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View all search resultsRegional dissent boils over as fiscal transfer cuts bite
Experts say the move contradicts President Prabowo Subianto’s promise of greater regional autonomy and risks fueling political tensions if not carefully managed.
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Finance Minister Purbaya Yudhi Sadewa addresses reporters’ questions at the State Palace in Central Jakarta, on Sept. 19, 2025.
(BPMI Setpres/Kris)
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harp cuts to regional transfers are unsettling provincial leaders, who warn the reductions could derail local development, disrupt public services and even civil servant pay. Experts say the move contradicts President Prabowo Subianto’s promise of greater regional autonomy and risks fueling political tensions if not carefully managed.
On Oct. 7, at least 18 governors, from Aceh in the west to Highland Papua in the east, along with delegates from eight other provinces, gathered at Finance Minister Purbaya Yudhi Sadewa’s office under the Indonesian Provincial Governments Association (APPSI). They urged the central government to reconsider the steep reductions of transfers to regions in next year’s budget allocations.
Most provinces still rely heavily on transfers from the government as their main source of revenue.
However, the government allocated only Rp 693 trillion (US$42 billion) for regional transfers in next year’s state budget. The amount already includes a last minute Rp 43 trillion top up aimed at averting public unrest over rising land and property taxes imposed by local administrations scrambling to offset this year’s cuts.
Even so, the figure remains around 20 percent lower than this year’s outlook, marking the lowest regional transfer in nearly a decade, even below 2016 levels.
Read also: Governors press finance minister to reconsider regional budget cuts
During a meeting with the finance minister on Tuesday, North Maluku Governor Sherly Tjoanda lamented the steeper cuts for next year, saying her province’s revenue-sharing funds, part of the regional transfers, had been slashed by 60 percent, while some regencies reported even deeper declines.
