Worried leader: Tito (third from left), with Indian Prime Minister Narendra Modi (centre) and Bali governor I Wayan Koster at the recent G20 Summit in Bali. The minister is unhappy that local administrations had only spent 62% of their annual regional budgets. — Reuters
JAKARTA: Home Minister Tito Karnavian has criticised regional decision-makers for not doing enough to spend funds they have received to speed up investment and economic development.
In a meeting on nationwide investment organised by the Investment Ministry, the home minister complained that several regional leaders had the “wrong mindset” on the economics of budget spending and income.
According to government data, local administrations across the country had only spent 62% of their annual regional budgets as of Nov 25, leaving 278 trillion rupiah (RM79bil) unused.
“I went to the field and met with 548 regional heads. I am worried about how regional heads think and believe. Most regional heads’ mindset on budget income and spending is not what we expect to support investment,” Tito said last Wednesday, adding that spending this year was even further behind schedule than last year.
Factors hindering budget realisation included contracts with year-end payments, project tender delays, a lack of inter-institutional coordination, political disputes between regional administrations and regional councils and even simply “not caring about regional spending figures,” according to the home minister.
Spending needed to be accelerated, he said, as local budgets were imperative for strengthening people’s purchasing power and stimulating private sector activity.
Data from the Home Ministry as of Nov 25 show that Jakarta, North Sumatra and South Sulawesi were among 19 provinces where budget realisation was below the national average. “They (regional leaders) should have gathered regional secretaries, finance agency heads and all bureaucratic heads and checked one by one, where is the low spending in these bodies? What are the problems?” the former police chief said. Sometimes superiors need to exert pressure; if not, they (subordinates) will just be timid.”
Tito also called on regions to generate more income of their own, including through region-owned enterprises, and lambasted regional heads for preferring to just focus on spending money from the central government.
He said regional heads were supposed to manage their budgets like “managing a household”, where income should be greater than spending to create a surplus for investment beyond the planned allocation.
Instead of raising more money through local taxes or fines that would anger the people, he said, regional governments should strive to attract investment from both domestic and foreign firms.
Such measures had become much more effective with the introduction of investment offices at the regional level, from regencies to provinces, he continued, which would streamline licensing through the Investment Ministry’s Online Single Submission system.
However, Tito expressed frustration in this matter with North Sumatra, where he said 97 regencies and 17 cities were not following the guidelines for these offices due to a lack of political will among regional heads.
“These people might not understand the benefits of investment offices, or they understand but feel that these policies are just wasting money from the central government,” Tito continued.
Data from the Home Ministry show that 13 of 34 provinces – including Yogyakarta and North Kalimantan – are categorised as “fiscally weak” due to their overreliance on budget transfers from the central government.
Seven provinces are categorised as “medium” with a balance between budget transfers and accumulated regional income, which includes Riau Islands and West Nusa Tenggara. “Do not ever even think that a region can be developed only through local budgets,” Tito continued. — The Jakarta Post/ANN
