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Tommy Anggriawan, Bambang Santoso Haryono and I Gede Eko Putra Sentanu/ JIAP Vol. 8 No.

1 (2022) 82-89

JIAP Vol 8, No 1, pp 82-89, 2022


© 2022 FIA UB. All right reserved
ISSN 2302-2698
e-ISSN 2503-2887
Jurnal Ilmiah Administrasi Publik (JIAP)
U R L : h t t p s: / / j i a p . ub . a c . i d / i nd e x. p hp / j i a p

The Role of Village Fund Policy to minimize the Impact of Covid-19: An Evidence
from Indonesia

Tommy Anggriawan a, Bambang Santoso Haryono b, I Gede Eko Putra Sentanu c
abc
Universitas Brawijaya, Malang, East Java, Indonesia

AR T IC LE IN FO R M A T IO N AB S TR AC T

Article history: The village fund policy is one of budgeting mechanism promoted by central
Date Submission: 10 February 2022 government of Indonesia for village government to maximize the development in
First Revision: 23 March 2022 village level. Although some literatures have confirmed the village fund policy
Accepted: 04 April 2022 contribution for village development, however the current situation of Covid-19
Available Online: 27 April 2022
pandemic has generated the demand for village fund policy to minimize the impact
of the pandemic. This research is intended to explore the role of village fund policy
to minimize the impact of Covid-19 in Indonesia by using desk study toward set of
current literatures. The result of this study confirms that there is a shift of principle
for allocation of village fund policy from the long of range social and economic
impact before the pandemic to the shorter impact during pandemic situation. The
new principle has also enable the village government to perform the effective way
to minimize the Covid-19 Pandemic impact.
Keywords: village fund policy, village
development, Covid-19, pandemic
INTISARI
Aspek keuangan telah dianggap sebagai salah satu instrumen penting yang
menentukan keberhasilan kebijakan. Kebijakan dana desa merupakan salah satu
mekanisme penganggaran yang diusung oleh pemerintah pusat Indonesia agar
pemerintah desa dapat memaksimalkan pembangunan di tingkat desa. Meskipun
beberapa literatur telah mengkonfirmasi kontribusi kebijakan dana desa untuk
pembangunan desa, namun situasi pandemi Covid-19 saat ini telah menghasilkan
permintaan kebijakan dana desa untuk meminimalkan dampak pandemi. Penelitian
ini dimaksudkan untuk mengeksplorasi peran kebijakan dana desa untuk
meminimalkan dampak Covid-19 di Indonesia dengan menggunakan studi pustaka
terhadap kumpulan literatur terkini. Hasil penelitian ini menegaskan bahwa ada
pergeseran prinsip pengalokasian kebijakan dana desa dari dampak sosial dan
ekonomi jangka panjang sebelum pandemi ke dampak yang lebih pendek selama
situasi pandemi. Prinsip baru ini juga memungkinkan pemerintah desa melakukan
cara yang efektif untuk meminimalkan dampak Pandemi Covid-19.

2022 FIA UB. All rights reserved.

1. Introduction government, so that all village in remote areas has their


own capability to develop its potential (Ministry of
In 2014, the elected president of Indonesia, Joko finance Indonesia, 2020). The existence of village fund
Widodo, has managed to modify the method of fiscal policy also become a pivot point to decrease the
transfer from central to village government. This decision dependency of village government toward the local
is intended to strengthen the financial support of village government (Zeho, Prabowo, Mahadiansar and Sentanu,
———
Corresponding author. Tel.: +62-819-3917-1527; e-mail: tommyanggriawans@gmail.com
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Tommy Anggriawan, Bambang Santoso Haryono and I Gede Eko Putra Sentanu/ JIAP Vol. 8 No. 1 (2022) 82-89

