State bodies to use credit cards for operational spending. The government will require all state agencies and ministries to use credit cards in their spending, particularly for daily operations, in an effort to increase transparency in budget spending.
The use of credit cards for each transaction is aimed at combating budget leaks, as all transactions are recorded and, therefore, traceable.
Finance Minister Sri Mulyani Indrawati confirmed she had asked government bodies to use credit cards for their spending on operational needs in order to tighten up state budget monitoring.
“That way, we can keep track of where the money goes and what it’s used for,” she said during a speech in Jakarta recently.
Using credit cards will also help in making budget reporting more accountable in the future as the government is planning to focus its spending on human resources development this year, which could be harder to monitor than typical goods procurement.
This year, the government has allocated 20 percent, about Rp492.5 trillion (US$34.79 billion), of the state budget to improve accessibility, distribution and quality in the country’s education system. It is also allocating Rp123.1 trillion for the improvement of health-service access and quality.
The use of credit cards to pay for government spending is not new as several state agencies, such as the Finance Ministry, the State Secretary’s Office and the Corruption Eradication Commission, have conducted trial runs.
Sri Mulyani added that the ministry was now working to evaluate the trial runs and would later determine when the policy should be applied to every governmental body in the country.
However, not all transactions can be paid with government-issued credit cards. The Finance Ministry’s spokesperson Nurfransa Wirasakti told The Jakarta Post the cards could only be used for paying for things like office supplies or work-related travel in transactions worth less than Rp 50 million.
The use of credit cards will not only facilitate the government in tightening up the monitoring of ministries and government institutions, but it will also assist the Finance Ministry in allocating funding through setting limits on the cards, Sri Mulyani said.
However, the suggested use of credit cards has garnered some criticism.
Institute for Development of Economics and Finance (Indef) researcher Eko Listiyanto, for example, said the lack of familiarity with credit card use in Indonesia could create complications.
“Some merchants may not have electronic data capture [EDC] machines to receive payments with credit cards, especially in remote places around the country,” he said.
University of Indonesia economist Fithra Faisal Hastiadi also cited the same problem and suggested the government use a simpler but more advanced technology that would have the same ability to track every detailed transaction: electronic payment.
The rise of electronic payment systems in recent years all over the globe has changed the way people pay for goods to a point where they use their phones instead of cash and cards to pay for them, he said.
Given the fact that some state-owned enterprises (SOEs) had recently joined forces to create their own payment system called LinkAja, he recommended the government make use of the available technology and, more importantly, reduce the burden on the state budget.
“Credit cards incur interest fees for every transaction, meaning that it will create more of a burden for the state budget,” he said.
Despite the criticism, both Fithra and Eko lauded the government’s efforts to make budget spending more transparent as in its previous attempts at digitizing budget planning and goods procurement.
Over the past few years, the government has continued to utilize technological advancements for electronic planning, goods procurement and budgeting for regional administrations, ministries and institutions to make budget spending and planning more transparent, and also more efficient.
Despite the fact that it would make government bodies more mindful in spending their budgets, he warned that it might not solve the crippling corruption problem in the country because of the low threshold of transaction amount allowed by the cards.
“The corruption that is rampant in a lot of governmental bodies in the country may still occur in bigger procurements,” he said. Cash no more: State bodies to use credit cards for operational spending (Riska Rahman, The Jakarta Post)