Home Affairs Ministry Explains New Profit-Sharing Fund Scheme for Regions

The Ministry of Home Affairs (Kemendagri) has explained changes to the Natural Resource Profit-Sharing Fund (DBH) scheme in Law No. 1 of 2022 on Financial Relations between the Central Government and Regional Governments (HKPD). Under the new regulations, DBH recipients are no longer limited to producing regions but also include directly impacted regions and processing regions. According to Horas Maurits Panjaitan, Secretary of the Directorate General of Regional Financial Development at the Ministry of Home Affairs, the main principle of DBH distribution remains the by origin approach, based on the origin of the natural resources. “Producing regions will still receive the largest portion, whether mining areas, oil and gas wells, or forest concession areas,” Maurits said at the National Development Orchestration Forum as part of the Appreciation for High-Performing Regional Governments 2026 in the Kalimantan Region recently. However, he continued, the new regulations expand the scope of DBH recipients by including categories of directly impacted regions and natural resource processing regions. According to Maurits, directly impacted regions are areas that do not directly produce natural resources but receive the effects of exploitation activities. Examples include regions bordering mining areas or exploitation zones that experience external impacts such as pollution, environmental damage, and infrastructural burdens from industrial activities. “This includes regions traversed or directly bordering and affected by natural resource activities, even if they are not producers,” he stated. Blora is an example of a region that can be categorised as directly impacted. In addition to impacted regions, the new rules introduce the category of processing regions, namely areas where natural resources are further processed, such as nickel smelter zones, oil refineries, or other mining product processing centres. Nevertheless, Maurits said that the status of processing regions does not automatically entitle them to the same DBH portion as producing regions. “We are concerned about the assumption that having a smelter or processing automatically grants a share like producing regions. That is not automatic,” he remarked. According to Maurits, the government is currently preparing follow-up government regulations (PP) to clarify indicators and variables for determining impacted and processing regions. He stated that support from regional governments will be very important, especially in the reconciliation and validation of data ahead of the full implementation of the new scheme in 2027. Besides changes to recipient categories, the DBH calculation mechanism has also been revised. In the old system, calculations still used a projection approach, but now the government uses the basis of actual receipts from the previous year or t-1 realisation. With this new system, the DBH amount is deemed more certain because it uses real receipt data. The government is also preparing derivative rules regarding the underpayment mechanism for DBH. Currently, Maurits said, regulations in the form of Ministry of Finance Regulation (PMK) No. 120 have been issued, and the central government is processing the Minister of Finance’s decision as the basis for disbursing underpayments in the 2026 fiscal year for 2024 obligations. Maurits added that implementing the new scheme requires more detailed data readiness from regional governments so that DBH calculations can be carried out more accurately and transparently. “The key is that the data used is based on realisation, and data reconciliation will be very important,” he said.