Indonesian regional fiscal autonomy and revenue management

Discussions regarding Indonesian fiscal decentralization have focused on both high-level policy reform and local-level revenue optimization.

At the legislative level, officials have called for the central government to grant greater authority and financial resources to regional governments. Proposals include shifting the central state’s role toward regulation and oversight while allowing regions to manage public affairs and improve revenue streams. Specifically, there have been calls to treat Jakarta’s revenue-sharing (DBH) as a strategic agenda through clearer institutional channels and transparent communication.

Recent legislative activity has expanded this focus toward oversight and accountability. Deputy Minister of Home Affairs Bima Arya Sugiarto has urged district-level legislatures (DPRD) to prioritize measurable community impact over simple budget absorption. In Central Sulawesi, officials are pressing the central government to settle approximately Rp 900 billion in unpaid mining revenue sharing, while the West Java DPRD is scrutinizing a proposed Rp 3.4 trillion loan due to declining regional revenue.

Concurrently, local governments continue seeking to strengthen fiscal independence by optimizing regional original income (PAD). In Jayapura, Vice Mayor Rustan Saru has identified optimizing regional levies as a primary pillar for fiscal independence, advocating for professional, integrity-driven management through digital technology. In Surabaya, officials are addressing parking retribution shortfalls—where realizations often fall below 50 percent of targets—by transitioning toward non-cash digital payment systems to prevent leakage, with suggestions to adopt centralized monitoring models similar to those used in Malang.