Optimising Regional Enterprise Contributions to Local Own-Source Revenue: Evidence from Sukabumi City, Indonesia

Abstract

egional Government-Owned Enterprises (Badan Usaha Milik Daerah/BUMD) occupy a structurally important yet chronically underperforming role in Indonesia’s local fiscal architecture. Despite their statutory mandate to generate returns to the regional treasury, their aggregate contribution to Regional Own-Source Revenue (Pendapatan Asli Daerah/PAD) remains marginal across most Indonesian localities. This qualitative study examines how BUMD contributions to PAD can be optimised in Sukabumi City, West Java, applying Halim’s (2016) intensification–extensification framework operationalised through nine analytical dimensions. Data were collected via semi-structured in-depth interviews with purposively selected informants from three city-owned enterprises BPR Kota Sukabumi (Municipal People’s Credit Bank), Sukabumi City Water Utility (PDAM Tirta Bumi Wibawa), and PD Waluya (a regional public enterprise centred on health and optical services, currently transforming into PT Sejati Bangun Bumi (Perseroda) together with fiscal management officials and legislative representatives, and triangulated with documentary analysis and field observation. Findings reveal that BUMD contributions averaged only 0.38% of total PAD over 2021–2025. BPR Kota Sukabumi exhibited markedly superior performance underpinned by sound corporate governance, professional management, and financial stability, whereas PDAM and PD Waluya remain constrained by operational inefficiencies, governance deficits, and regulatory rigidities. Extensification efforts encompassing business diversification, market expansion, service innovation, and strategic partnerships are underway across all three enterprises but remain nascent and uneven. The study recommends differentiated, enterprise-specific optimisation strategies centred on governance reform, regulatory modernisation, infrastructure rehabilitation, and deepened inter-sectoral partnerships as complementary pillars for sustainably augmenting BUMD fiscal contributions.