The Challenges Of Public Asset Management

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Recommended: Nature and characteristics of new public management

In the last three decades, a New Public Management (NPM) as a general set of financial and managerial reforms in the municipal sector has been adopted in many countries. The most difficult challenges in the historical backdrop of the NPM execution are the alterations in management of public asset and governance policies. The management of public sector asset reform considered as a central point and change the public sector organizations progressively (Grubisic et al. 2008). Meanwhile, BPK RI (Badan Pemeriksa Keuangan Republik Indonesia) as an audit board in Indonesia, tends to issue qualified opinion on the financial statement of local governments (34% of local government receive unqualified opinion, 60% obtain qualified opinion, adverse and disclaimer opinion are at 2% and 4%, respectively on semester I, 2014 report). Contrasting to its connotation, qualified opinion is not the best result in audit which means information within the audit is not complete or most matters have been dealt with adequately, except for a few issues. The challenges of public asset management in Indonesia is a major concern that caused the local government cannot afford unqualified opinion. Understanding those challenges will help the governments to plan strategies and propose alternative solutions. Therefore, this essay argues that the barriers to effective public asset management by the Indonesian local government involves the perception, government control, and human resource limitations to its influence.

An overview of examination result semester I, 2014 by the Audit Board of Indonesia states that more than forty percent of the potential loss of the country or region is due to problems regarding to their assets. The challenges in managing municipa...

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...et is important for the realization of public sector reform under the New Public Management ethos. Meanwhile, in the same time, local governments in Indonesia still experiencing a number of challenges regarding to the implementation of public assets management. There are three main aspects that obstruct the effective public asset management. They are include traditional perception in managing municipal assets, lack of government control, and the limitation of human resources who have adequate skills to manage public assets. This problems would affect the local governments’ financial statement audit report and hence influencing the audit opinion. It is recommended that the government either in central or local units to learn from other countries which have been successfully applied a number of strategies to support the implementation of public sector asset management.

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