Observers: Vehicle Rental a Strategy for Fiscal Efficiency and Budget Flexibility

Political observer and Executive Director of the Centre for Indonesia Strategic Actions (CISA), Herry Mendrofa, views the South Tangerang City Government’s (Pemkot Tangsel) allocation of Rp19.95 billion for official vehicle rentals in the 2026 Budget Year as a pragmatic fiscal efficiency strategy. Herry explained that by renting, the government avoids the burden of maintenance costs for official cars as assets and can save regional budget funds. “In my view, this can be read as a fiscal efficiency strategy. By renting, the government avoids the long-term burden of maintaining assets that have passed their economic life, while maintaining budget flexibility so it is not locked into large capital expenditures,” Herry said in a statement on Monday (13/7/2026). Herry sees this policy model as a form of fiscal risk mitigation, where rental costs are more predictable and do not add to the fixed asset burden. Furthermore, it allows for adjustments to vehicle needs according to the contract period. Nevertheless, Herry believes the South Tangerang City Government must review its effectiveness and remain dependent on contract transparency and provider accountability. “As well as periodic evaluations to ensure it is truly more cost-effective than purchasing. I think this is important for everyone to understand,” he said. Meanwhile, Economist from Pelita Harapan University (UPH), Tanggor Sihombing, stated that the option of renting official vehicles is more effective and efficient from a budget expenditure perspective. “Rental is very good from a cash flow perspective, as no large initial investment is required. It is also good from a risk management perspective, because the risk will be borne by the service provider, including maintenance costs,” said Tanggor. According to him, to improve accountability, an open tender for the procurement must be conducted. “The use of open e-procurement will increase transparency,” he said. Previously, the South Tangerang City Government’s official vehicle rental budget came under public scrutiny after it reached Rp19.95 billion in the 2026 Budget Year. Based on data from the General Procurement Plan (RUP) of the South Tangerang City LPSE via the data.inaproc.id page, the official vehicle rental budget at the Regional Secretariat in 2026 reached Rp19.95 billion. This value increased by approximately Rp2.07 billion, or 11.6 percent, compared to the 2025 budget of Rp17.89 billion.