<![CDATA[Although the number of Village Owned Enterprises (BUMDes) has increased significantly, their contribution to rural economic development remains limited because existing supervision emphasizes administrative compliance rather than organizational performance. This study aims to formulate a performance-based transformation strategy to strengthen the productivity, accountability, and sustainability of BUMDes. A qualitative policy analysis approach was employed by reviewing regulations, literature, and secondary data, complemented by the Urgency Seriousness Growth (USG) analysis, root cause analysis, and Bardach's policy evaluation framework. The findings reveal that the weak performance of BUMDes stems from three interrelated factors: the absence of a national performance based regulatory framework, fragmented performance information systems, and limited institutional capacity and managerial competence. The recommended policy option is a comprehensive systemic reform consisting of the implementation of a Key Performance Indicator (KPI) based governance framework, the development of the SIAB-DESA integrated performance information system, competency standardization for BUMDes managers, and performance-based incentive and disincentive mechanisms. These reforms are expected to shift BUMDes governance from an administrative compliance approach to results oriented management, enabling BUMDes to become professional, productive, and sustainable drivers of rural economic development.]]>
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