Home Affairs Ministry Encourages Regions to Implement Creative Financing
Jakarta (ANTARA) - The Director General of Regional Financial Development at the Ministry of Home Affairs, Agus Fatoni, is encouraging local governments to implement creative financing amid global uncertainties and regional fiscal limitations.
According to him, regions cannot solely rely on transfer funds from the central government but must seek alternative financing sources to ensure development continues.
“If we want to produce something different, it must be done in a different way. Therefore, if regions want to change and have better funding sources, they must continuously make breakthroughs and innovations,” said Fatoni in his statement in Jakarta on Sunday.
This effort is pursued by strengthening supervision, installing transaction recording devices, expanding tax payment services, and exploring new tax and levy potentials in accordance with regulations.
Additionally, the digitalisation of tax and levy management needs to be strengthened to curb leakages. Thus, services become easier, more effective, and efficient, while regional revenues can be monitored in real time.
Secondly, local governments need to optimise the management of Regional Owned Enterprises (BUMD). Fatoni mentioned that of the 1,097 BUMDs across Indonesia, fewer than half are able to provide profits for the regions.
Therefore, BUMDs need to be strengthened according to their respective potentials, ensuring the professionalism of management as well as improving guidance and supervision. Fatoni also suggested that regions form BUMDs in potential sectors, such as food, tourism, drinking water, and energy.
The third step, added Fatoni, can be taken through the optimisation of Regional Public Service Agencies (BLUD). BLUDs such as hospitals, community health centres, and schools can become sources of revenue if managed flexibly and professionally.
“If the BLUD performs well, it can sustain itself and even generate revenue, thereby reducing the burden on the regional budget,” he stated.
Fifthly, the optimisation of Corporate Social Responsibility (CSR) funds from private companies, state-owned enterprises, or BUMDs. According to Fatoni, the utilisation of CSR will be more effective if coordinated by local governments and directed towards priority programmes, such as poverty alleviation, stunting prevention, inflation control, housing improvements, and community empowerment.
Additionally, it is important for local governments to enhance cooperation between regional governments and businesses (KPDBU). This scheme is seen as capable of accelerating the development of infrastructure, hospitals, street lighting, markets, and various other public services through business financing support.
Fatoni gave an example where this scheme has been implemented by one region to build street lighting. The impact has been economic growth, development of MSMEs, and improved security quality.
He added that other financing sources that can be optimised include zakat, infak, and sedekah through the National Zakat Amil Agency. These funds can be optimised to support social programmes, such as poverty alleviation, education, health, and improving uninhabitable housing.
Furthermore, creative financing can also be carried out through regional loans, bonds, and sukuk to finance productive projects and infrastructure, while still adhering to prudent principles. Inter-regional cooperation also needs to be strengthened, particularly in area development, public services, and cross-border development. He hopes that various such schemes can encourage fiscal independence and accelerate regional development.
“Regions cannot work alone. There must be collaboration, both with businesses, other local governments, and funding sources outside the regional budget,” he concluded.