President Jokowi Signs Presidential Regulation on Granting of Awards, Imposition of Sanctions on State Ministries/Institutions, Regional Governments

In a bid to improve an effective and efficient budget performance of state ministries/institutions and the performance of regional governments sourced from the State Budget and Regional Budget for the implementation of sound financial management and to fulfill the implementation of online business licensing services and the acceleration of business implementation, the Government deems it necessary to regulate the granting of awards and imposition of sanctions on state ministries/institutions and regional governments for the performance of one-stop integrated service and the acceleration of business implementation.

In this regard, President Joko “Jokowi” Widodo on 6 March 2020 signed Presidential Regulation Number 42 of 2020 on Granting of Awards and/or Imposition of Sanctions on State Ministries/Institutions and Regional Governments.

This Presidential Regulation aims to improve budget performance of state ministries/institutions so that state ministries/ institutions may be granted awards and/or imposed with sanctions based on results of the assessment of budget management and budget performance indicators.

The results of budget management as referred to include aspects of: a. implementation; b. benefit; and/or c. context based on variables set by Minister of Finance.

The granting of awards to state ministries/institutions as referred to may be in the forms of: a. Charter/Trophy Award; b. publication in national mass media; and/or c. incentives.

“Incentives may be in the forms of additional activity budgets and other forms in accordance with the provisions of laws and regulations,” reads Article 7 paragraph (2) of this Presidential Regulation.

Under this Presidential Regulation, imposition of sanctions on state ministries/institutions may be in the forms of: a. written warning; b. publication in national mass media; and/or c. budget disincentives.

The budget disincentives as referred to in paragraph (1) letter c may be in the forms of: a. budget reduction; b. self-blocking budget; and/or c. budget refocusing,” reads Article 8 paragraph (2).

Furthermore, this Presidential Regulation also stipulates that the granting of award to regional governments may be in the forms of: a. Charter/Trophy Award; b. publication in national mass media; and/or c. regional incentive funds (DID) are implemented in accordance with the ability of state finances.

To improve the Performance of One-Stop Integrated Service and the Acceleration of Business Implementation, the Government grants awards and/or imposes sanctions on: a. state ministries/institutions on the Performance of Acceleration of Business Implementation; and b. Regional Governments for the Performance of One-Stop Integrated Service and the Acceleration of Business Implementation.

The imposition of sanctions on Regional Governments as referred to in this Presidential Regulation is carried out in stages, as follows: a. administrative sanctions on the guidance and supervision of Regional Governments carried out by Minister of Home Affairs and b. postponement of distribution of General Allocation Funds and/or Revenue Sharing Funds in accordance with the provisions of laws and regulations.

Minister of Finance with regard to the imposition of sanctions as referred to shall coordinate with Head of the Investment Coordinating Board by taking into account: a. the amount of distribution of General Allocation Fund and/or Revenue Sharing Fund; b. sanctions of budget cuts and/or other delays; and c. fiscal capacity of the regions concerned.

With this Presidential Regulation coming into force, Presidential Regulation Number 39 of 2012 on Granting of Awards and Imposition of Sanctions for Implementation of Ministries/Institutions Budget (State Gazette of the Republic of Indonesia Year 2012 Number 961), is revoked and declared invalid.

“This Presidential Regulation shall apply from the date of its promulgation,” reads Article 24 of this Presidential Regulation, promulgated by Minister of Law and Human Rights Yasonna H. Laoly on 12 March 2020. (EN)

Translator: Muhardi
Reviewed by: Lulu Wuliarti