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Jakarta Post

BPK report reveals potential rise in state losses

  • Fedina S. Sundaryani

    The Jakarta Post

Jakarta   /   Tue, April 18, 2017   /   09:30 am
BPK report reveals potential rise in state losses President Joko “Jokowi” Widodo (second left) receives the Supreme Audit Agency's 2016 second-half report at the State Palace on April 17. (Antara/Puspa Perwitasari)

Over the past few years, the government has firmly vowed to curb spending as the budget deficit widens amid falling revenues from tax and export earnings.

However, the latest audit by the Supreme Audit Agency (BPK) shows that despite such avowed fiscal rectitude in the state budget, irregularities across dozens of government institutions, regional administrations, state-owned as well as provincial-owned enterprises have cost the country trillions of rupiah.

In its 2016 second-half report, the agency reported that 5,810 irregularities, mostly comprising violations of prevaling laws and regulations, caused potential losses of Rp 12.59 trillion (US$949 million), up 27.5 percent from the Rp 9.87 trillion recorded in the July-December period a year earlier.

“As we did with the House of Representatives and the Regional Representatives Council [previously], we have asked the President as the head of the government to follow up on our recommendations. If the recommendations are not followed through, there will continue to be state losses or potential state losses,” BPK chairman Harry Azhar Azis told reporters after meeting President Joko “Jokowi” Widodo at the State Palace.

Harry pointed out three key issues the agency was most concerned about, namely the national health insurance (JKN) program, a lack of coordination between the central and regional administrations in the education sector, and the monitoring of taxpayers.

“The healthcare services at Puskesmas [community health centers] and general hospitals are not supported by a large number of qualified human resources. Furthermore, there are around 155 regional health insurance programs that have not been integrated with JKN,” Harry said.

The education-related irregularities were attributed to a lack of regulations that managed coordination between the central government and regional administrations.

Another concern the BPK raised was related to unpaid value-added tax (VAT) worth Rp 910.06 billion from four tax offices, with potential administrative sanctions of Rp 538.13 billion.

Following the meeting at the palace, Cabinet Secretary Pramono Anung said Jokowi had vowed to address the concerns expressed by the BPK in order to improve his administration’s transparency and credibility.

Despite several improvements in the rating of financial reports by regional administrations in 2015 as revealed by the report, Jokowi was not satisfied and called on his government to continue amending the financial information, he added.

As much as 58 percent of financial reports earned an unqualified opinion, the highest mark the agency offers, last year, higher than the 47 percent in 2015.

The report also showed that the percentage of regional administration financial reports earning that status had risen exponentially from just 13 percent in 2011.

“However, the government still hopes that this can continue to increase,” Pramono said.

House Commission XI overseeing the fiscal and financial sector plans to review the BPK’s report to evaluate whether any problems should be treated as crimes.

“We need to discuss the issues first at Commission XI. So far, there has yet to be any discussion [of the summary],” Johnny G. Plate of the NasDem Party told The Jakarta Post.