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Definition of BUMS and Examples of BUMS

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A business entity is defined as an organization that is structured in managing production factors to gain profit. Another definition of a business entity in the Competent Economics book is a juridical and economic entity that uses production factors to produce goods and services with the aim of making a profit.

Definition of BUMS and Examples of BUMS

Meanwhile, a company is an activity unit that carries out production factor management activities to provide goods and services for the community, distribute it, and make other efforts to obtain profits and satisfy community needs. There are several forms of business entities, including State-Owned Enterprises (BUMN), Private-Owned Enterprises (BUMS), Regional-Owned Enterprises (BUMD), and mixed business entities.

Regarding the discussion in this paper, the authors only discuss Private-Owned Business Entities along with the functions, roles and other things that make up the Business Entity itself.

Definition of BUMS

In general, the definition of a Private Owned Enterprise (BUMS) is a business entity whose capital is owned by a private party owned by one person or several people. BUMS aims to seek optimal profits as possible, to develop its business and capital and create employment opportunities. Apart from playing a role in providing goods and services, private business entities also help the government in efforts to reduce unemployment and contribute to revenue in the form of taxes.

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Based on Article 33 of the 1945 Constitution, privately owned business entities state that the business fields given to private parties The private sector is managing economic resources that are not vital and strategic or that do not affect people's livelihoods Lots. Private Business Entities (BUMS) are divided into two types, namely domestic private business entities and foreign private business entities. The meaning of domestic private business entity is a business entity whose capital is owned by the domestic community. Meanwhile, the meaning of a foreign private business entity is a business entity whose capital is owned by foreign parties.

BUMS function

  1. As a government partner to improve community welfare
  2. As a partner in resource management
  3. Is a dynamist in the community's economy
  4. Providing services to the community

The role of BUMS

  1. As a BUMN Partner
  2. As an addition to national production
  3. As an opening for job opportunities
  4. As an addition to state coffers and a booster of national income
  5. Assist the government in managing and managing economic activities that are not handled by the government.
  6. Assist the government in efforts to equalize income

Characteristics or Characteristics of BUMS

Privately Owned Enterprises (BUMS) have characteristics or characteristics. These characteristics in general are as follows, namely:

  1. Business entities whose capital comes entirely from the private sector
  2. Supervision is carried out hierarchically and functionally by company holders
  3. Looking for maximum profits
  4. Profit distribution is based on having the most shares or capital
  5. Business entities that have legal personality
  6. Run and capitalized by individuals, many people or groups.
  7. Members have voting rights according to the amount of capital/shares
  8. Can sell shares through the stock exchange
  9. The capital can be obtained from financial institutions, whether banks or non-banks.

Characteristics of Private Owned Enterprises (BUMS) based on Ownership, namely:

  1. Individual Private Entity Business
  2. The owner of a business entity is an individual
  3. The owner is the highest holder of power who manages all his business
  4. The running of a business entity depends on individual policies
  5. All responsibilities and risks are those of the individual owner
  • Partnership Private Entity Business
  1. Owner of two or more partnership business entities
  2. The authority of the business entity is determined in the partnership agreement
  3. The progress and decline of a business entity depends on the management of partners
  4. All business entity activities are carried out and directed to achieve mutual benefit

Characteristics of Private Owned Enterprises (BUMS) based on their functions, namely:

  1. Business entities that have the aim of making profits and sharing these profits
  2. As an economic institution that plays a role in providing goods and services which are services to the community
  3. As a dynamist in Indonesian economic life
  4. As a manager of natural and human resources
  5. Government partners in improving community welfare

Characteristics of Private Owned Enterprises (BUMS) based on their capital, namely:

  1. All capital is owned by private parties or entrepreneurs
  2. Loans are obtained from financial institutions, both banks and non-banks
  3. Issuance and sale of shares through the stock exchange
  4. Part of the profits is distributed to shareholders, and the rest is retained
  5. Have reserves for business development
  6. Can issue bonds over a long period of time

Government policy is taken with several considerations, including:

  • To foster creative power and community participation in efforts to achieve prosperity in accordance with the ideals of the Indonesian nation.
  • The limited capital that the government has to explore and process Indonesia's natural resources requires the enthusiasm of private business.
  • Provide opportunities for private companies to expand employment opportunities.
  • Meeting the need for experts in exploring and processing natural resources.

