enterprises in regional level (BUMD) are accepted as inefficient enterprises,
especially becoming burden fiscal. Therefore, this paper provides background
research for potential policies to optimize the role of BUMD in dealing to
regional economic development in East Java and discusses (i) the role of BUMD
in an economic activities, and (ii) BUMD performance. Based on the results, all
BUMD owned by Provincial Government show operating in low level of efficiency.
This result has two main implication : (i) associated with public goods,
consumers should pay expensive compensation to get public goods, (ii) BUMD
appear still not effective to influence market fluctuation. There are two
suggestions to optimize the role of BUMD. First, BUMD should improve the management to increase economic of scale.
Second, BUMD in non-strategies sector can be should to avoid an increases