The Ministry of Home Affairs (Kemendagri) records that the majority of regions in Indonesia still have weak fiscal capacity for the 2025 budget year.
Based on data from Kemendagri, only a few regions are recorded as having strong fiscal capacity.
Out of a total of 546 regions, consisting of 38 provinces, 415 regencies, and 93 cities, as many as 493 regions or approximately 90% still have weak fiscal capacity. As of August 31, 2025, only 26 regions or about 5% are classified as having strong fiscal capacity. Meanwhile, 27 regions or about 5% are in the medium fiscal category.
“The data shows that 90% of regions, namely 493 provinces and regencies/cities, have low fiscal capacity. Even though some of them are urban areas that demand continuous growth,” stated the Director General of Regional Administration Development at the Ministry of Home Affairs during the launch event of the National Urban Policy (KPN) at the Ministry of National Development Planning/Bappenas office.
It was detailed that out of 38 provinces, there are 15 provinces or about 39% with weak fiscal capacity. Then there are 12 provinces or about 32% in the medium category, and only 11 provinces or about 29% that fall into the strong category.
Meanwhile, out of 415 regencies, there are 407 regencies or about 98% that have fiscal weaknesses. From the total, only 4 regencies are in the medium category, and 4 other regencies have strong status.
“Their fiscal capability depends on central transfers, and only a small portion of regencies/cities have strong fiscal capacity,” it was explained.
From the urban perspective, out of 93 existing regions, 70 cities or about 75% are recorded as having weak fiscal capacity. Only 12 cities or about 13% are classified as medium and 11 cities or about 12% are able to show strong fiscal capacity.
This disparity needs serious attention, considering that most regions are still highly dependent on transfers from the central government. Low regional fiscal resilience has the potential to hinder sustainable development and local economic independence.
“Certainly there must be innovation in strengthening local revenue so that regions can independently finance development through various strategies, careful budget expenditure, innovative partnerships, ease of doing business, and good governance of Regional-Owned Enterprises (BUMD) and Boards of Directors (BOD) this year, God willing, or at the latest next year at the Ministry of Home Affairs there will be a new Director General, the Director General of BUMD to drive better regional revenue,” it was concluded.
