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West Java Governor Defends Regional Funds in Demand Deposits
What Happened?
Governor of West Java, Dedi Mulyadi, responded to a statement by the Minister of Finance, Purbaya Yudhi Sadewa, regarding regional funds (APBD) held in demand deposits. The Minister suggested this practice incurs losses. Governor Mulyadi countered that demand deposits are, in fact, the safest method for managing these funds.
Governor Mulyadi stated, ”If saving in a checking account today is considered a loss, then it’s unfeasible for local governments to keep money in a mattress or a safe, right? That would be an even greater loss.” he made these remarks in Bandung on October 24, 2025, as reported by Antara News Agency.
Why This Matters: The Debate Over Regional Funds Management
The core of the dispute lies in the optimal strategy for managing regional budgets. The Minister of Finance appears to advocate for more active investment of APBD funds, potentially in instruments offering higher returns. Governor Mulyadi prioritizes security and accessibility, arguing that demand deposits, while potentially yielding lower interest, prevent loss and provide readily available funds for development.
This debate highlights a broader tension between maximizing financial gains and ensuring fiscal responsibility within regional governance. The choice between higher-risk, higher-reward investments and safer, lower-yield options has significant implications for regional development projects and overall financial stability.
Understanding Demand Deposits and On-Call Deposits
Demand deposits are funds held in an account from which money can be withdrawn at any time without prior notice. While interest rates are typically low, they offer high liquidity and security.
Governor Mulyadi also referenced “on-call deposits,” a similar instrument used by regional governments. These deposits, while still relatively liquid, may have slightly less immediate accessibility than standard demand deposits but generally offer a marginally higher interest rate. He emphasized that these on-call deposits are flexible and can be withdrawn quickly for development needs.
Comparison of Deposit types
| Deposit Type | Liquidity | Interest Rate | Risk |
|---|---|---|---|
| Demand deposit | Very High | Low | Very Low |
| On-Call Deposit | High | slightly Higher than Demand Deposit | low |
| Checking Account | High | Low | Low |
The Regional Government Perspective
Governor Mulyadi explained that many regions already utilize on-call deposits as a means of maintaining readily available funds. He argued that earning interest on these deposits, even at a modest rate, provides additional income that can be reinvested in regional development projects.
“Then the interest becomes othre income which can also become development capital for the regional government, it doesn’t go to individuals and goes back to the regional treasury,” he stated, emphasizing the benefit of keeping funds within the public sector.