Private companies have now entered various sectors of life, including plantations, mining, industry, textiles, vehicle assembly and others. Private companies consist of two forms, namely national private companies and foreign companies. Examples: national private companies include PT Astra Internasional (managing the car and motorbike industry), PT. Indomobil (managing the car industry), and others.

Examples of foreign companies include PT. Freeport Indonesia Company (United States company that manages copper mining in Papua, Irian Jaya), PT. Exxon Company (United States company that manages petroleum drilling), PT. Caltex Indonesia (a Dutch company that manages petroleum mining in several places in Indonesia) and others.

The existence of these private companies plays a very important role in the economy in Indonesia. The role given by BUMS in the Indonesian economy is as follows.

  • Very helpful in increasing national production.
  • Can create new opportunities and jobs.
  • It really helps the government in its efforts to equalize income.
  • It really helps the government reduce unemployment.
  • Can increase foreign exchange sources for the government.
  • Increase sources of state income through taxes.
  • Helping the government to prosper the nation.

Examples of BUMS forms

BUMS has several forms, namely:

  • Private Company

A form of business entity in which all capital and responsibility is owned by someone personally. So, all risks and business activities are the full responsibility of the entrepreneur. Examples: Lodging, rice mills, department stores, restaurants. To establish a private company, there are no laws that specifically regulate it. However, for some types of business, individual companies may only carry out their activities after obtaining permission from the local government.

The advantage of a private company is that the owner is free to manage the company according to his views. As a result, owners are required to be creative and work hard. You can enjoy all the benefits yourself. Company secrets can be more secure. When facing problems, owners can make decisions quickly.

The owner does not need to consult because only he has the authority to decide. Weaknesses of sole proprietorship: Limited manpower and capital capacity because it is only founded by one person. The continuity of an individual business entity is less guaranteed because it only depends on a single owner. All responsibilities and risks of individual business entities are borne by themselves, with all assets guaranteed.

  • Firm

An association between 2 (two) or more people who run a business under 1 (one) name and aim to share the profits obtained from the partnership. Usually the people who set up a firm are people who have family relationships. The establishment is carried out before a notary by making a deed of establishment as written evidence. Firms are better than individual companies because they have larger capital and are managed by more than 1 (one) person. Examples: legal consultants and lawyers.

Losses resulting from the actions of one owner are also borne by the other owners because all the firm's risks are shared. If there are differences of opinion between the owners, there is a possibility of disputes arising in such circumstances. It is difficult for the firm to make decisions because there is no agreement between the owners.

The continuity of the firm is more guaranteed because it does not depend on just one person. Work can be divided into leadership, according to the abilities of the owners. Can collect larger capital. The firm's risks are not only borne alone, but are shared by the owners.

  • Limited Partnership (CV)

CV stands for Commanditaire Vennotschaap which comes from Dutch, in Indonesian it is known as a limited partnership. A Limited Partnership is a partnership consisting of several people who run a business and several people who only hand over capital.

People involved in this CV are called allies. There are 2 (two) types of partners in CV, namely:

  1. Active / complementary allies are allies who run / lead a company.
  2. Passive / limited partners Allies who entrust their capital to active partners and are not responsible for running their business.

  • Limited Partnership (PT)

PT is an association between 2 (two) or more people who run their business with capital obtained from issuing shares. Shares are a sign of capital statement at PT. Shareholders or limited liability companies only have capital invested. Profits for the company are given in the form of dividends. PT processing is handed over to the board of directors. In carrying out its duties, the board of directors is supervised by the board of commissioners.

