Regional endowments can be an option for cross-generational benefits offering greater benefits for regions having very high fiscal capacity with relatively good quality of public services.
The Law on Financial Relations between the Central Government and Regional Governments ("Hubungan Keuangan antara Pemerintah Pusat dan Pemerintahan Daerah" or HKPD Law) which was socialized by Sri Mulyani (10/03/22) encourages local governments to establish regional endowments independently.
Regional endowment funds are funds sourced from Regional Budget that are long-lasting and the funds managed by Regional Government can be used for regional expenditures without reducing the basic funds. Regional endowments can be formed by regions having high regional fiscal capacity and have met the needs of basic public services.
The purpose of regional endowments is to obtain social, economic, and/or other benefits. One of them is giving contribution to local government and public benefit across generations.
The principle of endowment fund management is stipulated through a Regional Regulation. This fund is managed by the Regional General Treasurer ("Bendahara Umum Daerah" or BUD).
The concept of regional endowments is similar to the central government. The central endowment fund is used for education funding, one of which is Educational Fund Management Institution (LPDP) scholarships, research, higher education, and culture. Thus, the fund is not used to purchase goods, but are used to prepare future generations.
"I hope that regions having natural resource surplus do not use waste it. Otherwise, people should make use of the surplus for the prosperity of the people, of course we have to save for future generations so that they can benefit from the results of these natural resources." Sri Mulyani's Hope in the Kick Off of Socialization of HKPD Law.
