In late 2025, Indonesia faces a persistent economic challenge: local governments struggling to spend their regional budgets effectively. Minister of Finance Purbaya publicly criticized Rp234 trillion in regional funds "sleeping" in bank accounts by the third quarter of 2025, with absorption rates at just 51%. West Java Governor Dedi Mulyadi countered that these funds are actively managed in checking accounts for ongoing projects. This media controversy highlights deeper systemic issues in Indonesia's fiscal management between central and regional governments.
Based on analysis of discussion transcripts from Metro TV's "Purbaya vs KDM" segment, the slow spending isn't merely inefficiency — it's rooted in bureaucratic processes, procedural delays, and economic adjustments. Understanding these factors is crucial for appreciating why localized government spending lags despite available funds.
The Rp234 Trillion Controversy
The debate intensified when Purbaya demanded faster APBD (Anggaran Pendapatan dan Belanja Daerah) execution, warning that idle funds in banks hinder economic stimulus during a slowdown. Governor Dedi argued the West Java funds (Rp4.17 trillion) are in Giro accounts — not deposits — for phased project payments. Purbaya countered that Giro accounts offer lower returns than certificates of deposit, making them still wasteful.
"Uang itu tersimpan dalam bentuk giro, bukan deposito. Dan saya pastikan tidak ada deposito pemerintah provinsi Jawa Barat untuk mengendapkan uang." — Governor Dedi Mulyadi
Public communication criticism escalated, with sources like communication expert Effendi Gozali suggesting the conflict could undermine center-region harmony. However, experts emphasize the issue transcends personalities — it's a structural challenge.
Systemic Reasons for Slow Spending Absorption
Komite Pemantauan Pelaksanaan Otonomi Daerah (KPPOD) Director Mas Herman Suparman describes this as a "chronic disease" appearing yearly. Several interconnected factors explain why absorption struggles despite timely central transfers.
1. Mandatory Bank Account Management (RKUD)
Peraturan Pengelolaan Keuangan Daerah requires regional governments to maintain Rekening Kas Umum Daerah (RKUD) for all revenues and expenditures. Funds from central transfers, local revenues, and DBH (Dana Bagi Hasil) deposit directly into these accounts.
"Dana mengendap atau dana yang dalam tanah kutip terparkir di bank gitu ya. Ini persoalan yang selalu muncul setiap tahun." — Mas Herman Suparman, KPPOD Executive Director
These funds "park" until expenditures occur, appearing as idle balances. Quarterly absorption spikes result from coordinated outflows, but early-year buildup creates the illusion of lethargy.
2. Delayed Procurement Guidelines
Technical guidelines for goods and services procurement often don't appear until January-March — sometimes later. This pushes infrastructure and development spending into mid-year.
"Karena pada praktiknya itu bisa sampai April, Mei, bahkan Juni. Sehingga pengadaan-pengadaan barang dan terutama terkait dengan pengadaan infrastruktur atau belanja-belanja modal yang lain akhirnya bergeser." — Mas Herman Suparman
Vendors and contractors submit invoices and claims seasonally, typically November-December, further compressing spending windows.
3. Impact of Central Efficiency Measures
2025's heightened fiscal efficiency reduced intergovernmental transfers. Regional leaders must adjust expenditures carefully, prioritizing essentials over rapid spending.
"Ada efisiensi yang dikeluarkan oleh pemerintah pusat dengan impres 1 tahun 2025 dan pemangkasan transfer ke tahun depan. Dalam konteks ini, pemerintah daerah itu mesti hati-hati melakukan pengeluaran belanja." — Mas Herman Suparman
New governors recalibrate budgets based on previous administrations' planning.
4. Complex Procurement and Procurement Processes
Public procurement requires competitive tendering, which takes months. Self-managed projects avoid this but demand upfront funding.
"Kalau lelang pasti akan lebih waktunya akan lebih panjang gitu kan. Nah, ini juga yang membuat dana-dana itu akhirnya agak lambat gitu." — Ester Dwi Astuti, INDEF Executive Director
Project timelines and contractor dependencies contribute to staggered disbursements.
5. Data Management Discrepancies
Different agencies report varying figures. Bank Indonesia's daily monitoring detects funds as deposits, while regional governments dispute categorization.
"Masalah rutin yang selalu muncul setiap tahun... Kita memakai data yang mana? Apakah data bank sentral atau data pemerintah daerah sendiri atau data Kemendagri?" — Ester Dwi Astuti
Disputes like Bangka Belitung's funds misattributed to South Sumatra highlight integration gaps. Governor Dedi demanded the minister verify directly, citing potential data errors.
Economic Implications and Positive Aspects
Despite controversies, parked funds aren't entirely unproductive. The analysis reveals spending delayed ≠ economy stagnant.
"Untuk apa? Untuk pertumbuhan ekonomi. Karena dari catatan kami, pemerintah daerah atau daerah pertumbuhan ekonomi daerah itu sangat bergantung pada government spending. Terutama untuk daerah-daerah yang kapasitas fiskalnya rendah." — Mas Herman Suparman
Most regional transfers fund salaries (DAU primarily), disbursed monthly and stimulating local economies during paydays. Capital expenditures and development aid drive infrastructure and social programs.
In 90% of regions with low fiscal capacity, government spending is the primary growth driver. Balances decrease naturally as programs execute.
Solutions and Recommendations
Several improvements could accelerate spending:
- Integrated Data Systems: Connect Bank Indonesia, Kemendagri, and regional systems to eliminate discrepancies.
- Advance Procurement Planning: Release guidelines earlier to fast-track Q1 spending.
- Flexible Account Management: Balance safety with liquidity optimization.
- Enhanced Monitoring: Proactive oversight instead of year-end focuses.
Transparency would prevent controversies like the Purbaya-Dedi dispute and build public trust.
Conclusion
The Rp234 trillion "sleeping funds" represent a timing issue rather than outright waste. Systemic factors create absorption patterns critics misinterpret as inefficiency. While improvements needed, these funds contribute to Indonesia's economy through salaries and investments.
As economic challenges persist in 2025, improving fiscal management coordination between central and regional levels becomes increasingly important for sustained growth.
Sources and References
- Metro TV Discussion Transcript: "Purbaya vs KDM: Who Is Right?" - https://www.youtube.com/watch?v=tfQDcFSHotQ
- Komite Pemantauan Pelaksanaan Otonomi Daerah (KPPOD)
- Institute for Development of Economics and Finance (INDEF)
- Bank Indonesia E-Monitoring System
- Ministry of Finance Regional Budget Guidelines