Among other fiscal components, local revenue (PAD) is the only instrument that is entirely under the control and initiative of the city government. PAD is the lifeblood of city autonomy, serving as a source of energy that enables city governments to formulate policies, finance services, and drive the local economy in accordance with the character of the region and the needs of its citizens.
Without sufficient local revenue, autonomy remains merely an administrative concept rather than true independence.
Post-pandemic, cities are beginning to struggle. They are starting to see public assets as a new source of economic value, and continue to strive for fiscal independence.
Despite a high level of initiative, the city's fiscal autonomy also faces significant challenges:
Disparity Not all cities have the same fiscal opportunities. Large cities with established economies are able to collect high local revenue, while small cities often depend on central government transfers, creating disparities in service quality.
Many cities are stuck in a pattern of stagnant revenue, where the potential of regional assets, economic cooperation, or financing innovations has not been fully exploited. Regional wealth has become a maintenance burden rather than a source of revenue.
Policy Consistency Most cities are still heavily dependent on central government transfers. This dependence makes city finances vulnerable to frequently changing national policies. Moreover, policy changes from the central government are often unilateral, made without coordination with diverse regions.
Read the review here.
However, the city government did not remain idle. The first step taken was to strengthen PAD governance: ensuring that every public asset was recorded, had legal status, and had a clear economic value.
The digitization of regional financial systems—from taxes and levies to asset management—will help cities monitor their revenue performance in real time and transparently.
In addition, utilizing regional assets through leasing or cooperation schemes, whether through cooperation agreements (KSP) or build-operate-transfer (BOT) agreements, can transform idle assets into new sources of revenue.
Institutional strengthening through human resource training in asset valuation and the formation of inter-agency teams is key.
Ultimately, fiscal independence does not come from taxation alone, but from trust and collaboration that result in tangible public services.
Read the review here.
Regional revenue from regional asset management is now one of the key pillars towards fiscal independence.
Through the category of "other legitimate local revenue," public assets are no longer viewed merely as administrative inventory, but rather as a legitimate, measurable, and sustainable source of economic value.
Read the full coverage Roundtable Decision Discussion: Fiscal Independence of Cities as a Trigger for Growth here.
