Home Affairs Minister Instructs Regional Governments to Implement Efficiency to Pay PPPK Salaries and Avoid Layoffs

Jakarta, VIVA – Minister of Home Affairs Tito Karnavian has asked regional governments (pemda) to implement efficiency measures and creatively seek additional income to prevent the termination of employment contracts (PHK) for Pegawai Pemerintah dengan Perjanjian Kerja (PPPK). Tito conveyed this following the implementation of a scheme capping regional employee expenditure at a maximum of 30 percent of the Anggaran Pendapatan dan Belanja Daerah (APBD) starting in January 2027, as regulated by Law Number 1 of 2022 on Financial Relations between the Central Government and Regional Governments (UU HKPD). “They must carry out efficiency in other expenditures. I am concerned that they have not done so yet. Efficiency, for example, in meetings, official travel, meals and drinks,” he said after a meeting with Commission II of the DPR RI at the parliamentary complex in Senayan, Jakarta, on Monday, 30 March 2026. Tito’s statement also responds to concerns that some regional governments may be forced to terminate PPPK contracts due to budget constraints. Members of the commission handling domestic governance raised these issues during the meeting. According to the Minister of Home Affairs, efficiency is one step that regional governments can take. In this regard, he cautioned regional heads to allocate budgets wisely. “There are regions that can implement efficiency, and that efficiency can cover the payment for PPPK. There are some like that,” he stated. Besides efficiency, he also urged regional governments to be creative in finding new sources of income so as not to rely solely on transfers to regions (TKD). He cited, for example, the need to revitalise Badan Usaha Milik Daerah (BUMD) and Usaha Mikro, Kecil, dan Menengah (UMKM) to increase Pendapatan Asli Daerah (PAD). “That is the role of regional heads. If they only do routine work that consumes the APBD, anyone can do it, but how can a regional head have creativity so that they do not burden the people,” Tito remarked. Additional PAD, he added, can also be maximised through taxes on large companies such as restaurants and hotels. These taxes must be ensured to enter the Dinas Pendapatan Daerah (Dispenda). On the other hand, Tito stated that Article 146 paragraph (3) of the UU HKPD allows for adjustments to the percentage of regional employee expenditure. Such adjustments will be decided by the Minister of Finance after coordinating with the Minister of Home Affairs and the Minister of State Apparatus Empowerment and Bureaucratic Reform.