January 17, 2026 | 12:37 pm
TEMPO.CO, Jakarta - The Vice-Chair of the Macro-Micro Economic Policy Analysis at the Chamber of Commerce and Industry (Kadin) Indonesia, Aviliani, believes there needs to be an evaluation of the reduction of transfers to regions (TKD) policy. This policy is considered to have the potential to affect regional economic growth.
"We encourage future evaluations of the reduction of regional transfers," said Aviliani at the Global & Domestic Economic Outlook 2026 forum in Jakarta, as quoted from a press release on Saturday, January 17, 2026. According to her, the central government needs to involve regions to ensure that they continue to benefit from the policy-making process.
The TKD budget for fiscal year 2026 has decreased significantly from the previous year. Initially, the government set the TKD budget at Rp650 trillion for the following year. This figure decreased by 24.8 percent from the 2025 outlook of Rp864.1 trillion. However, the House of Representatives (DPR) and the government have agreed to increase the TKD budget in the 2026 state budget from Rp43 trillion to Rp693 trillion.
Several governors have protested this policy. However, Finance Minister Purbaya Yudhi Sadewa revealed that the central government is still hesitant to increase the budget, citing concerns about deviations in budget utilization. The State Treasurer made this statement during a hybrid meeting with the Minister of Home Affairs Tito Karnavian and several regional heads on Monday, October 20, 2025.
Therefore, Purbaya initially asked governors to first improve regional governance and fund absorption, especially in the last two quarters of 2025. He also opened the possibility of increasing the TKD in the following year. "But with the condition that the governance is good. If it's bad, I can't propose it. The President doesn't like that," he said.
Read: The Next Round of Budget Efficiency to Support Priority Projects
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