Indonesian regional leaders challenge revenue-sharing formulas

Indonesian legislators and regional leaders are raising concerns regarding the distribution of Revenue Sharing Funds (Dana Bagi Hasil or DBH) and the overall reduction in regional transfer allocations.

During a DPD RI Committee IV meeting, legislator Andhika Mayrizal Amir questioned Minister of Finance Purbaya Yudhi Sadewa over the formula used for DBH. Amir highlighted a significant discrepancy in Central Sulawesi, noting that while the province contributes approximately Rp300 trillion in mining taxes, it receives only about Rp200 billion in DBH—less than one percent. He argued that under the Law on Financial Relations between the Central Government and Regional Governments (UU HKPD), producing regions are entitled to a 16 percent share to ensure local communities benefit from resource exploitation.

Simultaneously, regional governments are facing budget constraints due to a projected decrease in Central Government Transfers (TKD) in the 2026 APBN, which is set at Rp692.9 trillion, a 24.7 percent drop from 2025. In Siak Regency, Riau, local officials reported that unpaid DBH from 2023 and 2024 totals approximately Rp489.9 billion, an amount acknowledged as debt by the Ministry of Finance. These funding delays and cuts are reportedly forcing local governments to postpone infrastructure projects and cut operational spending.