2020). Under this circumstance, the autonomous sphere The shrinking of poverty and unemployment rate
for village government is inevitable strengthened because have proven that the village fund policy generates
the intergovernmental network between village and local positive impact toward the development. At least, it has
government is not a subordinate relationship (Hariyati, worked under the stable environment before the
Venusita, dan Agustin, 2017). pandemic occurred. However, since the Corona virus
The law number 6/ 2014, government regulation disease or notoriously known as Covid-19 occurred and
number 60/2014, and ministry of village’s regulation reaching Indonesia in early 2020, the situation is
number 11/ 2019 as the prominent backbone for village completely different.
fund policy implies that the village fund policy is In the middle year of 2020 and early 2021, the
designed to decrease the poverty, enhance community situation in Indonesia has turned into unpredicted
empowerment, promoting infrastructure development, circumstance, the virus is easily transmitted to
and fostering the economic growth through village owned unprepared society and resulting an emergency situation
enterprise. Within few years, after the village fund policy within few months. This situation challenged every units
has been implemented, numerous report has confirmed its of government entities to maximize its financial sources
impact either in social as well as economic contribution. effectively. It reduces the social interaction and economic
Tangkumahat, Panelewen & Mirah (2017) through activity, especially in local and traditional level.
their research reports, that village fund in Pineleng Consequently, the poverty and unemployment rate in
districts, Minahasa has contributes toward the growth village area is constantly increase significantly. Related
local economy. Furthermore, Kurniawan (2020) also to this phenomenon, the central government released the
confirms in his research that the village fund policy also regulation called as law number 2/ 2020 as the viable
gives a positive impact toward the infrastructure alternative which is shifting the use of village fund policy
development. Although in his research the significant from the sources of development in village level to the
benefit of infrastructure are not elaborated economically. instrument to minimize the impact of Covid-19.
However, from the social perspective the contribution of Furthermore, the ministry of village’s regulation
infrastructure is difficult to be neglected. Beside these number 7/ 2020 has settled the important priority of
studies, numerous research have indicated their similar village fund for minimize the Covid-19 pandemic. This
tone for their findings such as Bili and Rais (2017); Sulila paper intended to reveal on how is the role of village fund
(2019); Putri, Wardiyanto, and Suaedi (2020); or policy to minimize the impact of Covid-19. By using the
Joetarto, Setiawan and Farida (2020). desk study toward set of current literatures and theoretical
The official data released by The Ministrial of approach, this inquiry is expected to illustrate viable
Village, Development of Disadvantaged Regions and exposure of village fund policy’s contribution based on
Transmigration indicates constant progress of per-capita public policy and social economic analysis during the
income (from village owned enterprise), the decrease on pandemic. It is important to recognize the specific benefit
unemployment rate and poverty in village region as of village fund policy during the pandemic since the
illustrated in the following figure 1. financial sources is become one of determining factor for
policy succeed.
Rate Of P overty and
Unemplyment in Village Areas of 2. Theory
Indonesia
2.1 The Nexus between Financial Sources and Policy
Poverty Unemployment Rate Succeed
14.21 14.11 13.90
15 13.20 One of the oldest literature of public policy implies
that the financial aspect will significantly determine the
10 policy success. Although, it is not guaranteed that all
4.93 policy with sufficient financial sources will always lead
4.35 4.01 3.72
5 to positive results. The study conducted by Songling et al
(2018) explores to what extent the dependence between
0 policy succeed and financial support. Furthermore, Dewi,
2015 2016 2017 2018 Muluk and Hermawan (2021) in their paper confirm the
importance of budgeting allocation for policy and
Figure 1 Rate Of Poverty and Unemplyment in program implementation. Most of study’s result shows
Village Areas of Indonesia the high intensity of correlation between policy practice
Source: National Statistics Agency of Indonesia, and financial flows around them. The financial source
2018 will enable every unit of government to run the strategic
movement correlated to the overall purpose. However,

