OPTIMIZING THE UTILIZATION OF REGIONAL PROPERTY THROUGH RENTAL, LEND-TO-USE, AND COOPERATION MECHANISMS: A LITERATURE REVIEW OF THE POTENTIAL FOR REGIONAL ORIGINAL INCOME AND THE RISK OF REGULATORY COMPLIANCE

Abstract

Fiscal constraints drive local governments to optimize Regional Government Assets (BMD) through lease, borrow-to-use, and utilization cooperation mechanisms to enhance Regional Original Revenue (PAD); however, this practice also potentially increases the risk of non-compliance with the asset management regulatory framework. This article aims to synthesize academic literature and regulatory documents to analyze the effectiveness of these three utilization mechanisms, measure their contribution to PAD, and map compliance risks alongside public sector accounting implications. This study employs a critical narrative review method with a systematic thematic synthesis approach. Reference tracing was conducted through parallel and nested searches across accredited university repositories, primary regulations (Minister of Home Affairs Regulation No. 47 of 2021, Government Regulation No. 27 of 2014 as amended by No. 28 of 2020), accrual-based Government Accounting Standards, and Audit Reports issued by the Supreme Audit Agency (BPK). The synthesis reveals that the lease mechanism provides a stable contribution to PAD with moderate control complexity, borrow-to-use supports public service efficiency without direct fiscal impact, while utilization cooperation offers high economic value potential but entails compliance risks and complex contractual risk allocation. Audit findings consistently identify critical gaps in the absence of written approvals, weak physical-administrative reconciliation, non-market-based tariff settings, and partial audit trail documentation. Key accounting challenges encompass the consistency of accrual-based revenue recognition and the depth of disclosure in the Notes to the Financial Statements (CaLK). Optimizing PAD through BMD requires strict integration between fiscal targets, procedural compliance, and internal controls grounded in audit readiness. This article proposes a four-tier accountable governance model and provides strategic recommendations for local governments, regulators, and external auditors to strengthen transparency, prioritize economic substance over legal form, and ensure the sustainability of regional asset management.