and Joint Village-Owned Enterprises (BUM Desa Bersama) cited from The Minister of Village, Disadvantaged Regions, and Transmigration Decree Number 145 of 2022, which focuses on balance in weighting assessment aspects. The analytical outcomes denote an inequity in the allocation of peak scores amongst business units, which could potentially affect the final ranking results. Processing/Manufacturing Business Units, Village Financial Institutions (LKD)/Savings and Loans, Agricultural Cultivation, and Tourism exhibit different distributions of maximum scores, which potentially lead to disparities in performance evaluations. Furthermore, this document also identifies issues in the incorporation of indicator priority scales, particularly related to the assessment of collectability in Village Financial Institution (LKD)/Savings and Loans Business Units, which may deviate from recognized credit quality assessment standards. These findings suggest the need for a review of the Minister of Village, Disadvantaged Regions, and Transmigration Decree Number 145 of 2022 on the Ranking Formula for BUM Desa, by making improvements to the ranking guidelines, including fair and representative score distribution across all business units and adjustment of indicator priority scales to accurately reflect the operational conditions of Village-Owned Enterprises (BUM Desa) and Joint Village-Owned Enterprises (BUM Desa Bersama). Recommendations in this document contribute to existing literature by offering insights into the significance of equitable and balanced ranking as the foundation for the development and sustainability of Village-Owned Enterprises (BUM Desa) and Joint Village-Owned Enterprises (BUM Desa Bersama) in providing benefits to rural communities.