Depok, September 4, 2024 – In the context of 25 years of regional autonomy implementation in Indonesia, challenges in managing regional fiscal capacity have become increasingly complex and require special attention. Responding to this urgency, the Faculty of Administrative Sciences, University of Indonesia (FIA UI), in collaboration with the Indonesian Muslim Intellectuals Association (ICMI), held a seminar titled “Regional Autonomy and Regional Fiscal Capacity” at the EDISI FIA UI Auditorium. This event aimed to discuss the challenges and opportunities in strengthening regional fiscal capacity in the 25 years of regional autonomy.

“We need improvements in the context of regional autonomy. Through this seminar, we are preparing a white paper for the next government, which will contain recommendations on how to strengthen regional autonomy and fiscal capacity using the right instruments. This is crucial as we face populist politics, which often highlight integrity and managerial aspects that must be addressed with a more structured and effective approach,” said the Chairman of the ICMI Regional Leadership Council, Sudirman Said, MBA.

Dr. Fibria Indriati, M.Si., Vice Dean for Education, Research, and Student Affairs at FIA UI, stated that as an educational institution, FIA UI has a responsibility to contribute to the development of human resources in the regions. “We are committed to supporting the achievement of fiscal autonomy through educational programs, such as the Master’s Program in Administrative Sciences, with specializations in local taxation, regional retribution, local finance and assets, and intrapreneurship innovation. These programs are designed to prepare regional human resources to increase Local Own-Source Revenue (PAD) and manage regional finances more effectively,” said Dr. Fibria.

The seminar featured three speakers who are taxation experts. One of them, Dr. Inayati, M.Si., a lecturer at the Department of Fiscal Administration at FIA UI, presented her research on factors influencing regional tax revenue.

“Our 2022 research indicates that regional tax revenue is influenced by two main factors: regional tax policies and regulations, and regional tax administration. Key issues include urban bias in determining regional tax types and disparities in tax revenue potential between regions,” explained Dr. Inayati.

She also highlighted administrative challenges, such as a shortage of functional tax examiners and difficulties in the tax collection process, which can reduce the effectiveness of regional tax revenue.

The second speaker, Berly Martawardaya, Director of Research at INDEF and lecturer at the Faculty of Economics and Business, University of Indonesia (FEB UI), discussed “25 Years of Regional Autonomy in Indonesia: Developments, Challenges, and Options.” He examined the progress and challenges of regional autonomy in Indonesia over the past 25 years.

“While there has been an increase in the number of autonomous regions, the gap between regions remains a significant issue. There is an urgent need for regulatory reform that is more responsive to local dynamics and for optimizing the distribution of authority between the central and regional governments. Strengthening regional fiscal capacity must be supported by up-to-date and easily accessible data,” he emphasized.

Additionally, the seminar addressed the challenges of regional governance and the demographic bonus, presented by Jilal Mardhani, CEO of Neraca Ruang and a member of the ICMI Regional Leadership Council (MPD). He stressed the need for smart and creative regional leadership to tackle moral, environmental, and social challenges.

He also pointed out the potential negative impact of government policies that do not favor the middle class, which could lead to a decline in purchasing power and public welfare.

“It is crucial to leverage Indonesia’s demographic bonus, which will end in 2041. If Indonesia does not immediately improve human resource quality, the country risks falling into the middle-income trap and facing increased burdens on the younger generation due to an aging population by 2035,” he warned.

The seminar underscored the importance of policy and regulatory reforms to support the strengthening of regional fiscal capacity. Collaboration between the central and regional governments and the enhancement of human resource capacity is essential to address the increasingly complex challenges over the next 25 years.