The Politics of Indonesia’s Fiscal Recentralisation: Public Views on Regional Transfer Cuts

North Nias Regent Amizaro Waruwu knelt before Villages and Development of Disadvantaged Regions Minister Yandri Susanto during a meeting on 25 February 2026, in a scene which went viral on social media. In tears, Amizaro pleaded for the central government’s attention on 30 disadvantaged, frontier and outermost (“3T”) regions, including his own, which had been hit by serious cuts to its TKD, or Transfers to the Regions (Transfer Ke Daerah).

This grievance reflects the anxiety voiced by hundreds of regional heads like Amizaro. Through Presidential Instruction No. 1/2025, President Prabowo Subianto had ordered major cuts to regional fiscal transfers from the state budget, citing government efficiency as the rationale. Up to IDR270 trillion (almost USD15 billion) was set aside to finance his populist programmes. The cuts are politically sensitive because reductions in the revenue-sharing components of TKD are likely to hit many regions outside Java hardest, even though these are often the regions with the weakest capacity to replace lost transfers through their own-source revenue.

It is unsurprising that regional leaders have pushed back: they are expected to keep their campaign promises, but their fiscal space is now being squeezed.

By reclaiming fiscal space from the regions to fund large national programmes, the central government has weakened the capacity of subnational governments whose authority comes from local democratic elections.

At a deeper level, the TKD cuts raise democratic and constitutional concerns for decentralisation because they curtail the fiscal capacity of elected regional governments through a unilateral decision from the national government (that is, the central executive). A bigger question is, how does the Indonesian public view the TKD cuts? To answer this, Indikator Politik conducted a nationally representative face-to-face survey in mid-April 2026. The survey took a base sample of 2,300 adults, but for analytical purposes, included an oversample to ensure that at least 100 respondents in each province and at least 10 respondents in each district or municipality were polled, bringing the total sample to 7,040 respondents. The results point to a clear pattern of public opposition against TKD cuts. Although public awareness of the policy was limited, with only 28.5 per cent of respondents saying they knew about the cuts, among those who were aware, a clear majority (63.3 per cent) opposed them (Figure 1).

Figure 1. Approval of Regional Transfer Cuts (Percentage of Respondents Aware of the Policy)

A closer look at who rejected the policy reveals a fairly consistent pattern. Among respondents who have heard of the cuts, opposition is strikingly broad, running across gender, ethnic and religious lines, which makes it hard to dismiss as the grievance of any single community. The sharper divides lie elsewhere. Younger, better-educated and higher-earning respondents reject the policy most firmly, while baby boomers, farmers and those with little schooling are far more split.

The large sample also allows the disaggregation of attitudes toward the TKD cuts, to map where opposition concentrates at the provincial level (Figure 2). Rejection of the cuts runs highest across the western and central belt of the archipelago, topping 80 per cent in Aceh, South Sumatra, Bengkulu, East Nusa Tenggara and West Sulawesi. It holds in the 70–79.9 per cent range in Banten, Central Java, Yogyakarta, Riau, Jambi, West Kalimantan and Central Sulawesi. Yet geography matters less than one might expect: opposition is fairly even nationwide and the urban–rural and Java–outer-island gaps stay narrow. Even respondents living on Java island – arguably the group best positioned to gain from the cuts, as Prabowo’s populist programmes are concentrated there while the revenue-sharing cuts to the TKD fall mainly on regions outside Java – oppose the cuts in large numbers. The gap between who bears the cost of the TKD cuts and who resists them is what makes the policy so consequential, since the regions hit hardest are the least able to cover the shortfall through their own-source revenue.

Figure 2: Map Showing Distribution of Respondents Rejecting TKD Cuts, By Province

Interestingly, about two-thirds of respondents did not support the president’s claim that TKD should be cut because regional budgets often become vehicles for corruption: only 33 per cent accepted this reasoning. A majority (53 per cent) said the central government should not impose cuts to regional government spending, as this would weaken local governments’ ability to develop their regions. When broken down demographically, a majority across demographic groups rejected the TKD cuts as they would harm local development capacity.

There is a clear pattern: the higher the level of education of the respondent, the more they rejected centrally imposed TKD cuts. This suggests that more educated Indonesians are more aware of governance risks arising from such cuts. However, there is no meaningful difference between respondents living in Java and those outside Java; for both groups, majorities opposed the cuts.

Looking Ahead

The TKD cuts face substantial public resistance and, more importantly, have created a governance problem for the Prabowo administration. By reclaiming fiscal space from the regions to fund large national programmes, the central government has weakened the capacity of subnational governments whose authority comes from local democratic elections. This is not simply a matter of regional heads struggling to keep campaign promises, but points to a deeper erosion of decentralisation as a governing principle in Indonesia. Local governments now have less flexibility to respond to local needs, while citizens may experience weaker delivery of public services, higher local taxes or unfulfilled local programmes. If this continues, the cuts could become a source of political tension ahead of the next elections in 2029. Dissatisfied regional heads might start to distance themselves from the president as voters increasingly recognise that local service failures are shaped by fiscal decisions made at the centre.

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