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Tommy Anggriawan, Bambang Santoso Haryono and I Gede Eko Putra Sentanu/ JIAP Vol. 8 No. 1 (2022) 82-89

the budgeting mechanism should be maintain in situation, the constant progress of society’s welfare is
appropriate and high credibility rules (OECD, 2020). demanded, therefore they might consider the long-term
In contrast with this statement, some of government impact.
organizations with bureaucratic disease will be The table 1, demonstrates four scenarios of policy
vulnerable toward the corruption, collusion or nepotism. benefit that might be gain positive contribution for
These kind of phenomenon are frequently leading to the society. These scenarios will be used as an analytical tool
failure of the policy either in a planning process or on its to assess the shift of village fund policy implementation
implementation phase. Then the next important before and during the Covid-19 Pandemic. By this
proposition is how the policy determined as success or classification, all program and allocation of village fund
failed policy. It is easy to recognize the policy success the policy will labelled from the first until the fourth
policy outcome can be valued in economic perspectives. scenarios. In addition to these scenarios, the policy
However, the challenge then comes from the policy with makers should completely realize the right use of specific
non-economic output or when it emphasizes on the social benefit in a right time, for instance during the critical
benefit rather than economic contribution such as disaster situations they should consider the short-term policy
management or climate change policy. impact rather than the longer ones. While in a normal
Perhaps, the analysis of social cost-benefit might situation, the constant progress of society’s welfare is
become the viable option offering the ex-ante and ex-post demanded, therefore they might consider the long-term
appraisal then compare them in a similar way (GGGI, impact.
2018). In a most fundamental approach the basic ideas on
relies on the economic and social benefit bounded in a 3. Research Method
certain timeframe, for example the economic benefit in This article is constructed based on the literature
short term might be looks more interesting rather than study approach which is administered through the recent
short term in social benefit. Conversely, the long term of publications regarding the village fund application as part
social benefit looks more important rather than the long of financial resources to minimize the impact of COVID-
term of economic benefit (Weimer, 2014). These 19. Schwade and Schubert (2018) illustrates the design of
scenarios commonly has calculated by using certain the literature study that is comprised of several phases. It
mathematical equation, considering the net present value consist of the definition of review scope as the primary
and final assessment Banerjee, Cicowiez and Moreda step where the focus and limitation of the study should be
(2017). settled properly. Then followed by the conceptualization
However, the basic principle of social cost-benefit of selected topic which is one of essential part to correlate
analysis might be illustrated in a following table. the logic of framework and the existing thought from the
Table 1 Four Scenarios of policy benefits literature. Furthermore, the identification of database will
guarantee the availability of information sources.
Social Benefit Economic Benefit Yet, the next phase will be the literature search
intended to strengthen the thesis statement which decided
The first The second earlier. In this phase, the researcher will attempt to find
Short Term scenario (short scenario (short any possibilities whether the finding will support the
term of social term economic thesis statement or contradictive with them. All of these
benefit) benefit)
phases should be conducted before a comprehensive
Third scenario Fourth scenario analysis commenced.
Long Term (long term of (long term of
social benefit) economic benefit)
Source: Weimer (2014)
The table 1, demonstrates four scenarios of policy
benefit that might be gain positive contribution for
society. These scenarios will be used as an analytical tool
to assess the shift of village fund policy implementation
before and during the Covid-19 Pandemic. By this
Fig. 1 Literature analysis phases
classification, all program and allocation of village fund
Source: Schwade & Scubert (2018)
policy will labelled from the first until the fourth
scenarios. In addition to these scenarios, the policy Regarding the process of literature analysis
makers should completely realize the right use of specific described in fig.1, this research attempt to gather the data
benefit in a right time, for instance during the critical from various reputable sources, including scientific
situations they should consider the short-term policy journal, factual news as well as official document
impact rather than the longer ones. While in a normal published by public institution. In addition to these data

