Arnoldus Kristianus, Jakarta – Indonesia's regional revenue stood at Rp 253.36 trillion ($15.27 billion) as of September 2025, down 10.86 percent from a year earlier, prompting the government to urge local administrations to simplify business licensing and revive regional economic activity.
Finance Minister Purbaya Yudhi Sadewa said regional governments must refocus their efforts on stimulating local economies to reverse the trend.
"To increase Local Own-Source Revenue (PAD), regional economic activity must move. Boost productive sectors, simplify licensing, empower MSMEs, and ensure public services are efficient," Purbaya said during the 2025 Regional Inflation Control Coordination Meeting in Jakarta on Monday.
Local taxes, the largest component of PAD, dropped 10.24 percent to Rp 182.8 trillion, following the government's removal of the vehicle title transfer fee for second-hand car transactions.
Retribution income was the only category that posted growth, rising 4.6 percent to Rp 36.83 trillion, supported by higher healthcare service fees. "This shows public service activity is still running well," Purbaya said.
Revenue from regionally owned enterprises fell 8.96 percent to Rp 9.26 trillion, as dividend payouts declined. Meanwhile, "other legitimate local revenues" plunged 30.44 percent to Rp 24.47 trillion, largely due to the reclassification of income from Regional Public Service Agencies (BLUD), now fully recorded as retribution.
The ministry has also raised concerns over Rp 254.3 trillion ($15.3 billion) in idle regional funds sitting in bank accounts. Purbaya warned that slow budget realization was stalling money circulation and undermining local growth.
"Neither the central nor local governments should keep excessive funds in banks. Every rupiah must flow back into the economy through public projects, infrastructure, and social programs," he said.
The Finance Ministry expects faster regional disbursements and stronger coordination to help revive productivity and support Indonesia's broader economic resilience.