The component that holds the highest power in a PT is the General Meeting of Shareholders (GMS). In the GMS, it is determined how the activities of the business entity will be carried out, appointing, dismissing the directors & board of commissioners and arranging the distribution of dividends to the participants.

Based on its shares, PT is divided into 2 (two), namely:

  • Closed PT

The shares in this PT are limited, there are not many of them & the shareholders usually know each other. Usually this is intended to ensure that the business entity's assets do not fall into the hands of other people.

  • PT Open

In this PT, the shares are listed on the stock exchange. Shares can be owned by the general public & shareholders do not have to know. PT usually writes the abbreviation Tbk (open) after the name of the company.

Types of BUMS

There are 3 (three) types of private companies, namely:

  • National Private Company

A company whose business capital comes from local communities from within the country, for example a national private company, an example of a national private company is PT. Djarum, PT. Indofoot Sukses Makmur, PT. Agung Podomoro Group.

  • Foreign Private Companies

A company whose business capital comes from overseas communities, for example from Japan investing capital and implementing their companies in Indonesia, examples of foreign private companies are PT. CHEVRON, PT. MITSUBHISI, PT. ASTRA, etc.

  • Mixed Private Company

A form of corporate company whose business capital is obtained from cooperation between national (domestic) entrepreneurs and entrepreneurs from abroad. An example of a mixed multinational company is PT. AL AXIATA Group.

Advantages and Disadvantages of BUMS

  • Excess
  1. The way to set up an individual business entity is easier.
  2. Capital fulfillment comes entirely from the owner.
  3. Arranging organizational activities is easier and simpler.
  4. The large owner's dominance means that management is also simple.
  5. The level of taxation is also small, because there is a non-taxable income component (PTKP).
  6. And others.
  • Lack
  1. The liability of a business entity is unlimited, meaning that if a loss occurs, the owner's personal property is also guaranteed.
  2. The amount of capital and management limited to one person will reduce the company's large capacity.
  3. The survival of the company is not guaranteed, this is related to the existence of only one owner at any time the owner is permanently absent or dies, so his successor may not be able to run the company because he is lacking experienced.

Advantages and Disadvantages of the Firm

  • Excess
  1. The amount of capital that can be raised is greater than in individual businesses, so capital needs are more easily met.
  2. All firm owners work together to manage each other so that their attention to the business entity is greater.
  3. Decision or policy making is more rational and accurate because it is carried out by more than one person.
  4. Management capacity is greater due to the division of work among members.
  5. Company survival is more guaranteed.
  6. And others.
  • Lack
  1.  It is very easy and prone to conflict between allied members which results in the dissolution of this business entity.
  2. The owners' liability is unlimited, meaning that all members will be responsible for their personal property if there is a risk of loss to the business entity.
  3. An ally who resigns will have difficulty withdrawing his personal capital.
  4. And others.

Advantages and Disadvantages of CV

  • Excess
  1. Needs in the form of capital are more easily met because they are in the form of a partnership.
  2. The liability of limited/passive partners is limited.
  3. The leadership of a business entity can be carried out by two or more people, making it easier to prepare thorough and accurate plans.
  • Lack
  1.  There is a differentiation in the duties of passive partners not to directly manage the activities of the business entity.
  2. Prone to causing internal conflict among members.
  3. There is unlimited responsibility for active partners.
  4. The survival of CV can be disrupted at any time.
  5. Complex supervision of active allies is required.

Advantages and Disadvantages of PT

  • Excess
  1. The capital collected is greater, namely through the sale of shares.
  2. It is easier to expand your business.
  3. Ability to get better credit.
  4. Limited shareholder liability.
  5. And others.
  • Lack
  1. The shares are easy to trade so it is easy to give rise to speculation.
  2. Company secrecy is less guaranteed because all company activities must be reported to the owners of capital/shares.
  3. The role of shareholders is less concerned about the condition of the company because they prioritize obtaining dividends.
  4. And others.

That's the discussion about Definition of BUMS – Function, Objectives, Advantages, Disadvantages, Examples Hopefully this review can increase your insight and knowledge, thank you very much for visiting.

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