TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Optimizing regional budgets to combat poverty in Indonesia
One of the key problems in regional financial management is the inefficient allocation of spending by regional governments.
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
Seeking remedy: A woman and her children wait for medical treatment at a local health clinic in Ayam village in Asmat regency, Papua, on Jan. 26, 2018. Poverty remains high in Papua despite its huge natural resources. (AFP/Bay Ismoyo)
A
s Indonesia celebrated its 79 years of independence, poverty remained a persistent issue affecting millions. On July 1, Statistics Indonesia (BPS) reported that 25.22 million Indonesians still lived below the poverty line, with an average monthly expenditure of just Rp 582,932 (US$36.4) per capita.
The poverty rate is particularly high in eastern Indonesia, especially in natural resources-rich Papua and Maluku, where 19.39 percent of the local population, or 1.51 million people, live in poverty.
This dire situation is reflected in the low Human Development Index (HDI) scores in these regions. According to BPS data released in May 2024, Papua and West Papua had the lowest HDI scores in the country, at 63.01 and 67.47, respectively.
The National Medium‐Term Development Plan (RPJMN) for 2020‐2024 highlights several factors contributing to these low scores, including the suboptimal implementation of special autonomy, underdeveloped natural resource‐based potential, inadequate infrastructure and connectivity, limited access to basic services, and vulnerability to social inequality and poverty.
These issues underscore the poor quality of financial management at the regional government level.
One of the key problems in regional financial management is the inefficient allocation of spending by regional governments. The 2024 regional budgets of all the 38 provinces show that personnel expenditure dominates government spending at 33.54 percent (Rp 464.5 trillion), followed by goods and services expenditure at 28.32 percent (Rp 392.2 trillion).
On the contrary, capital expenditures, which could drive infrastructure development in the regions, account for only 15.27 percent (Rp 217.7 trillion).
