Heaptalk, Jakarta — Indonesia’s Minister of Home Affairs, Tito Karnavian, has called on local governments in North Maluku Province to revitalize and support the private sector as a key strategy to increase Regional Original Revenue (PAD). He emphasized that a thriving private sector plays a crucial role in improving regional fiscal independence.
The Minister delivered this message during his address at the Regional Development Planning Forum (Musrenbang) for North Maluku’s 2026 Regional Government Work Plan (RKPD), held virtually on Thursday, April 24, 2025, from the Ministry of Home Affairs headquarters in Jakarta.
Minister Karnavian outlined that the Ministry classifies regions into three categories based on fiscal capacity: strong, moderate, and weak. Regions with strong fiscal capacity are those where PAD exceeds central government transfers. In contrast, moderate regions have a relatively balanced share between PAD and transfers, while weak areas rely heavily on central funding.
As of March 24, 2025, North Maluku’s PAD stood at only 22.80%. “That means 77%, to put it simply, still depends on the central government,” he stated.
According to the Minister, such dependency poses risks, particularly if the central government’s revenue targets are not met. In contrast, regions with strong fiscal capacity are more resilient and have greater flexibility to implement innovative local programs beyond those mandated by the central government.
“They can roll out numerous initiatives for their communities, not just the mandatory programs from the central level,” he said.
To address this, the Minister urged local governments in North Maluku to develop an ecosystem that supports private sector growth. He emphasized the need to simplify business licensing processes and to enhance regional spending realization as a catalyst for private sector activity.
Additionally, he stressed the importance of completing key spatial planning documents, namely the Regional Spatial Plan (RTRW) and the Detailed Spatial Plan (RDTR). These documents are essential for helping businesses identify viable investment areas.
“With clear zoning—residential, commercial, green space, conservation—entrepreneurs can make informed decisions about where to invest,” he explained.
The Minister concluded by urging the Governor of North Maluku to ensure the prompt completion of RTRW and RDTR documents at both provincial and district/city levels. “This is crucial for providing legal certainty to investors,” he said.