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Tommy Anggriawan, Bambang Santoso Haryono and I Gede Eko Putra Sentanu/ JIAP Vol. 8 No. 1 (2022) 82-89

sources, the contribution from theoretical exposure will policy is underlined in two important subject, first the
also not be ignored, particularly from the public policy village fund management and second is policy control.
and rational economic perspective. In the first phase of implementation, there are at
Most of research paper discussing about fiscal least 473 village leaders have been convicted in to the
budgeting instrument will commonly involve its village fund corruption and infringements (Diantoro,
mathematical equation or at least its statistical analysis. 2020). Furthermore, some cases have reported the
However in this study, the focus of research is exploring difficulties of village government to manage village fund
the contribution of village fund policy to minimize the policy in a more effective way (Syafingi et al, 2020).
impact of Covid-19 pandemic, particularly how it may be However, the frequency of these matters has shrunk due
useful in critical or emergency situation. Thus, the to the revision of the system. Thus, the central
discussion section of this paper is limited to the government might consider if the village fund policy
contextual approaches illustrating the shift contribution might become the effective method to developing the
before and during the pandemic occurred. remote areas.
Although this paper will not mainly uses quantitative Before the pandemic occurred the main allocation of
attributes, but the feature of literature study will enable village fund policy has been channeled into three main
this paper to grasp any results of quantitative channels. It comprised of first, fulfilling the basic need of
measurement or even statistical analysis from other village such as development of basic health services,
sources. This stage will make the result of this paper integrated health center for infant and toddler, and
becoming more than a theoretical motion, and it may development of early child education. Second,
become a preliminary point for further study. In short, the development of strategic infrastructure for instance,
finding of this research is expected to provide viable primary and secondary road, basic utilization of local
exposure based on public policy and social economic farmers, sanitation infrastructure, and clean and fresh
analysis. water. Finally, the village fund policy also be allocated to
the development of village potential, including economic
4. Result and Discussion development, capacity building, as well as local
It is almost impossible to explain in a comprehensive empowerment.
way the overall situation before the Covid-19 Pandemic Meanwhile under the Covid-19 pandemic, the
without bordering them in a specific topics. However in implementation of Village government regulation
contrast, if the topic has been settled after the pandemic number 60/ 2014 has claimed to be inappropriate to the
then the finding will be narrowed by the significant result, emergency situation. Accordingly, It was leading to the
because it is difficult to observe the topic when there are emergence of Village government regulation number 11/
no significant alteration. Therefore, the logic behind the 2019 (later replaced by Village government regulation
description to illustrate findings of this paper is lied on number 7/ 2020) which is prioritizing the village fund for
the illustration of early portraits of village fund policy minimize the impact of Covid-19. Under this newest
particularly before and during Covid-19 pandemic. In regulation, there are two prominent channels, including
addition to this logic, it will present the data commenced first, the public health and second the social security. The
by the policy alteration and its impact. Therefore, in a public health has become the new government concern
normative perspective it may looks as policy analysis since the pandemic has spread in almost all region of the
result, but in a more detailed look the comparative value country.
between them will be emanated. Beside this regulation the central government has
released the law number 2/ 2020 which is become the
4.1 Early Portraits of Village Fund Policy: Before and strategic policy in national level suggesting the public
During COVID-19 Pandemic budget use for Covid-19 mitigation. The emergence of
law number 2/2020 is become one of strategic movement
Numerous critiques have been expressed when the
forcing all government units to allocate some of their
concept of village fund policy stated. The critiques comes
financial resources to minimize the impact of Covid-19.
from the member of house representative of Indonesia,
Accordingly, the central, local, as well as village
conveyed it would be difficult to control the internal
government are demanded to revise their previous
management of village fund policy because Indonesia has
budgeting plan by considering to minimize the impact of
large number of village. There are at least 81.616 villages
Covid-19 in their region.
in Indonesia and each of them will have between 500
million to 1.500 million IDR (around 35 thousand – 100 4.2 Comparative Analysis Before and After Pandemic
thousand USD) depends on the number of society and the
wide of village area (Ministry of Finance Indonesia, Regarding the findings illustrated in the previous
2021). The primary critiques regarding village fund section, it can be inferred that there is a shift between the
prior situation to pandemic and the current pandemic

