22 Years Of Decentralization, Sri Mulyani Reveals 65 Percent Of Regional Finances Still Supported By The Center
JAKARTA - The implementation of fiscal decentralization in Indonesia has been going on since the enactment of Law Number 25 of 1999 concerning Financial Balance between Central and Regional Government. With this decentralization, development in the regions is not only the responsibility of the central government but also local governments.
Minister of Finance (Menkeu) Sri Mulyani Indrawati said that currently, regional development funding is still very dependent on the allocation of transfers to the regions and village funds (TKDD) from the central government, while regional revenue (PAD) is still a smaller portion.
"So far, funding has really depended on TKDD with a portion of around 65 percent. Meanwhile, PAD contributed around 23 percent and 8.4 percent came from other income. Apart from that, the regions still need financing, "he said in a press statement, Monday, March 22.
Minister of Finance Sri Mulyani added that during the pandemic, the PAD component in the form of regional taxes and levies (PDRD) had decreased. This is because the impact of the pandemic has also affected economic activity in all regions.
For this reason, he said the Ministry of Finance is continuously committed to increasing local taxes and levies (PDRD) as the main component of local revenue. In the process, it will still pay attention to the harmony of the national taxation system and the conditions of the national economy.
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For information, the Job Creation Law number 11 of 2020 mandates several points related to PDRD, namely the elimination of nuisance permit fees as a form of support for simplifying business licensing.
It was also stated that the PDRD tariff adjustment by the government for national strategic projects, the ease of providing regional fiscal incentives by regional heads, strengthening the regional draft evaluation scheme and monitoring regional regulations, and supporting budget incentives by the central government to regional governments.
"We will later see how we will try to strengthen the regional government in implementing its PDRD but without causing uncertainty in the investment sector," concluded Sri Mulyani.