PUPR Ministry accelerates 2024 budget absorption
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 - Kementerian PUPR percepat serapan anggaran 2024
26 August 2024
By Ichsan Amin
Jakarta, ID – The Public Works and Housing (PUPR) Ministry is accelerating budget absorption in fiscal year 2024.
PUPR Minister Basuki Hadimuljono stated that the acceleration of the 2024 budget implementation would be achieved through the expedited tendering of goods and services, strategic activity packages, administrative and budget revision resolutions, land settlement, cash-for-work programmes, and the reallocation of priority budgets.
“Based on the outcome of yesterday's work meeting with Commission V of the House of Representatives (DPR), there is a potential budget surplus of Rp3 trillion for tenders. We will allocate this amount to the cash-for-work programme,” PUPR Minister Basuki Hadimuljono said in Jakarta at a work meeting with DPR as quoted on Sunday (25/8/2024).
As of 20 August 2024, the budget realisation of the PUPR Ministry has reached Rp68.05 trillion, which is 41.7% of the total budget, with physical progress at 49.3%. Minister Basuki explained that this year's budget realisation is 9.2% higher than last year's, which only reached 32.5%.
As of 20 August 2024, the tender realisation includes 2,708 contracted packages with a budget of Rp109.35 trillion, which represents 96% of the total contractual activities worth Rp113.94 trillion. Specifically, tender packages account for 1,370 packages with a budget of Rp16.49 trillion. The remaining packages are carry-over contracts from the previous fiscal year, comprising 1,338 packages with a planned budget of Rp92.86 trillion.
“The packages currently being tendered amount to 461, with a budget ceiling in the budget implementation plan of Rp4.59 trillion, representing 4% of the total contractual activities worth Rp113.94 trillion. These packages are still awaiting signing, tendering, and the determination of a winner,” Minister Basuki said.
Minister Basuki explained that, in 2024, the PUPR Ministry will continue the cash-for-work programme, which as of 20 August has reached a value of Rp8.22 trillion. This marks an increase of Rp1.11 trillion from Rp7.11 trillion (status as of 31 May 2024).
“However, based on the outcome of the last work meeting of the PUPR Ministry, there is still a potential surplus of Rp3 trillion from the tender budget that will be redirected to the cash-for-work programme. As of 20 August 2024, the absorption progress of the cash-for-work programme has reached Rp2.99 trillion (36.4%), employing 153,052 workers, which is 42% of the total target of 364,000 workers,” Minister Basuki said.
Meanwhile, DPR Commission V Deputy Chairperson Andi Iwan Darmawan Aras stated that DPR Commission V is urging the PUPR Ministry to increase the absorption of the State Budget (APBN) in fiscal year 2024.
“DPR Commission V is requesting the PUPR Ministry to accelerate the realisation of the cash-for-work programme, the Presidential Instruction on Regional Roads, and the Presidential Instruction on Drinking Water and Wastewater in 2024. They also emphasise the prioritisation of local businesses, the increase in operational programmes, and the optimisation and rehabilitation efforts,” he stated.
Housing financing quota increased
Meanwhile, PUPR Minister Basuki Hadimuljono revealed that the quota for the house financing liquidity facility (FLPP) will be increased in September 2024. “This September, the FLPP will be increased. We would like to increase the quota again with approval from the Finance Minister,” he stated, as quoted by Antara on Sunday (25/8/2024).
The government has previously allocated Rp13.72 trillion for the FLPP in 2024, intended for 166,000 houses.
The government has also allocated Rp0.68 trillion for downpayment subsidies (SBUM) for 166,000 houses, while funds from participants of the public house savings (Tapera) programme amount to Rp0.83 trillion for 7,251 houses.
Last year, the government allocated Rp26.3 trillion for the FLPP for 229,000 houses, Rp895 billion for SBUM for 220,000 houses, Rp52 billion to support the administrative costs of 13,993 houses, and Rp1.09 trillion from Tapera participants' funds to distribute 7,020 houses through Tapera financing.
Minister Basuki mentioned that the quota for the FLPP in 2025 will be adjusted according to the programmes of President-elect Prabowo Subianto. However, the exact quota amount that will be proposed by the PUPR Ministry for the programme in 2025 has not yet been determined.
The FLPP is a programme in the housing sector that facilitates low-income citizens in owning houses with a lower interest rate of 5%, fixed throughout the tenure.
Rp75.6 trillion in 2025 budget
Based on the Financial Memo and Draft State Budget (RAPBN) for 2025, the PUPR Ministry is allocated Rp75.63 trillion. This budget will be used for food and energy security, as well as the fulfilment of other basic infrastructure needs.
PUPR Ministry Secretary General Zainal Fatah stated that the allocation for infrastructure development outside the food and energy sectors includes national road construction from Aceh to Papua, spanning 128.1 kilometres (km).
“Additionally, we will continue to improve connectivity through the construction of toll roads spanning 4.83 km, which is significantly shorter than national roads as it generally supports construction. Regarding roads and bridges, we also want to ensure that our roads remain in good condition through preservation activities,” Secretary General Zainal Fatah said at a press conference on the Financial Memo and RAPBN for 2025 (16/8/2024).
Meanwhile, activities targeting villages remain a key mission for the upcoming government. Secretary General Zainal Fatah noted that, through the Settlements Directorate General, efforts will be made to increase drinking water provision in villages through the Community-based Drinking Water Provision (Pamsimas) programme.
“This also includes the provision of community-based sanitation, without neglecting sanitary activities in cities. Through the Settlements Directorate General, we will also develop settlement areas, school buildings, and madrasah schools,” Zainal Fatah added.
In the housing sector, which is allocated Rp4.53 trillion, Secretary General Zainal Fatah mentioned that support would continue for vertical housing construction to achieve the flat construction target for low-income citizens.
“Therefore, all planned activities supported by the Rp75.63 trillion budget will continue not only in cities but also in villages. This aligns with the vision of the upcoming government,” Secretary General Zainal Fatah concluded.
