The Supreme Audit Agency (BPK) has identified discrepancies in subsidy distribution by state-owned enterprises (SOEs) following an audit conducted in the first half of 2024.
The audit, which examined subsidy and public service obligation (PSO) programs for the 2023 fiscal year, assessed 15 state-owned companies, revealing a financial correction value of Rp1.8 trillion (US$114 million).
Additionally, 10 of these companies were found to have accounting violations amounting to Rp461.63 billion, largely due to non-compliance with regulations.
One notable correction involved State-owned fertilizer holding company PT Pupuk Indonesia and its subsidiaries, with a miscalculation in fertilizer subsidies totaling Rp338.52 billion.
BPK board member Slamet Edy Purnomo cited that these discrepancies stemmed from non-adherence to allowable cost criteria.
“The subsidies were calculated higher without efficiency efforts in production, resulting in inflated production costs and potential moral hazards in subsidy calculations,” he said in a media statement released on Tuesday, November 12, 2024.
BPK’s audit highlighted inaccuracies in recipient data and weak oversight in the subsidy distribution process, which ultimately reduced fiscal space for other government programs.
To address these issues, BPK recommended that boards of commissioners of SOEs increase oversight over subsidy-related activities, ensuring cost calculations to prevent moral hazard and production cost leakage.
Additionally, BPK urged SOEs directors to refine systems for subsidy calculation and distribution and to strengthen internal supervisory mechanisms for accurate reporting.
Improving data quality, integrating information systems, and enhancing coordination with technical ministries and the Ministry of Finance were also recommended to address excess or deficit payments for 2023 subsidies.
