MANAGERIAL PROBLEMS AND REGULATIONS DISHARMONY IN REGIONAL OWNED ENTERPRISES: CASE STUDY OF INDONESIA BANKING SECTOR

Abstract

Regional-Owned Enterprises (BUMD) plays a vital role in the economic development of a region due to its ability to function as an income contributor while implementing public service obligations. However, there are various managerial problems associated with BUMD due to the ownership structure and disharmony of regulations. This study, therefore, aims to analyze the problems associated with ownership structure, in implementing BUMD functions, and regulatory disharmony in the financial sector. Data were qualitatively obtained from Bank Jabar Banten, through in-depth interview with BUMD management and policymakers. In addition, the descriptive analysis was used to answer the research questions. The result shows that for a company's decision-making process to run effectively, at least one local government with a dominant stake needs to be utilized. Shareholders also need to reduce the dividend payout ratio in order to support the implementation of the BUMD's dual function. Meanwhile, the Financial Services Authority needs to harmonize regulations in the financial sector with Local Government Laws in order to guarantee practices that support the welfare of the community.