THE ROLE AND CHALLENGE OF LABDA PACINGKREMAN ADAT VILLAGE ON THE COVID-19 GOVERNMENT ERA

THE ROLE AND CHALLENGE OF LABDA PACINGKREMAN ADAT VILLAGE

ON THE COVID-19 GOVERNMENT ERA

I KETUT SUJANA

Faculty of Economics and Business, Udayana University

            In the Provincial Regulation of Bali Province Number 4 of 2019 concerning Indigenous Villages in Bali, Labda Pacingkreman Indigenous Village, hereinafter referred to as LPD, is a Village Credit Institution owned by a customary village located in the Indigenous Village Area. The existence of LPDs is getting stronger with the passing of Law (Law) Number 1 of 2013 concerning Microfinance Institutions (LKM). In this Act the existence of LPD is very specific, so its regulation is exempt from the law. This is set out in Chapter XIII of the Transitional Provisions of article 39 paragraph 3 which reads: "The National Rural and Penal Authorization Board as well as any such institution which existed before this Law came into existence, is declared in its existence under customary law and is not subject to this law".

            Before the existence of LPDs was recognized under customary law, where LPDs wanted to be combined with existing legal forms of companies. This can be seen from the Joint Decree (SKB) of several ministers and the Governor of Bank Indonesia. One of the dictum in the Joint Decree is a Micro Finance Institution (LKM) that has not been incorporated, formed at the initiative of the government, regional government, and / or the community such as the Village Credit Institution (LPD) to become a Rural Credit Bank (BPR), Cooperative, Business Entity Village Owned (BUMD), or other financial institutions in accordance with applicable regulations.

However, LPDs in Bali remain unchanged as village financial institutions that have unique characteristics. LPD has a unique governance system including the existence of social control through the election of administrators by the village community (krama) and a supervisory body (village preacher /Jro bendesa exficio to be the head of the supervisory body) chosen by the indigenous villagers, krama, and spiritual control based on for belief in the law of karma. Thus, the existence of LPDs related to their position is indeed not MFIs so they are not subject to SKM and MFI Law. And, LPD is a traditional institution because it is regulated based on customary law.

            The existence of LPDs in Bali has a very clear position as an adat institution in an adat / pakraman village, which has a special financial and economic function generally in an adat village. The first legal basis for the formation of an LPD in Bali is Perda No. 2 of 1988. The regulation states that the LPD belongs to a traditional village that functions as a container for the wealth of a customary village /pakraman. Juridically, the existence of traditional village /pakraman villages is recognized in the 1945 Constitution article 18 letter I which emphasizes that the State recognizes and protects the unity of customary law communities.

               LPD has played a role in supporting various activities in traditional villages including LPD: repairing temple buildings; support ceremonial activities in the temple; help with the costs of human and pitra yadnya ceremonies; and the LPD provides financial assistance and maintenance of the environment and other assistance. LPD management in its operations also refers to the philosophy of Tri Hita Karana, namely the three causes of happiness, namely a balanced or harmonious life attitude between serving God, serving fellow human beings, and loving the natural environment based on sacred sacrifice (yadnya). Therefore, the aim of the LPD is not merely to seek maximum profits but also to pay attention to the benefits for stakeholders.

               In the coronavirus era pandemic 2019-2020 or known as the covid-19 pandemic how many LPDs in Bali had played an active role in alleviating the burden of the community from the impact of covid-19 such as the LPD directly or together with customary village administrators providing basic food assistance to traditional village manners, as well as krama tamiu and tamiu. In addition, the LPD also provides relief to credit borrowing customers, such as relief to delay paying the principal obligations and interest on the loan. This is done in the hope of being able to help ease the burden on society in this pandemic era. During this period, many people did not receive or decrease income drastically, due to layoffs or job losses. Not only are the people affected by this negative impact, but also almost all sectors, including LPD.

            LPD really feels the negative impact of this co-19, such as credit interest income receipts continue to decline, on the other hand the operational expenses that must be released are still relatively large, such as salary costs and Interest expense. On the other hand, the operational activities of LPDs are relatively declining due to the community saving funds in the form of Savings and Deposits decreasing and LPDs also issue more careful credit to the public. This condition resulted in some LPDs taking the policy to employ employees not in full as normal conditions, employees work alternately and the length of work is half a day. The impact and when the end of the co-19 pandemic cannot be ascertained, so the risk faced by the LPD is very heavy. For example, there are indications that people are withdrawing more and more of their savings. This is thought to result in increased LPD liquidity risk which could have an impact that it would be difficult to pay operational expenses or to withdraw funds from community Savings or Deposits. On the other hand, the ability to pay debtors decreases or even disappears altogether, so there are more problematic debtors (default). Challenges like this must also be considered by various parties so that the LPD remains steady.