Public Service Agency (Badan Layanan Umum/BLU) and Regional Public Service Agency

(Badan Layanan Umum Daerah/BLUD)

Public Service Agency (BLU) defined as the institution of government that provide
goods and/or services to the citizen without prioritizing the profit that based on efficiency
and productivity principle. The purpose of BLU is to give service for Indonesian people in
order to developing social welfare by giving flexibility in operate the financial by economical
principle and productivity. Hence, the good business practice will occurs.

BLU operation is based on UU No. 17 Year 2003, UU No. 01 Year 2004, PP No. 23
Year 2005 that are concerned in BLU Financial Management and Operation. In addition to
that, there are also PMK No. 7 Year 2006 that focused on The Administrative Requirement
in Proposal and Establishment of Work Units of Government Agencies to Implement
Financial Management of Public Service Bodies/BLU.

Characteristic of Public Service Agency

 BLU operates as a work unit of the state ministry / agency / local government for the
purpose of providing public services delegated by its parent agency
 BLU finance is not state wealth, but is part of the state budget system
 Managed with the principles of efficiency and productivity such as corporations by
autonomy system.
 BLU organizes its activities without prioritizing profit seeking
 BLU acts as an agent for achieving the goals of the state ministry / institution
 The work plan and budget as well as the BLU financial and performance reports are
prepared and presented as an inseparable part of the work plan and budget as well
as the financial and performance reports of the ministries of state / institutions /
local governments
 BLU is not a separate legal entity. The legal status of BLU is not separate from the
ministry of state / government.
 Receiving both income and donations can be used directly
 Employees can consist of civil servants and not civil servants.

There are three types of Public Service Agency

1. BLU whose activities provide goods or services include hospitals, educational

institutions, licensing services, broadcasting, and so on
2. BLU whose activities are to manage special regions or zones including regional and
economic zones development authority
3. BLU whose activities manage special funds include revolving fund managers, SME
funds, onward loans and employee savings

The requirements of operating the Public Service Agency

The requirement is the agency that directly giving the services to its people and
required substantively, technically, and administratively that being suggested by
minister, head of agency, head of SKPD into Financial Minister/Governor, etc.
Substantive

This requirement is defined as the government agency is providing these public service;

1. Providing goods and/or services. For instance, the medical division services,
providing education, also providing services in research and development.
2. Operate and manage the special/certain funds. For examples, operating the
revolving fund for SME, loan forwarding manager, housing saver managers.
3. Operate and manage the region and areas by autonomy system. For instance,
authority and integrated economic development zone.

Technical Requirement

1. The service performance in main duties and functions has to be feasible to be

operated and increase the achievement throughout Public Service Agency as what
being recommended by minister, head of agency, head of SKPD according to the
authority.
2. The financial performance of the concerned budget user authority that is healthy as
indicated in the proposed BLU designation document.

Administrative Requirement

1. A statement of ability to improve service performance, finance, and benefits for the
community
2. Governance patterns
3. Business strategic plan
4. Principal financial statements
5. Minimum service standards (SPM)
6. Latest audit report or statement willing to be audited

From all of those requirements, the public service agency is being accepted or declined.
Government institution that applying public service agency / BLU has to use the minimum
service standard that formulated by ministry/government. Minimum service standard could
be suggested by the institution of government that applying PKK-BLU. Minimum service
standard has to considering the quality of services, the welfare of services, the costs and the
easiness to get the services.

Public Service Agency (BLU) Financial Operation

1. BLU allowed to collect the fees to citizen as feedback of goods/services that already
received by its citizen. The fees can be accounted as tariff that calculated by costs
per unit or per funds of investment. In addition to that, the tariff has to considering
the continuity and services development.
2. Public service agency can be used directly for pay the BLU expenses, without
transferring into the national/regional fund account.
3. There is flexibility in operating the expenses. BLU expenses operates flexible based
on the balance between volume of services performance with the amount of
expenses, and following good business practices.
4. In operating the funds, public service agency do these tasks:
 Planning the receiving and expensing the costs.
 Do collect the revenues and fees.
 Saving the funds and operate the account of bank
 Do the payment
 Receive the fund sources to enclose the short term deficit
 Use the short term surplus costs to gain the additional revenues
5. Public service agency manage the payables and receivables in efficient and effective
way
6. Public service agency do the short terms and long terms investment.
7. Public service agency allowed to provide the goods and services based on economic
principle and efficiency according to good business.
8. The system is according with the SAK (Standard Akuntansi Keuangan)
9. The employee of public service agency can be from civil servants and non-civil
servants.
10. The remuneration can be give to the head, controller, and the BLU employees
according to the level of responsibility and professionalism that needed after the
regulation from ministry/government/etc are applied.
11. The surplus of BLU can be used in the next year of period except because of the
commando from Financial Ministry/Governor/etc according to the authority and
paid half or wholly into national funds.