Jakarta development plans constrained by efficiency measures
Jakarta’s plan to become one of the world’s 20 global cities by 2030 has prompted Governor Pramono Anung to strive to equip the capital with facilities and infrastructure befitting a world-class city. A number of infrastructure projects are being pursued amid tightening central government finances. This situation has inevitably affected regional finances, which are already consumed by annual activities ranging from civil servant salaries and allowances, flood management, waste management, various government activities and more.
Several flagship projects are to be carried out, such as the construction of public transport facilities to encourage residents to shift from private vehicles to mass transit. These flagship projects are a concrete effort to tackle persistent congestion caused by the growth of motor vehicles. Other priorities include flood and tidal flood management through the National Capital Integrated Coastal Development (NCICD) project to protect Jakarta’s land from seawater threats, waste handling and management in the capital, access to education and health, civil servant spending and public services, and the development of social spaces in Jakarta.
The existence of these development projects inevitably affects the Jakarta regional budget (APBD), which is currently being tested by the efficiency measures imposed by the central government. This efficiency factor has caused Jakarta to lose fresh funds amounting to more than Rp15 trillion sourced from revenue-sharing funds (DBH) from the central government. The amount is so large that the funds not disbursed to Jakarta are more than double the 2026 West Sumatra regional budget of Rp6.4 trillion.
In 2026, Jakarta’s regional revenue is projected to come from regional taxes of more than Rp49.8 trillion, regional levies of more than Rp2.2 trillion, other legitimate regional income of Rp4.6 trillion, and regional asset management of more than Rp876 billion. This regional revenue will be used to fulfil work programmes designed in 2025 for implementation in 2026, such as personnel expenditure of Rp21.4 trillion, goods and services expenditure of Rp28.9 trillion, subsidy expenditure of Rp5.2 trillion, social assistance expenditure of Rp4.5 trillion, grant expenditure of Rp2.8 trillion, and interest expenditure of Rp120.4 billion.
This situation has forced the Governor of Jakarta to think hard about finding new sources of income to support the development projects. Various approaches have been initiated, including using bus stops as promotional spaces along Jalan Sudirman and increasing regional levies through services and other means. Efforts are also being made to increase dividends from a number of regional-owned enterprises, and most recently to boost revenue through the development of the creative economy industry, which is designed to add to Jakarta’s coffers.
Meanwhile, a quick method being floated to obtain fresh funds is the issuance of regional bonds targeted to generate Rp5.6 trillion in fresh funds to be carried out in 2027. Initially, Pramono Anung only targeted Rp3.5 trillion through the issuance of regional bonds. However, as time went on, the amount of money to be borrowed through the regional bond issuance scheme increased to Rp5.6 trillion.
The fresh funds are planned to be used to extend the Jakarta LRT line from Kelapa Gading-Manggarai to the Dukuh Atas area, estimated at Rp2.7 trillion. In addition, the fresh funds will be used for the health sector, namely continuing the construction of Sumber Waras Hospital amounting to Rp2.9 trillion, and a number of other development projects.
The loan is planned to be repaid by the Jakarta provincial government along with interest within a period of seven years. This means that if the loan is disbursed in 2027, it will only be fully repaid by 2034. If Governor Pramono Anung does not continue his leadership into a second term, namely 2029-2034, this loan will become a burden for the next Governor of Jakarta, so it must be comprehensively assessed from now on.
Bank Indonesia warns of risks. The plan to issue regional bonds has drawn attention from the Bank Indonesia Representative Office for Jakarta. Deputy Head of the Bank Indonesia Representative Office for Jakarta, Bambang Arianto, warned of the risks related to the Jakarta provincial government’s plan to issue regional bonds to finance a number of future development programmes. The Jakarta provincial government must be able to manage the risks associated with these bonds going forward and must prepare a study on the payment scheme for the regional bonds to be issued. The bond funds will be used for the construction of various other infrastructure in Jakarta and will certainly generate returns for the region. Most importantly, the financing incurred can be covered by the income generated from the development. The Bank Indonesia representative stated that the proposed regional bonds could actually support the regional budget for infrastructure development needs, provided they can be repaid on time.