BSKDN Chief Says Innovation is the Answer to Regional Fiscal Challenges
The Head of the Agency for Domestic Policy Strategy (BSKDN) of the Ministry of Home Affairs, Yusharto Huntoyungo, has asserted that innovation is the primary answer to the fiscal challenges currently faced by local governments.
He explained that the fiscal pressure facing local governments demands the emergence of various policy breakthroughs and governance improvements. The continued high dependency on regional transfers, coupled with the limited capacity of Regional Original Income (PAD) in several areas, makes innovation an urgent necessity.
“In a situation like this, innovation is no longer a creative choice, but a survival strategy. We no longer measure the strength of a region by the size of its budget, but by its ability to endure with limited resources. Innovation is the only way to transform limitations into capacity,” said Yusharto in a statement in Jakarta on Wednesday.
He made these remarks during the kick-off of the “2026 Regional Innovation Index (IID) Assessment” at the BSKDN Command Centre, Jakarta, on Tuesday (23/6).
Furthermore, Yusharto stated that the IID serves not only as an instrument to measure innovation performance but also as a means to build the capacity of local governments to be adaptive to development dynamics. Strengthening a culture of innovation is key to improving governance, public services, and regional development amidst increasingly complex fiscal pressures.
“This activity is not merely a technical coordination forum, but a strategic instrument to ensure that innovation truly becomes part of the local government system,” he said.
He noted that local governments are currently in the implementation phase of the 2025-2029 National Medium-Term Development Plan (RPJMN), which demands real transformation. With more than 90 per cent of public services managed by local authorities, innovation has become a mandatory mechanism to ensure services remain relevant.
“Without innovation, bureaucracy only produces routines, not solutions,” Yusharto remarked.
Additionally, he highlighted the ongoing development disparities between regions, noting that innovation is required as a corrective instrument to accelerate equitable development and strengthen local potential. According to him, innovation must be understood as an instrument for economic transformation, rather than just an administrative task. Therefore, regions are encouraged to improve governance, simplify services, and build an adaptive work culture.
He also emphasised the importance of the IID as a national learning system that enables the exchange of best practices between regions. In 2025, approximately 36,000 innovations from 531 regions were recorded; however, challenges remain regarding quality, consistency in reporting, and the availability of actionable data.
“What we need is not just a high quantity of innovation, but innovation that is measurable, replicable, and has a real impact,” he said.
BSKDN is also encouraging the replication of innovations so that best practices do not remain confined to the local level. He noted that replication can accelerate policy adoption and serve as a form of efficiency amidst fiscal constraints.
“No region will progress alone, and no innovation should stop at a single point of success,” Yusharto concluded.