Reliance on Central Transfers: Deputy Interior Minister Says Many Local Governments in Central Java Still Face Fiscal Capacity Challenges

REPUBLIKA.CO.ID, SEMARANG – Deputy Interior Minister Bima Arya Sugiarto has spotlighted the substantial fiscal dependence of dozens of districts and cities in Central Java (Jateng) on central government transfers to regions (TKD). According to him, this demonstrates that the fiscal capacity of the relevant local governments remains weak.

Bima revealed that the fiscal capacity of the Central Java Provincial Government is already quite good. As much as 66 percent of the composition of the Central Java Provincial Budget (APBD) comes from local own-source revenue (PAD). Meanwhile, its TKD is around 30 percent.

“But if we look at the district/city level, there are still many challenges,” said Bima while attending the Deliberation of the Central Java Provincial RKPD for 2027 at the Central Java Governor’s Office in Semarang City on Tuesday (28/4/2026).

He explained that there are three categories of fiscal capacity: strong, moderate, and weak. Fiscal capacity is considered strong if PAD is more dominant than TKD. Meanwhile, moderate fiscal capacity is when the values of PAD and TKD are balanced. Whereas weak fiscal capacity is when TKD is more dominant than PAD.

“Strong fiscal capacity is clearly Semarang City. Surakarta City is quite good. But looking at the data for the others, there are still many challenges,” said Bima.

He called on the local governments in Central Java, consisting of 35 districts/cities, to increase their PAD. According to him, one way this can be done is by optimising regional assets.

“How to inventory those assets, then process them into economic growth centres. Well, this is asset optimisation,” said Bima.