Vice Chairperson of Budget Committee Muhidin Mohamad Said gives explanation in a meeting with the government at the Parliament Complex, Senayan, Jakarta (15/9/2020).. Photo : Oji/Man

Budget Committee (Banggar) of the House of Representatives of the Republic of Indonesia approved a budget of Rp 795 trillion (US$ 53 billion) for Transfers to the Regions and Village Funds (TKDD) in 2021 Draft State Budget (RAPBN). The funds are expected to assist regional governments in economic recovery, education, and health services in order to support recovery and strengthen national economy.

“We have just made a decision regarding regional transfers that consist of Profit Sharing Funds, General Allocation Funds, Special Transfer Funds, Special Autonomy Funds and Privileges Funds, as well as Village Funds at the discretion of the President,” explained Banggar’s Vice Chairperson, Muhidin Mohamad Said in a meeting with the government at the Parliament Complex, Senayan, Jakarta, Tuesday (15/9/2020).

The Politician of Golkar Party further explained that Rp. 723.4 trillion (US$ 48.8 billion) is allocated for regional transfer funds and Rp 72 trillion (US$ 4.8 billion) for Village Funds or a 1.1 percent increase from this year’s allocation as regulated in the Presidential Regulation (Perpres) Number 72 of 2020. He said that the budget increase in the Village Funds, Rp 72 trillion (US$ 4.8 billion), is expected to support the economic recovery and priority sectors.

The focus of economic recovery in regions include: strengthening the sustainability of cash-intensive programs and social safety nets in the form of Cash Transfers Assistance (BLT), empowering Small and Medium Enterprises (SMEs) and the agricultural business sector, encouraging village economic transformation through digital villages and continuing the village potential development program, superior village products, rural areas, and increasing the level of village-owned business (BUMDes) roles.

Banggar also supports the development of priority sectors, including the development of information and technology (ICT) through digital village development, tourism development through tourism village development, supporting food security through agricultural cultivation development, animal husbandry, and fisheries, Cash-intensive programs are prioritized for infrastructure and connectivity improvement.

Programs in health sector that receive support are the development of national health program through village health post (Poskesdes) and village delivery facilities (Polindes), improvement of nutrition, and reduction of stunting at villages. “We expect manpower-intensive projects can empower and engage community/local residents. With the issues of COVID-19 leaving many people unemployed and economic recovery, engaging local residents in such programs is expected to increase the amount of money in circulation and propel economy in villages,” stated the legislator from Central Sulawesi constituency.

Previously, the Finance Ministry Fiscal Balance Director General Astera Primanto said that the TKDD’s general directives are geared to support the economic recovery measures in line with the national priorities, through the development of accessibility and connectivity of the economic growth centers, incentive support to the regions to attract investment, improvement of the investment service system, and support for MSMEs.

The directives also require the TKDD to synergize with Ministries and State Institutions’ spending in the human capital development (Education and Health), to encourage regional infrastructure spending through creative financing such as regional loan, Regional Government-to-Business Cooperation (KPBU), and inter-region cooperation to support the achievement of the National Medium-Term Development Plan (RPJMN)’s targets, and to redesign the management of TKDD especially the general transfer fund (DTU) and the special transfer fund (DTK) with performance-based budgeting and increased accountability.

They are also geared to improve the TKDD budgeting performance and to carry out regional budget reform through the implementation of Regional Unit Price Standard (SHSR) and the preparation of Standard Account Chart. In detail. The transfer funds to the regions consist of three parts. First, Balance Funds amounting to Rp 688.67 trillion is divided into general transfer funds of Rp 492.25 trillion and special transfer funds of Rp 196.42 trillion.

The general transfer funds are divided into Revenue Sharing Funds of Rp 101.96 trillion and General Allocation Funds of Rp 390.29 trillion. Second, Regional Incentive Funds with the allocated budget amounting to Rp 13.5 trillion. Third, Special Autonomy Funds with the allocated budget of Rp 19.982 trillion and Rp. 1,32 trillion set aside for Special Funds of Yogyakarta Special Region. The last is Rp. 72 trillion for Village funds.