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Table 2 Comparative Analysis of Key Initiative Policy Correlated to Village Fund


before and during the Pandemic
General
Law and Regulation Key Initiative of Policy Suggestion Expectable Impact
Phase
• Infrastructure development • long-term social benefit
Law Number 6/ 2014
• Non-infrastructure development • Long-term social benefit
about Village
• Community empowerment • Long-term economic benefit
• Maximize the public service • Long-term social benefit
Government Regulation • Community empowerment and
• Long-term social benefit
number 60/ 2014 about community based program
Village Fund • Financing the village’s • Long-term social and
Before the
Pandemic development priority economic benefit
• Financing the village development • Long-term social and
priority program economic benefit
Village Ministry
• Financing the village development
Regulation number 11/
in terms of community • Long-term economic benefit
2019 about the main
empowerment program
allocation of village fund
• Financing the strategic action to
• Short term social benefit
solve village’s problem
• Refocusing program and budgeting • Short term social and
re-allocation for Covid-19 economic benefit
Law number 2/ 2020 • Establish Covid-19 response
• Short term social benefit
about country’s fiscal acceleration task force
policy and public finance • National economic recovery • Long-term economic benefit
for Covid-19 pandemic • Establish social safety net • Short term social benefit
mitigation • Direct allocation for low income
society (those of receive economic • Short term economic benefit
impact of Covid-19 pandemic)
During the
• Financing the public health
Pandemic
Village Ministry infrastructure (emergency car, • Short-term social benefit
Regulation number 7/ basic health protocol, and etc)
2020 about priority • Facilitating social protection
allocation of village fund through food and groceries • Short term social benefit
supports
• Specific allocation for non-natural
Finance Ministry • Long term social benefit
disaster management
Regulation number 50/
• Direct transfer for social and • Short term social and
2020
economic protection economic benefit
Source: Analytical result, 2021
state in terms of village fund policy usage. According to Theoretically, either infrastructure or non-infrastructure
the law number 6/2014, government regulation number development is essential action to support the social and
60/2014 as well as the village ministry regulation number economic welfare, while the community empowerment
11/2019, the main principle of policy initiative is to foster contributes for long term economic progress of village
the continuous development. Thus, these regulations society Kurniawan (2020).
promoting the long term economic and social impact for In a more detailed look the government regulation
village society. number 60/2014 and village ministry regulation number
Misno (2015) in his publication coveys the village 2011/2019 provides more detailed exposure rather than
fund policy intended to support the long term goals law number 6/2014 which tend to express the policy
correlated with minimize the development gap among practice in general way. In the government regulation
village and increase the welfare status for marginalized number 60/2014 and village ministry regulation number
society. This assertion is relevant with the findings of this 2011/2019, the village government has encouraged to put
paper where the Law number 6/2014 suggest the special concern regarding the situation and potential of
allocation of village fund should be prioritized for their village. Therefore they are expected to perform the
infrastructure development, non-infrastructure specific community based program, delivering the village
development and community empowerment. development priority such as irrigation, and maximize the

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Tommy Anggriawan, Bambang Santoso Haryono and I Gede Eko Putra Sentanu/ JIAP Vol. 8 No. 1 (2022) 82-89

