Home Affairs Minister urges local governments to be efficient and creative in seeking funds to prevent PPPK layoffs
Jakarta (ANTARA) - Home Affairs Minister Tito Karnavian has urged local governments (pemda) to implement efficiencies and creatively seek income to prevent the termination of employment contracts (PHK) for government employees with work agreements (PPPK).
Tito conveyed this following the implementation of the scheme capping regional personnel spending at a maximum of 30 per cent of the regional revenue and expenditure budget (APBD) 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 efficiencies in other expenditures. I am concerned that they have not done so yet. Efficiencies, for example, in meetings, official travel, meals,” he said after a meeting with Commission II of the House of Representatives (DPR RI) at the parliamentary complex in Senayan, Jakarta, on Monday.
Tito’s statement also responds to concerns that local governments may be forced to terminate PPPK contracts due to budget constraints. Members of the commission handling domestic governance raised this issue during the meeting.
According to the Home Affairs Minister, efficiency is one of the steps that local governments can take. In this regard, he cautioned regional heads to allocate budgets wisely.
“There are regions that can implement efficiencies, and those efficiencies can cover the payment for PPPK. There are some like that,” he stated.
In addition to efficiency, he also urged local governments to be creative in seeking new revenue so as not to rely solely on transfers to regions (TKD). He cited examples such as revitalising Regional Owned Enterprises (BUMD) and micro, small, and medium enterprises (UMKM) to increase local own-source revenue (PAD).
“That is the role of regional heads. If it’s just 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 continued, can also be maximised through taxes on large companies such as restaurants and hotels. These taxes must be ensured to enter the Regional Revenue Agency (Dispenda).
On the other hand, Tito stated that Article 146 paragraph (3) of the UU HKPD allows for adjustments to the percentage of regional personnel spending. Such adjustments are decided by the finance minister after coordinating with the home affairs minister and the minister for administrative and bureaucratic reform.
Nevertheless, the Home Affairs Minister emphasised that such adjustments are a last resort. The Home Affairs Ministry will first monitor the capabilities of local governments. Tito will also deploy teams to the regions.
“Do not expect solutions like this last one. Do not head there first before trying. We also want to see which regional heads are capable. There are regional heads who might just give up immediately. Well, let their people see why they chose them, not creative,” he said.