‘Satu Desa, Satu Milyar’: Village Law No. 6/2014 as a Rural Financial Development Programme

This chapter describes the introduction process of the Indonesian Law No. 6/2014 (Undang-Undang Republik Indonesia No. 6 tahun 2014 tentang Desa. SEKNEG, Jakarta, 2014), popularly known as Undang-undang Desa (‘Village Law’) which was officially ratified by Parliament in 2014. It highlights the new era of the sharing of power, governance and decentralisation at the village level in Indonesia. The law is based on the notion of the village as a self-governing community with local-level government, which recognises and respects the origin of the village and its indigenous rights. The presentation of the historical context of the new ‘Village Law’ describes the context in which the law has emerged, where the processes of decentralisation and democratisation have played a significant role after the previous first five decades of the country’s political and economic process of centralisation. The phenomena of ‘brain drain’ and ‘capital drain’ from the rural towards the urban areas which have contributed to the decrease of the rural population have further determined the present conditions of village development in Indonesia. In addition to regional development, the disparity between rural and urban infrastructure, especially in health, education and employment, are shown to continue encouraging the migration of people from rural to urban areas. Although, the implementation of the ‘Village Law’ has given new hope to free the villages from the chain of poverty, feudalism, backwardness and exploitation of their natural resources, the chapter points to a chronic problem of the paradigm in rural development in Indonesia, which has also contributed to inequality at the village level, i.e. ‘betting on the strong’. The chapter concludes that the development of social capital is the key to building an integrated infrastructure, in which community-based organisations and institutions are crucial to develop and manage special socio-economic activities promoting the welfare of all members of the community.