public service. All of these policy suggestions emphasize central government has decided that the implementation
on long term social and economic advantages. of law number law number 2/ 2020, village ministry
In 2020, however, the decision of central regulation number 7/ 2020, and finance ministry
government to release the law number 2/ 2020, village regulation number 50/ 2020 will be extended until 2022.
ministry regulation number 7/ 2020, and finance ministry Accordingly, the program refocusing and budget
regulation number 50/ 2020 has generated different reallocation will also be continued by following those
orientation. It mainly discuss about the pandemic laws.
situation which is emphasized on short term impact either In rationally choice perspective, this decision might
in economic and social contribution Dewi, Muluk, and be questionable especially when the government manage
Hermawan (2021). The disposition of government is to continue prolonging short term economic and social
concerned for the disaster management rather than benefit under nearly normal situation. However the
chasing the constant development because the situation Covid-19 pandemic is highly unpredictable situation, the
has turned to be a critical circumstance. Most of risk to claim for the government succeed to control the
development plan written previously has been revised pandemic and followed by early decision to adapt with
under the program refocusing and budgeting reallocation. normal situation might resulting serious consequence.
The table 2 illustrates the comparative analysis of the Some of prominent evidences have been shown such as
policy suggestion before and during the pandemic. when the second wave of pandemic explode in India right
Based on the illustration described in the table 2, it after the government claims their succeed of Covid-19
can be seen that many of village government actions has mitigation Bismas (2021) or when the new variant of the
been shifted from long term social and economic benefit virus emerging and resulting multiple wave of pandemic
to the shorter one. This phenomenon is relevant to the in Brazil (Campos et al, 2021).
theory of social cost-benefit conveyed by Weimer (2014), Both of the case in India and Brazil provide a
particularly when the government might be prefer to take warning signal for other country to persist with
the short term benefit under critical situation. In this case emergency situation policy until the pandemic totally
the pandemic situation forced the public institution to vanished. Thus, although the current government
take the relevant decision which is prioritized on short decision seems to contradict with rational choice
term economic and social impact rather than the longer perspective, however, it may minimize the value of
ones. disaster risks. By this consideration, the future projection
of village fund usage is suggested to be allocated in policy
4.3 A Future Projection and program with short term benefit until the Pandemic
Although some research might consider that short is totally over. Alternatively, the government may also
term economic and social impact are also needed by the attempt to focus on both policy with long term and short
public institution even when the government is not in a term benefit in balance proportion at once. On this
critical situation such as direct transfer money, certain occasion, the village fund usage should be allocated for
subsidy, or short term government loan (Wang et al, only specific priority because their limited amount.
2020; Steenblik, 2018). However, they are commonly
5. Conclusion
applied as the complemented programs. In other words,
the short term social and economic benefit in this According to the series of discussion illustrated in a
occasion will merely complete the other policy or previous section, it can be inferred that before the
programs which is prioritized for long term development. pandemic occurred, the village fund policy has
This situation is slightly different when the contributed to accommodate the long term social and
government demanded to put most attention for short economic benefit carried by village government. The law
term benefit under the real critical situation. The leader of number 6/ 2014, government regulation number 60/2014,
public institution may likely chase the quick stability and ministry of village’s regulation number 11/ 2019 as
rather than the long term development. In this section, the prominent backbone for village fund policy implies
this paper will illustrate the scenario for the future that the village fund policy is designed to decrease the
projection correlated to the current government allocation poverty, enhance community empowerment, promoting
of village fund. This projection is described according to infrastructure development, and fostering the economic
the result of conceptual analysis of the current trend of growth through village owned enterprise.
Covid-19 Pandemic in Indonesia. However in the mid of 2020, the situation in
In the last quarter year of the 2021, the trend of Indonesia has turned into unpredicted circumstance, the
Covid-19 Pandemic in Indonesia has slowing down. The corona virus is easily transmitted to unprepared society
government units whether in central, local, and village and resulting an emergency situation within few months.
level have been proven their performance during the This situation has challenged every units of government
critical situation in the previous phase. However, the entities to maximize its financial sources effectively.

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Tommy Anggriawan, Bambang Santoso Haryono and I Gede Eko Putra Sentanu/ JIAP Vol. 8 No. 1 (2022) 82-89

Regarding this situation, the government release law Well-Being. Journal of Economics and Policy
number 2/ 2020, village ministry regulation number 7/ (JEJAK), 13(2), 345-366.
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regulations has enable the village government to Indonesia. Jurnal Forum Ekonomi, 23(3), 513-
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situation. It helps to convert the policy with long term Ministry of Finance Indonesia. (2020). Pengertian dan
social and economic benefit to the shorter one. Therefore, Tujuan Dana Desa. https://djpb.kemenkeu .go.id
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