Indonesia is a great nation that holds a strong aspiration to prosper\nits people. This awareness must continue to be nurtured. However, it\nmust be acknowledged that today there are three structural problems\ndemanding resolution: political financing, political regeneration, and\nfiscal decentralisation.<\/p>\n
The three need to be unravelled in sequence, because other problems\nsuch as corruption, bureaucratic inefficiency, legal injustice, and\neconomic inequality are in fact merely derivatives of these three\nfundamental issues.<\/p>\n
Yesterday, 17 August 2026, Indonesia turned 81 years old. At such a\nmature age, the relationship between the centre and the regions should\nbe increasingly harmonious: the centre providing guidance, the regions\nlending support, and the people\u2019s welfare continuing to improve.<\/p>\n
Yet the reality of the past two years has shown the opposite\ndirection. The warmth of central-regional relations has dimmed, and\nsigns of tension have become increasingly visible in the run-up to the\nindependence celebrations themselves.<\/p>\n
The most obvious source of tension is the reduction in Transfers to\nthe Regions (TKD). Since Presidential Instruction Number 1 of 2025 on\nbudget efficiency, TKD funds\u2014which include the General Allocation Fund\n(DAU), Revenue Sharing Fund (DBH), Special Allocation Fund (DAK),\nSpecial Autonomy Fund, and Village Fund\u2014have continued to be eroded.<\/p>\n
In 2026, the cuts were recorded at around Rp226 trillion, and based\non the Financial Note of the 2027 Draft State Budget delivered in\nmid-August, the trend of cuts is continuing, albeit slightly\nsmaller.<\/p>\n
Yet for approximately the previous decade, TKD had been relatively\nstable at around Rp900 trillion. It is hardly surprising that a number\nof regional heads have flocked to the Ministry of Finance to voice their\nobjections.<\/p>\n
The Regional Autonomy Implementation Monitoring Committee together\nwith the Indonesian Forum for Budget Transparency have even filed a\njudicial review of Law Number 1 of 2022 on Central-Regional Financial\nRelations with the Constitutional Court (MK).<\/p>\n
Ironically, the major theme put forward by the Chair of the Regional\nRepresentative Council (DPD) at the Annual Session of the People\u2019s\nConsultative Assembly (MPR), which was followed by the Joint Session of\nthe DPR and DPD in mid-August, was \u2018Strong Regions, Sovereign\nIndonesia\u2019. A reminder that regional strength should be the foundation\nof national sovereignty, not a variable sacrificed for the sake of\ncentral budget efficiency.<\/p>\n
This fiscal imbalance is exacerbated by the fact that the majority of\nregional governments still rely heavily on central transfers to finance\nbasic affairs such as education and health, so that cuts to TKD directly\nhit the room for manoeuvre in development at the local level.<\/p>\n
The dissatisfaction does not stop in budget meeting rooms. It seeps\ninto the streets. In various regions, unrest has emerged in diverse\nforms: farmers in North Halmahera blockaded roads demanding certainty\nover copra prices, masses in Gowa demanded the revocation of a regional\nregulation deemed problematic, residents of Taliabu Island rejected the\nunilateral halt of class C mining activities, and clashes marked the\ncommemoration of Aceh Peace Day, which a number of figures read as an\nexpression of dissatisfaction with local leadership.<\/p>\n
These various events have different triggers, but they share a common\nthread: a crisis of trust between the regional public and the\nauthorities\u2014both local and central\u2014who are perceived as increasingly\ndistant from the real needs of the people.<\/p>\n
This phenomenon confirms the core argument of this article: when\nfiscal decentralisation stalls, the state\u2019s capacity to translate good\npolicies into tangible results on the ground is also degraded. However\ngood the policy intentions formulated in Jakarta, they will undergo\nmassive distortion once they come into contact with fiscal and political\nrealities in the regions.<\/p>\n
From the Political Sphere to the Business Sphere<\/p>\n
The derivative problems of the inability to resolve the three\nstructural issues are also clearly visible in the business world. Large,\nwell-established companies with good governance often find it difficult\nto adapt within an unstable political and bureaucratic ecosystem. Yet\nthe engine of economic growth must keep moving amid improvements in\ngovernance\u2014like a ship that must continue sailing while being\nrepaired.<\/p>\n
This situation causes technical policies to change in rapid\nsuccession with a speed and logic that are difficult to predict. Today a\ncompany draws up a business plan based on one regulation; tomorrow a new\npolicy emerges that changes all those assumptions. Before business\noperations have finished adapting, public opinion has already moved on\nsocial media, pressure from community groups has increased, and the\npolitical configuration has shifted again.<\/p>\n
The business world now faces market competition as well as the demand\nto understand policy changes, political dynamics, and the interests of\nstakeholders all at once. This shows that the sources of corporate risk\nincreasingly originate from outside the market mechanism itself\u2014no\nlonger merely because a competitor\u2019s product is cheaper or new\ntechnology is superior, but because of regulatory changes, political\ndynamics, public pressure, and shifts in power networks that influence\ndecision-making processes.<\/p>\n
It is at this point that the role of public affairs finds its\nstrategic position. David Bach and David Bruce Allen, two American\nbusiness strategy academics, call this space the non-market\nenvironment\u2014a situation in which the social, political, legal, and\nregulatory environment determines organisational success as much as the\nmarket itself. This perspective is increasingly relevant as policy\nchanges take place ever faster and involve ever more actors who\ninfluence one another.<\/p>\n
Throughout the first half of 2026 alone, the national policy space\nwas coloured by various dynamics: a surge in world oil prices, the\nformation of a strategic investment holding company, changes in digital\npolicy, adjustments to mining governance, and several cabinet\nreshuffles. All of this shows that the non-market environment has now\nbecome a factor as important as economic indicators in determining\nbusiness direction.<\/p>\n
These changes are taking place alongside a decline in public trust.\nThe Edelman Trust Barometer 2026 recorded that 70 per cent of global\nrespondents admitted difficulty in trusting parties with different or\nchanging views. This condition makes the policy-making process\nincreasingly complex, because government, business, media, communities,\nand civil society organisations all influence one another in the same\npublic space.<\/p>\n
Unfortunately, many organisations still manage public affairs in ways\ninherited from an era when policy changes took place far more slowly.\nStakeholder mapping often stops at a list of official names, an\norganisational chart, or an influence matrix updated once a year.<\/p>\n
Such documents do help identify who has an interest in an issue, but\nthey are not sufficient to explain who actually holds influence when\ndecisions are made.<\/p>\n
A Paradigm Leap for Public Affairs<\/p>\n
For public affairs practitioners, this shift carries major\nconsequences. Their role is no longer merely to maintain good relations\nwith the government or to convey corporate aspirations to regulators.\nThey are required to become strategic environment analysts capable of\nconnecting policy data, media, social networks, communities, and\npolitical dynamics into information that management can use in\ndecision-making.<\/p>\n
It is here that the importance of the public affairs role lies:\ngrounded in strong conceptual and ideological values, it must be able to\nserve as a bridge that harmonises the main stakeholders\u2014namely\ngovernment and political society, civil society and economic\nsociety\u2014towards the nation\u2019s aspiration of shared prosperity.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/public-affairs-notes-on-the-81st-anniversary-of-indonesian-independence-1787025131", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }