Jakarta. Home Affairs Minister Tito Karnavian has attributed the financial losses of nearly half of Indonesia’s 1,057 municipally- and provincially-owned companies to rampant cronyism.

Speaking at a meeting on regional budgets in Jakarta, Tito said that many of these companies have become parasitic users of government funds, adding to the financial burden on local and central governments.

"Nearly half of these companies are suffering losses due to favoritism in appointing unqualified relatives or friends to managerial positions," Tito said.

The financial instability of these companies not only erodes local government revenues but also increases dependence on financial transfers from the central government.

Municipally- and provincially-owned companies are commonly established to provide essential public services, including water utilities, regional development banks, traditional markets, tourist resorts, land transportation, and animal slaughterhouses.

To address the issue, Tito said he has issued a circular instructing local governments to liquidate companies that are no longer financially viable.

"If these companies continue to operate, their financial losses will only balloon, becoming a greater burden on local government budgets. Furthermore, changes in local government leadership often result in new executive appointments, which only exacerbate the issues and deepen the financial losses," Tito explained.

As these companies fall under the oversight of the Home Affairs Ministry, Tito urged comprehensive reform in their management to improve local revenue streams and reduce financial dependency.

"President Prabowo Subianto has set a target to boost national economic growth to 8 percent. Achieving this ambitious goal will require robust financial conditions, including at the local government level," Tito said.

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