IMPLEMENTATION OF FISCAL DECENTRALIZATION IN INDONESIA: 2001-2009

(1)

Jurnal Ekonomi Pembangunan

Volume 13, Nomor 1, Juni 2012, hlm.1-17

IMPLEMENTATION OF FISCAL DECENTRALIZATION IN

INDONESIA: 2001-2009

Nursini

Faculty of Economics, Hasanuddin University Kampus Baru Tamalanrea Jalan Perintis Kemerdekaan Km.10

E -mail: nini_mahmud@yahoo.com Diterima 10 Juni 2011 / Disetujui 1 April 2012

Abstract: In Indonesia, the implementation of fiscal decentralization has entered the 9th_year,

however, so far many problems and obstacles which is faced during the implementation to sti-mulate economic growth and reduce poverty. This study aims to analyze: trend of government expenditure in decentralization era and regional autonomy during 2001-2009 and fiscal decentralization degree in Indonesia. This objective is achieved through descriptive analysis using secondary data for 2001-2009. The result shows central government expenditure tends to decreased and transfer expenditure increased significantly every year in absolutely, but annual growth rate fluctuated considerably. This indicates the allocation portion of the transfers was unstable. The largest component of transfers is fund balance and tends to in-crease every year significantly, fiscal decentralization degree at districts/city and province increased in 2007-2008. It is recommended to regional government to allocate public interest bigger than for government administration such as personnel government spending.

Keywords: fiscal decentralization, regional autonomy, government expenditure, transfer Abstrak: Di Indonesia, pelaksanaan desentralisasi fiskal sudah memasuki tahun ke-9, namun masih banyak persoalan dan hambatan yang dihadapi terutama dalam mendorong pertum-buhan ekonomi dan penurunan kemiskinan. Penelitian ini bertujuan untuk menganalisis: perkembangan pengeluaran pemerintah dalam era desentralisasi dan otonomi daerah untuk periode 2001-2009 dan derajat desentralisasi fiskal di Indonesia. Tujuan ini dicapai melalui analisis deskriptif dengan menggunakan data sekunder periode 2001-2009. Hasil penelitian menunjukkan: perkembangan pengeluaran pemerintah pusat cenderung menurun dan transfer pemerintah meningkat cukup signifikan setiap tahun secara absolute, tetapi tingkat pertumbuhan berfluktuasi. Ini berarti bahwa selama periode desentralisasi, porsi alokasi transfer ke daerah tidak stabil. Komponen terbesar pengeluaran transfer adalah dana perim-bangan dan cenderung meningkat setiap tahun secara signifikan, derajat desentralisasi fiskal untuk kabupaten/kota dan provinsi meningkat selama dua tahun terakhir, 2007-2008. Direkomendasikan kepada pemerintah daerah untuk mengalokasikan anggaran lebih besar kepada kepentingan publik daripada administrasi pemerintahan seperti belanja pegawai negeri.

Kata kunci: desentralisasi fiskal, otonomi daerah, pengeluaran pemerintah, transfer

INTRODUCTION

Fiscal decentralization is one of the most inter-esting issues in the theory of state and local finance, and has helped to globalize the world. Fiscal decentralization is expected to be able to

overcome the various problems being faced by countries, including issues of poverty and instability of economic growth. Through fiscal decentralization, the government can recognize the needs of society so that public services become more efficient and touch the real needs of society which in turn can encourage

(2)

eco-Jurnal Ekonomi Pembangunan Volume 13, Nomor 1, Juni 2012: 1-17

nomic growth and reduce poverty.

Many empirical studies have examined the impact of fiscal decentralization on the econ-omy of a country such as economic growth and poverty. The relationship between fiscal decen-tralization and economic growth has been ex-amined by many empirical studies (Phillips and Woller, 1997; Zhang and Zou, 1998; and Marti-nez-Vazquez and McNab, 2001; Rodriguez-Pose and Kroijer, 2009). Some empirical studies indi-cate that the relationship between the two va-riables is still a debate. Fiscal decentralization has a negative effect on economic growth in China (Zhang and Zou, 1998), Phillips and Woller (1997) in developing countries and a positive influence on economic growth in de-veloped countries (Martinez-Vazquez and McNab, 2001; Rodriguez-Pose and Kroijer, 2009). Several other studies examined the rela-tionship between fiscal decentralization and poverty (Martinez-Vazquez and McNab, 2001, Susan, 2005). Martinez-Vazquez and McNab, (2001) concluded that the policy of spending more precise than the revenue policy. World Bank (2007) recommends that the problems of poverty can be overcome by making the pro poor budgeting.

There are three indicators of fiscal decen-tralization that are commonly used by many empirical studies: (1) Decentralization of penditure is defined as the ratio of total ex-penditure in each district/city in the region budget (APBD) of total government expendi-tures (State Budget) (Phillips and Woller, 1997; Zhang and Zou, 1998; Rodriquez-Pose and Kroijer, 2009). This shows the relative size of government expenditures between regional governments and the central government, (2) Decentralization of development expenditures is defined as the ratio between the total devel-opment expenditure of each district/city (APBD) relative to the total national develop-ment expenditure (APBN). This variable indi-cates the relative size of government expendi-ture in development between local and central government. From this ratio it can be seen whether the regional government is in a good position to carry out public sector investment or not. If there is a positive relationship between

these variables with economic growth, the re-gional government is in a good position, (3) Revenue decentralization is defined as the ratio between the total revenue of each district/city does not include subsidies to total government revenue (Philips and Woller, 1997). This varia-ble expresses the relative amount of revenue regional governments against central govern-ments.

