Government extends transition for 30% regional payroll cap
The rule, due to take effect in January 2027, will be folded into the 2027 APBN law after 479 of 546 regions missed compliance.
The government is extending the transition period for implementing the maximum 30 percent payroll spending cap from APBD, which was originally set to take effect in January 2027. Home Affairs Minister Tito Karnavian said the decision was made after a meeting with Finance Minister Purbaya Yudhi Sadewa and PANRB Minister Rini Widyantini on 7 Mei 2026. The extension will be inserted into the 2027 APBN law, rather than through a revision of the Law on Financial Relations between the Central Government and Regional Governments, because that route was seen as slower. According to a mapping by Kemendagri, 479 of 546 regions still record payroll spending above 30 percent. The government had discussed raising the cap to 40-50 percent, but ultimately kept it at 30 percent to push regions to increase PAD and improve BUMD.