Indonesia's Public Works Ministry Seeks to Restore Slashed Budget, Assures Toll Road Projects Will Continue

JAKARTA, investortrust.id – Indonesia's Ministry of Public Works is seeking to restore a significant portion of its 2025 budget after a substantial cut, raising concerns about the potential impact on infrastructure projects, though the ministry assures that toll road developments will continue as planned.

The ministry's initial budget allocation of Rp 110.95 trillion ($7 billion) for 2025 has been reduced by 73% or Rp 81 trillion, leaving only Rp 29.57 trillion.

"Yes, of course (we are fighting for it)," said Deputy Minister of Public Works Diana Kusumastuti at the ministry’s office in South Jakarta on Tuesday, Feb 4, 2025. "We are currently conducting an efficiency exercise to adjust to the budget cut of Rp 81 trillion. We are reviewing it first, and hopefully, we will find new solutions."

Diana explained that the ministry is focusing on budget efficiency measures to sustain the Asta Cita food self-sufficiency program, particularly in dam and irrigation network projects. Asta Cita refers to the eight commitments or aspirations of the Indonesian government under President Prabowo Subianto.

She assured that the budget cuts would not disrupt ongoing or upcoming toll road projects. "Most toll road projects are under the Public-Private Partnership (PPP) scheme, so they are not entirely funded by the state budget (APBN)," she stated. "That means the projects will continue as planned."

Ministry Receives 'Love Letter'

Earlier reports indicated that the Ministry of Public Works had received a 'love letter'—a colloquial term for a budget cut notification—from the Ministry of Finance regarding the Rp 81.38 trillion (about $5.12 billion) reduction for 2025. The cut follows a Presidential Instruction on budget efficiency.

Diana noted that there have been no specific directives regarding the addition of new National Strategic Projects (PSN) under the Prabowo Subianto administration. However, President Prabowo has instructed the ministry to review all unfinished PSN projects to determine priorities aligned with Asta Cita’s objectives.

"In principle, all ongoing projects will be reassessed to redefine priorities based on Asta Cita," Diana told investortrust.id on Monday, Feb 3, 2025. "The implementation will be staged according to the government’s fiscal capacity."

The Ministry of Public Works’ 2025 state budget was initially set at Rp 110.95 trillion.

However, under Finance Minister Sri Mulyani Indrawati’s directive, outlined in a Circular Letter, the ministry must implement efficiency measures amounting to Rp 81.38 trillion. According to Diana, the efficiency measures exclude employee salaries, foreign loans and grants, and government-issued Islamic securities.

"For other expenditures, operational costs have been reduced by 50%, while infrastructure spending has been cut by 24%," she explained. Diana added that several programs, including road, dam, building, and irrigation projects, are being reassessed for prioritization.

"We have to allocate resources wisely and determine what should be prioritized," she emphasized. "Projects funded by foreign loan and grant, and Government-issued Islamic securities must proceed as committed."

 

Budget Efficiency Measures by Category

The budget cuts outlined in the Circular Letter are allocated as follows:

• Office Supplies: 90.0% reduction

• Ceremonial Events: 56.9% reduction

• Meetings, Seminars, and Similar Activities: 45.0% reduction

• Studies and Analysis: 51.5% reduction

• Training and Technical Guidance: 29.0% reduction

• Activity Output Fees and Professional Services: 40.0% reduction

• Printing and Souvenirs: 75.9% reduction

• Building, Vehicle, and Equipment Rentals: 73.3% reduction

• Application Licenses: 21.6% reduction

• Consultant Services: 45.7% reduction

• Government Assistance: 16.7% reduction

• Maintenance and Repairs: 10.2% reduction

• Business Travel: 53.9% reduction

• Equipment and Machinery: 28.0% reduction

• Infrastructure: 34.3% reduction

• Other Expenditures: 59.1% reduction

Despite the significant budget cuts, the Ministry of Public Works remains committed to ensuring that critical infrastructure projects proceed without disruption while maximizing efficiency and fiscal responsibility.