Regional governments are currently facing fiscal constraints following the policy to cut regional transfer funds (TKD). In the era of regional autonomy, this condition has pushed local governments to pursue various innovations to increase locally generated revenue (PAD) through new potential sectors. At the same time, many regions lack strong PAD potential amid the weakening rupiah exchange rate, budget efficiency measures, and the economic impacts of global geopolitical changes.
A lecturer at the Department of Politics and Government, Faculty of Social and Political Sciences, Universitas Gadjah Mada (FISIPOL UGM), Dr. Abdul Gaffar Karim, believes that the design of authority and fiscal arrangements in the current era of regional autonomy should be assessed based on the extent to which they improve public welfare and the quality of public services, as well as the strength of democracy, particularly in terms of accountability, participation, and government responsiveness.
“If both improve, then the design is appropriate, regardless of the form of authority distribution,” he said on Wednesday (May 13).
According to Dr. Karim, this perspective is rooted in the idea that regional autonomy is an instrument rather than an end goal. The ultimate aim, he argued, is to create a state that is closer to its citizens through reliable public services, responsive policies, and vibrant local democracy. Meanwhile, recentralization efforts may emerge as a corrective measure for standardization, the prevention of irregularities, or the implementation of cross-regional programs.
“I believe these recentralization efforts must be limited so they do not undermine local innovation and accountability,” he added.
For Dr. Karim, the relationship between the central and regional governments should be based on partnership rather than unilateral command. He emphasized that national programs implemented in the regions should be co-designed. In this model, the central government sets standards and provides funding, while regional governments adapt implementation to local conditions, with joint evaluations following.
Therefore, fiscal disparities among regions must be addressed through fairer transfer policies and performance-based incentives.
“It should not simply be about budget cuts. Moreover, if transfers are reduced, there must be a transition scheme to ensure that essential public services do not collapse,” he said.
According to Dr. Karim, the growing trend of recentralization should be interpreted carefully. Part of it may help address governance issues, but excessive implementation could become a setback.
He noted that strengthening central authority is not always harmful, particularly for matters involving cross-regional impacts, national standardization, or strategic interests. However, if the withdrawal of authority and transfer cuts occur without a clear design, such as collaboration schemes and service indicators, it risks weakening regional capacity, particularly in the context of autonomy.
He stressed that recentralization is not inherently wrong, but it can become regressive if it reduces regional governments’ ability to provide services. According to him, the key lies in clear divisions of authority accompanied by fair financing. Decisions regarding the division of authority must be grounded in collaborative mechanisms.
“Responsibilities must be clearly defined, budgets should follow authority, and national programs should be implemented through co-governance. The central government sets standards and targets, while regional governments carry out implementation, followed by evaluations based on service performance data rather than mere administrative compliance,” he explained.
Furthermore, Dr. Karim emphasized the importance of enforcing the subsidiarity principle so that public affairs can be handled by the level of government closest to citizens, while the central government intervenes when regions lack sufficient capacity. He also highlighted the need to align authority with budgeting mechanisms so that, when the central government introduces priority programs in regions, dedicated funding schemes are provided.
“Transfers should not merely distribute money but also address fiscal disparities among regions so that minimum public services become more equitable,” he said.
Addressing national programs, Dr. Karim stated that ensuring national standards and quality may justify central involvement, but not the withdrawal of regional authority. Using the MBG program as an example, he explained that the central government could maintain authority over nutrition standards, monitoring, and supply chain governance while still involving local governments that better understand local ecosystems, including family data, food supply chains, school conditions, and local social dynamics.
According to Dr. Karim, the current challenges of regional autonomy are multidimensional, encompassing fiscal matters, regulations, and leadership quality, all of which must function in harmony. Many regions remain dependent on regional transfer funds, while opportunities to increase locally generated revenue are limited. As a result, innovation is often constrained by limited fiscal space.
“If only one aspect is improved, the results will not be optimal, so reforms must be comprehensive. Sometimes we hear stories about regional leaders who are clean and innovative. Is that enough to advance a region? Apparently not,” he remarked.
At the same time, Dr. Karim noted that autonomy provides discretion, but without integrity and managerial capacity, it can lead to mismanagement. Regulatory complexity and overlapping authority must also be minimized. He explained that when central regulations become increasingly detailed and frequently change, regional governments tend to become overly administrative, focusing more on procedures than improving services.
“Fiscal and regulatory design form the basic structure, but leadership is the key factor that distinguishes regions that can survive from those that cannot,” he stated.
He hopes that the debate on recentralization will not stop at discussions about central and regional authority alone. More importantly, the design of authority and fiscal arrangements should improve public welfare, enhance public services, strengthen local economies, and reduce inequality. He also hopes for more accountable governance, greater citizen participation, and more responsive policies.
“I hope evaluations of regional autonomy are conducted using service indicators such as education, health, poverty, the quality of basic infrastructure, and public satisfaction, as well as indicators of local democracy such as accountability, participation, and transparency, rather than merely administrative assessments,” he concluded.
Author: Hanifah
Editor: Gusti Grehenson
Post-editor: Zabrina Kumara
Photo: Freepik / Magnific