Observer: South Tangerang's Official Vehicle Rental Scheme Plugs Regional Budget Leaks

Economic and Fiscal Observer from Airlangga University (Unair), Bagas Pradana Wijaya, assessed that the South Tangerang City Government’s (Pemkot Tangsel) policy of allocating IDR 19.95 billion in the 2026 Fiscal Year budget for renting official vehicles is a strategic step in maintaining regional fiscal health. He stated that the mechanism of transitioning from asset purchases to functional utilisation is considered effective in cutting potential long-term budget leakages in the Regional Budget (APBD). He stated that the public needs to view this policy with a comprehensive Total Cost of Ownership (TCO) approach, rather than merely fixating on the macro figures listed in the budget documents. “If the South Tangerang City Government forces itself to buy hundreds of new vehicle units, the initial outlay indeed looks like an investment. However, in the long term, there is a financial iceberg ready to burden the APBD, ranging from aggressive asset depreciation to ballooning maintenance costs,” Bagas said when contacted on Monday (13/7/2026). Bagas explained that in public sector accounting theory, operational vehicles are assets that experience very high depreciation costs, reaching 15 to 20 per cent in the early years of use. Furthermore, entering the fourth or fifth year, the golden phase of vehicle performance is guaranteed to decline drastically. As a result, the burden of maintenance costs and spare parts replacement will spike exponentially. “By choosing a rental scheme, the South Tangerang City Government is actually implementing a risk transfer strategy, shifting financial risk to a third party. Matters such as the decline in the asset’s book value, annual motor vehicle tax payments, vehicle registration extensions, and All-Risk insurance premiums become the full commercial burden of the winning tender vendor,” Bagas elaborated. Furthermore, Bagas assessed that the main advantage of this scheme is the zero downtime clause. This guarantee ensures that bureaucratic mobility and public services in South Tangerang will not be disrupted if a vehicle unit is damaged. “If an official car enters a workshop for periodic servicing or experiences technical issues, the vendor is obliged to provide an equivalent replacement car on the same day. This is an invisible efficiency that is very costly for bureaucratic performance,” he added. Responding to the IDR 2.07 billion increase in the rental budget compared to the previous year, bringing the total to IDR 19.95 billion, the Unair fiscal expert assessed that this fluctuation is still within the bounds of healthy economic rationality. According to him, the increase is proportional to the guarantee of service quality and current market logistics adjustments. “The increase is rational if compensated by a strict strengthening of the Service Level Agreement (SLA). Renting a fleet in always prime condition is far more efficient than the region having to allocate tens of billions in capital for new purchases, which ultimately leaves behind complicated logistics management and used asset auction problems in the future,” he stressed. From an accountability perspective, Bagas reminded that the utilisation of e-purchasing through the LKPP e-catalogue, regulated in LKPP Regulation Number 9 of 2021, is the main key to closing gaps for collusion or price mark-ups. However, Bagas provided a critical note that the accuracy of the policy targets taken by Mayor Benyamin Davnie must be strictly guarded by internal auditors or the South Tangerang City Inspectorate. “The SLA in the cooperation contract must be tightly locked and monitored periodically in the field. Supervision by relevant agencies is necessary so that this IDR 2.07 billion budget increase is truly compensated by accountable vendor performance,” Bagas said. Overall, Bagas concluded that the procurement of operational facilities through a rental scheme is a modern best practice in financial governance. “The South Tangerang City Government’s move is on the right track towards realising a lean, healthy APBD structure focused on public spending that directly touches the community,” he concluded.