Budget cut, transportation subsidy remains a priority
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - Anggaran dipangkas, subsidi transportasi tetap jadi prioritas
5 February 2025
By Ichsan Amin
The Transportation Ministry is continuously prioritising its budget to subsidise pioneer transportation amid the government’s efforts to enhance the efficiency of the State Budget (APBN).
Transportation Minister Dudy Purwagandhi stated that his agency will monitor budget efficiency within the ministry, in accordance with Presidential Instruction Number 1 of 2025 on Budget Efficiency in the Implementation of the State Budget and Regional Budget for Fiscal Year 2025.
“Transportation subsidies and pioneer transportation will still be prioritised to provide accessibility for various aspects of community life and ensure the continuity of affordable and inclusive public mobility,” he said in Jakarta on Tuesday (4/2/2025).
"The Transportation Minister explained that, in the land transportation sector, subsidies for the Buy the Service (BTS) programme in six cities will be continued. Meanwhile, in the sea transportation sector, there are subsidies for pioneer ships, maritime highway cargo ships, cattle ships, rede ships, and Public Service Obligation (PSO) for economy-class ships."
Next, in the air transportation sector, there are subsidies for pioneer passenger air transportation, pioneer cargo air transportation, and jet fuel for cargo transportation. In the railway sector, there are subsidies for pioneer trains and Public Service Obligation (PSO) for long-distance trains, medium-distance trains, Eid trains, short-distance trains, Diesel Multiple Units (DMUs), Greater Jakarta Commuter Line (KRL), and Yogyakarta KRL.
“We will ensure and have further discussions with the Finance Ministry, as the budget holder, on the vital importance of transportation for the population, especially in remote areas,” the Transportation Minister said.
The Transportation Ministry will also seek approval from the Finance Ministry to utilise the Public Service Agency (BLU) budget to maximise operations within the ministry.
“Budget reductions are occurring in almost all ministries. However, we will identify which programmes are most impactful to the people so that they can be supported with the [BLU] budget,” he revealed.
Transportation Minister Dudy added that the budget for business trips and other non-essential activities will be reduced based on the President's directive and instruction. “So, we will make activities that do not directly impact the people more efficient. However, for activities that directly impact the people, such as transportation subsidies, we will maintain them,” he added.
Based on Presidential Instruction Number 1 of 2025 on Budget Efficiency in the Implementation of the State Budget and Regional Budget for Fiscal Year 2025, the state’s budget for 2025 will be reduced by Rp306 trillion.
The budget includes Rp256 trillion for ministries and institutions and Rp50 trillion for transfers to regions. The Transportation Ministry’s budget has been cut by almost half, reaching Rp31 trillion from its total 2025 budget.
For accessibility
Transportation Observer from Unia Soegijapranata in Semarang, Djoko Setijowarno, stated that transportation subsidies must be viewed as a vital aspect where the state’s presence is essential. According to him, if transportation subsidies are removed, it would be equivalent to lowering the public’s quality of life.
“Subsidies are essential for public welfare in various aspects. Not all regions have the same revenue, so regions with smaller revenue will have limited transportation access due to their infrastructure limitations. Therefore, the government must be present,” he said to Investor Daily.
Djoko also mentioned that if transportation subsidies are removed or cut, it will directly impact the lower-middle class, who rely on public transportation for their daily activities.
“Transportation is not just relevant for the Transportation Ministry; there are also infrastructure programmes by the Public Works Ministry that cover regional roads, directly benefiting public accessibility,” he stated.
According to him, the Presidential Instruction on Regional Roads offers numerous benefits. These include enhancing interregional connectivity, balancing infrastructure development, accelerating the construction of regional roads, improving infrastructure quality, boosting both national and regional economies, reducing national logistics costs, and enhancing road conditions.
He added that public transportation is not necessarily linked to congestion, but it has a significant correlation with poverty. For example, impoverished regions often have access to substandard transportation.
Budget realisation at Rp39 trillion
Meanwhile, Transportation Minister Dudy Purwaghandi announced that the budget realisation for the Transportation Ministry in 2024 amounted to Rp39.09 trillion.
The realisation is based on the Transportation Ministry’s 2024 budget, which reached 85.21% of the total budget of Rp45.88 trillion. “The realisation stands at Rp39.09 trillion. I believe continuous improvement is essential,” stated the Transportation Minister after the entry meeting on the review of the Transportation Ministry's Financial Report for 2024 by the Supreme Audit Agency (BPK) in Jakarta on Tuesday (4/2).
The Transportation Minister noted that the 2024 budget realisation included 98.31% for staff expenditure, 92.05% for goods expenditure, and 76.43% for capital expenditure. He emphasised that the Transportation Ministry remains committed to collaborating with the BPK to ensure the financial reports of ministries are reviewed accountably and transparently.
“We request the BPK to offer suggestions and guidance for reviewing the 2024 financial report of the Transportation Ministry. The Transportation Ministry is dedicated to implementing the recommendations provided by the BPK,” stated the Transportation Minister.
The Transportation Minister also provided information that can be utilised by the BPK in reviewing the 2024 financial report of the Transportation Ministry. The entry meeting served as the initial communication between the BPK and the entity being reviewed, which is the Transportation Ministry.
“The meeting was held to align perceptions on the checking process. The review is conducted based on the government's strategic plan, which was developed in accordance with Asta Cita,” explained the Transportation Minister.
Board Member I of the BPK, Nyoman Adhi Suryadnyana, stated that the Transportation Ministry successfully accomplished several achievements that other ministries or institutions could not attain.
The achievements include their Non-tax State Revenue (PNBP), budget realisation, and the implementation of motor vehicle testing through the VTA Online, SKRB Online, and SRUT-RB Online systems.
Additionally, Inaportnet is one of the supporting systems for managing the PNBP from sea transportation, which is the largest contributor to the Transportation Ministry. “We appreciate the PNBP realisation of the Transportation Ministry, which has reached 117.16% of the target. This is remarkable because it is a challenging amount to achieve,” stated Nyoman.
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