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View all search resultsTax hikes, program cuts to hit regions as Jakarta pulls funds, warns CSIS
The share of the state budget controlled by Jakarta is expected to climb from 72 percent in 2021 to 83 percent in 2026, leaving most programs to be designed and implemented by the central government.
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President Prabowo Subianto (right) and former presidents Susilo Bambang Yudhoyono (second right) and Joko “Jokowi“ Widodo (second left) salute the Red and White flag during the annual flag-hoising ceremony to commemorate the 80th Independence Day at the State Palace in Jakarta on Aug. 17, 2025. (Reuters/Ajeng Dinar Ulfiana)
President Prabowo Subianto’s focus on funding costly flagship programs, such as free nutritious meals and the Red and White Cooperatives, from next year’s state budget could leave regions bearing the brunt, as the government plans to slash regional transfers (TKD) by nearly 25 percent. Experts have warned that the move could strain public services in remote regions and widen inequality.
Deni Friawan, an economic researcher at the Centre for Strategic and International Studies (CSIS), argued that shrinking regional budgets would have serious consequences, as many regional governments still rely on transfers from the central government for around 70 to 80 percent of their funds.
A smaller TKD means less money for local governments, creating gaps in funding for civil servant salaries, regular programs and local development, according to Deni.
He noted that the pressure, as such a shift was also implemented in this year’s budget, has pushed some regional governments, such as Pati regency in Central Java to hike land and building taxes (PBB) to cover shortfalls, resulting in widespread protests.
“Since major tax bases remain controlled by Jakarta, regional finances were never truly decentralized,” he said at a press briefing on Monday.
According to him, the draft of next year’s budget marks another shift toward recentralization, with the central government directing most spending.
