Jakarta Minister of Home Affairs Tito Karnavian revealed shocking facts regarding the performance of Regional-Owned Enterprises (BUMD) in Indonesia. Out of a total of 1,057 Regional-Owned Enterprises (BUMD) spread across various regions, nearly half are experiencing significant losses.
“Almost half of it is bleeding, why?” “Putting people, family, relatives, friends, in positions where they are not capable,” said Tito Karnavian at the National Coordination Meeting on Regional Finance in Jakarta, Wednesday (12/18/2024).
Tito explained that the losses not only affected the company’s operations but also impacted the Regional Original Revenue (PAD), making it less optimal.
According to him, one of the main causes of this problem is the practice of nepotism, which he refers to as “ordal,” where the appointed employees do not have adequate competence.If this continues, in the end, the regional budget (APBD) will have to cover the losses of the regional-owned enterprises (BUMD).
“Well, this keeps rolling from the regional heads.” Changing regional leaders, placing new people, the problems get deeper, and the losses increase,” he added, as quoted by Antara.
As a handling measure, Tito admitted that he had issued a circular encouraging local governments to close BUMDs that are no longer operationally viable. He emphasized that maintaining BUMD that continues to incur losses will only worsen the region’s financial condition.
“Well, this keeps rolling from the regional heads.” “Changing regional leaders, placing new people, the problems get deeper, the losses increase,” said Tito, who also previously served as the National Police Chief.
On that occasion, Tito also reminded that the Ministry of Home Affairs is responsible for overseeing BUMD, even mentioning that its role is almost akin to that of the “BUMD Minister.”
Tito Asks Regional Heads to Change Their Mindset
To improve the situation, Tito urged regional heads to change their mindset. He emphasized that local governments should not only focus on regional spending but also on efforts to increase revenue.
“President Prabowo has targeted Indonesia’s economic growth to reach 8 percent.” Regions must support this by improving their finances,” concluded Tito.
This issue has become a serious concern considering that BUMD should play a role as one of the driving forces of the regional economy. Regional heads are now faced with the challenge of improving the governance of BUMD to drive more sustainable economic growth.
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