Village treasury lands (tanah kas desa) originate from the colonial era and usually comprise a
few hectares that remain under the control of the village government. Village Law No. 6/2014
allows villages to manage their own assets, including village treasury lands, for common welfare
and the benefit of the most vulnerable groups of the village. Ministry of Home Affairs Regulation
1/2016 stipulates three relevant formats of village land use: rental, cooperation in joint ventures,
and Build Operate Transfer/Build Transfer Operate (BOT/BTO).
Land is a strategic resource on the Indonesian island of Java, which has a large rural population.
The most common plot sizes for farmland are small and can hardly sustain the lives of their
owners and are increasingly transformed to serve industrial and infrastructure purposes. For
this reason, ensuring the optimal use of village treasury lands is an important policy objective.
Sidomulyo and Bonorowo Villages in Kebumen District have applied the rental format for their
village land and leased the land to poor farming households. Tlogojati and Beran Villages in
Wonosobo District engaged in business cooperation, while villagers in Sukoharjo Village in
Wonosobo District applied the BOT format when building and operating a local market.
A comparative analysis of experiences in these five villages showed that the rental to farmers
in Sidomulyo and Bonorowo provides the lowest gross income to the leaseholders—between
IDR 2.6 and 2.8 million per year, from which input costs, rental fees, and labor fees must still be
subtracted. Incomes from the cooperation with a tea plantation in Tlogojati provided as much as
three times the income, and small businesses in Beran provided the village with over 20 times
the income of leaseholders.
It is therefore recommended that restrictive Articles 14–16 of MoHA Regulation 1/2016, which
stipulate that cooperation in joint ventures and BOT/BTO models can only be considered
when village budgets are insufficient, be dropped. Instead, the regulation should introduce a
new paradigm for village treasury land utilization: encouraging village entrepreneurship.
Entrepreneurship efforts might also involve a role for the private sector, especially when the
scale of business exceeds the resources owned by a single village.