Optimizing Public Resources: Circular Letter on Utilizing Regional Property and Village Assets

The utilization of Regional Property (Barang Milik Daerah, BMD) and Village Assets has become a pivotal topic in the effort to increase village economic independence through the formation of the Merah Putih Village/Urban Village Cooperative (KDKMP). The official Circular Letter (SE) regarding this utilization emphasizes that the use of government-owned assets is not intended to transfer ownership. Instead, it aims to support development goals through efficient, transparent, and measurable usage. This policy ensures that public resources act as a catalyst for the entire village community’s prosperity.

Policy Background: Driving Local Economic Leverage

This policy originated from the need to increase economic leverage at the local level without adding burdens to regional government budgets. Assets owned by the state and the village serve as resources that can be optimized to accelerate the growth of village-based enterprises. The primary objective is to create a sustainable business ecosystem, increase village income, and strengthen the institutional capacity of villages to manage assets professionally.

Crucially, the SE highlights that asset utilization does not change ownership status. Even if BMD is leased to KDKMP or village assets are used for operations, the title remains with the regional government or the village. This approach maintains the stability of asset ownership while providing practical space for local economic development.

Scope of Asset Utilization

The scope covers various activities relevant to the KDKMP business plan. BMD assets can be allocated through lease agreements with authorized approval, while village assets are utilized based on clear proof of ownership and annual usage determination by the village head. Key activities include:

• Village Pharmacies: Utilizing space for community-based health services managed by KDKMP.
• Warehousing: Storage facilities to support the supply chain for local village products.
• Logistics: Infrastructure support such as roads and distribution facilities to streamline market access.

Dual Mechanisms for Implementation

The utilization follows two main pathways, each with specific requirements and oversight mechanisms:

1. Utilization of Regional Property (BMD)

BMD can be leased to KDKMP through formal agreements. This pathway focuses on providing physical facilities for medium to long-term operations. Key aspects include:

• Formal Lease Agreements: Defining rights of use, maintenance standards, and risk management.
• Usage Restrictions: Ensuring the asset remains under government ownership and is used strictly for the approved business plan.
• Digital Accountability: Periodic reporting through electronic systems to monitor utilization levels and economic impact in real-time.

2. Utilization of Village Assets

Village assets are managed through a decentralized approach, allowing for local priority adjustments. This includes:

• Annual Usage Determination: The Village Head sets priorities for asset use based on the current development needs of the residents.
• Cross-Level Coordination: Involving sub-district and regional governments to ensure alignment with broader development programs.
• Inclusive Evaluation: Assessing the impact of asset use on public services and village institutional capacity.

The Role of Stakeholders

Success depends on seamless collaboration between various actors. Governors and Regents/Mayors play a coordinative role in identifying and supervising assets. Village Heads are responsible for the annual determination of village asset use. Meanwhile, the KDKMP acts as the business operator, responsible for managing daily activities, maintaining compliance with lease terms, and reporting performance to the village administration and central ministries.

Implementation Schedule and Risk Control

The policy sets strict deadlines, mandating that implementation actions and reporting be submitted by the first week of October 2025. Professional implementation requires accurate asset verification, integrated electronic reporting, and performance evaluation mechanisms to assess social and economic impacts.

While challenges such as legal compliance and transparency exist, the opportunities are vast. These include diversifying village income, improving public services, and strengthening local supply chains. By managing these public resources responsibly, villages can foster sustainable economic growth.

Conclusion

This Circular Letter reflects an affirmative effort to utilize public resources for village prosperity. With clear governance and transparent mechanisms, the utilization of BMD and village assets has the potential to become a major driver for local economic development through KDKMP. Support from regional governments and active community participation are the prerequisites for achieving these policy goals sustainably.

Visit the Village Regulations page for official access.