Transportation policy: 2024 subsidy surged by 30%
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.
Bisnis Indonesia - Kebijakan transportasi: Dana subsidi 2024 melonjak 30%
7 June 2023
By: Lorenzo A. Mahardhika
Jakarta - The budget allocation for pioneer transportation and public service obligation subsidies in the transportation sector in 2024 will increase by 30.15% from this year to Rp12 trillion.
The surge in subsidies in the transportation sector next year includes subsidies for pioneer transportation that will increase from Rp3.51 trillion in 2023 to Rp4.1 trillion.
Subsidies for public service obligation (PSO) will also increase from Rp6.71 trillion in 2023 to Rp7.9 trillion.
Transportation Minister Budi Karya Sumadi said that the Transportation Ministry was preparing a budget allocation of Rp4.1 trillion for pioneer transportation subsidies in fiscal year 2024.
According to him, the budget allocation is higher compared to the budget allocation in 2023 that reaches Rp3.51 trillion.
Land transportation will be allocated Rp1.5 trillion for 327 road transportation routes, 33 intermodal transportation routes, 7 cargo transportation routes, and urban transportation in Nusantara Capital City (IKN) in East Kalimantan.
Next, maritime transportation is allocated Rp1.87 trillion for 117 pioneer ship routes, 6 livestock carrier routes, 35 maritime highway routes, and 16 rede ships.
The railways sector is allocated Rp176.98 billion to subsidise railway services on seven routes.
In the air transportation sector, he explained that it would receive around Rp554 billion for 42 pioneer cargo routes, 220 pioneer passenger flight routes, 1 subsidised cargo route, and fuel subsidies for passengers and cargo.
The Transportation Minister affirmed that that amount did not include the allocation for PSO in 2024 that reaches Rp4.7 trillion for the railways sector and Rp3.2 trillion for the maritime transportation sector.
He explained that subsidies for PSO were included in the budget implementation list (DIPA) of the Finance Ministry. “Regarding the subsidies for PSO from DIPA, we will receive Rp4.7 trillion for railways and Rp3.2 trillion for maritime transportation. Most of the subsidies for maritime transportation will be used for pioneer [ships] and the maritime highway,” he explained at a work meeting with House of Representatives (DPR) Commission V in Jakarta on Tuesday (6/6).
Budi Karya also revealed that the budget absorption of the Transportation Ministry as of late May 2023 was still low at Rp10.44 trillion or 31.26% from the total allocation of Rp33.41 trillion.
Until now, the largest expenditure realisation of the Transportation Ministry is employee expenses that reaches Rp1.75 trillion or Rp45.9% of the budget ceiling of Rp3.81 trillion.
For goods spending, the Transportation Ministry has realised Rp4.52 trillion or 29.7% of the budget ceiling of Rp15.23 trillion. Next, capital spending realisation has reached Rp4.17 trillion or 26.5% of the 2023 budget ceiling that reaches Rp15.75 trillion.
Budi Karya mentioned that budget absorption was not yet optimum as the construction of several projects were being accelerated. Hence, he promises to accelerate the projects and the procurement of goods/services.
“We will improve the budget absorption from last year as the contracts that we must carry out have been performed,” he explained
Moreover, the Transportation Ministry is also preparing several steps to boost the budget absorption, such as improving planning quality and discipline in performing an activity.
Besides that, he will also accelerate programmes, projects, activities, as well as goods and services procurement.
On the other hand, non-tax state revenue has reached Rp3.55 trillion from the target of Rp8.06 trillion. Meanwhile, revenue realisation from public service bodies (BLUs) has reached Rp552.7 billion from the target of Rp1.59 trillion.
Political year
Meanwhile, Indonesia Transportation Society (MTI) Regional Empowerment and Strengthening Deputy Chairperson Djoko Setijowarno said that the plan to increase subsidies for pioneer transportation was one of the efforts of the Transportation Ministry to improve services for the people.
According to him, the increase in subsidies is required as there are still many people in remote and frontier regions who need optimum transportation access.
Djoko said that the increase in subsidies for pioneer transportation could boost economic activities in the regions.
“So, the economy is improved realistically for all people, not only for resellers” Djoko explained.
On the other hand, Djoko reminded the Transportation Ministry that subsidies for pioneer transportation needed to be on target, especially approaching the political year.
He said that the Transportation Ministry needed to conduct a thorough evaluation on regional transportation that can operate independently.
He continued that the allocation for pioneer transportation needed to be prioritised for remote areas.
