Sumber : Istimewa
REGIONAL development banks (BPDs) were born out of decentralization. But today, BPDs are being killed by centralization. Worse still, their owners, the local governments, have allowed it, even turning them into vehicles for political careers. On top of that, rules issued by the OJK, Ministry of Home Affairs, and Ministry of Finance overlap.
The centralization of civil servant payroll agricultural officers, health workers, and soon teachers is a severe blow to BPDs, the “BPD apocalypse” will be no metaphor; it will be a political-economic inevitability.
There are currently 27 BPDs in Indonesia, with total assets of Rp1,043 trillion. These account for 50%-70% of third-party funds, and as much as 80% at smaller BPDs. BPDs live off the circulation of bureaucratic money.
For perspective, regional personnel spending reaches Rp506 trillion a year. Of the millions of regional civil servants, 2.15 million are teachers, followed by 400,000 health workers and tens of thousands of agricultural extension officers. This creates low cost funds, expands DPK and provides an entry point for consumer lending the backbone of profitability.
Centralization is already visible: agricultural extension officers’ allowances are being directed by the Ministry of Agriculture from the center, health-worker incentives are being disbursed.
The domino effect is brutal: funding costs rise, liquidity tightens, lending to MSMEs and regional projects is hampered, non-interest income falls, and the customer database of civil servants disappears. This is a double whammy: revenue falls, costs rise, and the business base shrinks.
If centralization is a blow from above, local political interference is a blow from below. BPDs are owned by provinces and regencies/cities. A dispersed ownership structure creates a common-pool problem: no majority shareholder is accountable, yet everyone feels entitled to demand dividends and credit facilities. Everyone must follow the governor’s working-visit schedule wherever it may lead.
Intervention is compounded by rent-seeking. Local elections need funding. BPDs often become indirect sources of financing through loans to contractors who win tenders, fund placements, and directed dividends. BPDs are a perfect example of state capture by local elites: not financial intermediation, but power intermediation.
When payroll centralization reduces the flow of bureaucratic funds, BPDs already weakened by intervention lose their liquidity buffer. It is like a diabetic patient suddenly having their nutritional intake cut off: there are no reserves left to survive. These days, liquidity is increasingly scarce in the regions and certainly at BPDs. Yet their owners are busy figuring out how to extract political benefits by controlling BPDs that are already navigating a steep road.
There is also the regulatory overlap: OJK, BI, the Ministry of Home Affairs, the Ministry of Finance, LPS, POJK, and various ministerial regulations that instead shrink BPDs. BPDs live with a multiple-principals problem: overlapping rules create both regulatory arbitrage and regulatory burden. It is heavy. In some cases, OJK officials in the regions are even afraid to reject a governor’s request as shareholder when putting forward candidates for directors and commissioners.
Payroll centralization adds another paradox. The central government pulls civil servant salaries into national banks in the name of efficiency, while at the same time requiring BPDs to meet minimum core-capital requirements that call for capital injections from local governments. If BPD funding is drained, how are BPDs supposed to grow? These are mutually negating policies: the center asks BPDs to become stronger, while cutting their lifeline. Yet BPDs today are already different from what they were 10 years ago. They have transformed, but local government intervention and centralization have delivered a severe blow.
The BPD apocalypse is not an act of nature, but the result of policy choices and governance failures. If the central and local governments agree to make BPDs healthy, professional, and competitive financial institutions, payroll centralization could instead become a moment of transformation. But if political interference is allowed to continue and policy overlaps are not fixed, BPDs will become museums of regional economics: remembered as relics of a failed decentralization.
The centralization of teachers’ salaries if it actually happens is not the end of everything. It is merely another nail in the coffin of BPDs, a coffin long prepared by local elites. The BPD apocalypse is near, the central government must undertsand to bring them back as modern and independent pillars of regional finance.
The centralization of salaries for civil servants teachers, agricultural extension officers, and healthcare workers will leave the regional governments starved. This is because BPDs are the largest contributors to Regional Original Revenue (PAD). Therefore, regional legislative councils (DPRD) and regional governments must not remain silent in the face of the center's arbitrary actions. The BPD apocalypse is near.
The centralization of civil servant payroll agricultural officers, health workers, and soon teachers is a severe blow to BPDs, the “BPD apocalypse” will be no metaphor; it will be a political-economic inevitability.