Fiscal decentralization policy and regional autonomy has been implemented in Indonesia since 2001 and aims to support the achievement of national development for the creation of prosperity of the community. During the period of 2001-2010, a lot of expectations should be realized, however it should be recognized that many problems and constraints are still faced during the implementation of fiscal decentrali-zation.

This study aims: (1) to analyze the trend of government expenditure in Indonesia, (2) to analyze the degree of fiscal decentralization in the era of decentralization and regional auton-omy for the period of 2001-2009.

RESEARCH METHOD

This research used descriptive research ap-proach. The type of data is secondary data which collected from various sources inclduded internet, World Bank reports, and other docu-ments. Secondary data were analyzed through descriptive statistical models that described the development of regional (district/city) revenue and expenditure in the decentralization era and the trend of indicators of fiscal decentralization in Indonesia for the last three years (2007-2009). Indicator of fiscal decentralization which ana-lyzed was expenditure side which measured by ratio of district/city government expenditure to total national expenditures.

RESULTS AND ANALYSIS

Trend of State Government Expenditure Fiscal decentralization has several objectives as follows (Anggito, 2008): (1) to reduce fiscal

(3)

Implementation of Fiscal Decentralization (Nursini) 3 parities between central and regional

govern-ments (vertical fiscal imbalance) and regions (horizontal fiscal imbalance), (2) to improve the quality of public services in the area and reduce public service gaps among regions, (3) to im-prove the efficiency of utilization of national resources, 4) to strict governance, transparency, and accountability in the allocation of activities transferred to the regions targeted, timely, effi-ciency, and fair, and (5) to support sustain-ability fiscal macroeconomic policy.

It is understood, of course, that it is im-possible to achieve fully all these objectives, everywhere and all the times. Some goals may conflict with one another, and, to the extent that objectives are not consistent, hard choices will have to be made. At least, however, the purpose of this policy is to provide a basis for evaluating the relative success of the implementation of a fiscal decentralization program. In addition, it is noted that the ultimate goal of all these goals is to create greater well-being of a better society through increased regional economic growth.

To find out how far one or more objective is reached, the necessary fiscal decentralization indicators are commonly used by many coun-tries. Here are some indicators of fiscal decen-tralization is applied in Indonesia (Khuzaini, 2006): (1) Decentralization of expenditure, (2) decentralization of revenues, and (3) decentrali-zation of development expenditures. The same opinion by Martinez-Vazquez and Sri Mulyani (2003), the degree of fiscal decentralization measures can be seen from the sub-national share to national revenue and expenditure. Furthermore, they argued that these measures are far from perfect proxies of the degree of de-centralization their use is common and, within limits, can be instructive.

The main instrument of fiscal decentraliza-tion is the transfer of central government to re-gional governments consisting of balance fund and the special autonomy fund. Balance fund consists of revenue sharing, the General Allo-cation Fund (DAU), and the special alloAllo-cation fund (DAK). In the new budget structure, the expenditure component is composed of two areas: central government expenditure at Na-tional level (centers) and regional expenditure.

Regional expenditure includes expenditure by the central government in the region (through Ministries/Institution; K/L, vertical funds, de-concentration funds, the duty of assistance funds) and transfers to the region through APBD.

As illustration in 2008, central government expenditure to the regions is 41 percent consisted of centers government expenditure in the region is 12 percent (by K/L; vertical funds, de-concentration funds, and the duty of assistance) and transfers to the regions is 29 percent, while center government expenditures at the national level by 34 percent. In 2009, the state budget funds to the region increased to 76 percent which consists of government expen-diture through the K/L by 45 percent and transfer to the regions by 31 percent (Figure 1 and 2).

Source: Finance Ministry: Finance Note 2009 (processed data)

Figure 1. Composition of Central Government Expenditure in 2008 (percent)

In addition, there are other programs such as PNPM which has absorbed the State Budget so that the amount of money circulated at the regional level increases. By looking at the de-velopment of central government expenditure during the era of regional autonomy and fiscal decentralization seems the central government expenditure decreased and the transfer ex-penditure increased. In 2008, the largest trans-fers were allocated to the DAU for 62 percent, the rest is 38 percent which allocated to the DAK, profit-sharing and funds special

(4)

auton-Jurnal Ekonomi Pembangunan Volume 13, Nomor 1, Juni 2012: 1-17

omy (Otsus). But in 2009, transfer to the DAU decreased to 58 percent, the rest is 42 percent is allocated to the other components of the bal-ance funds and funds Otsus.

Source: Finance Ministry: Finance Note 2009 (processed data)

Figure 2. Composition of Central Government Expenditure in 2009 (percent)

What is interesting to note further is the development of the State government expend-iture over the period 2001-2009. Does the State expenditure significantly affect the national economy in the era of decentralization and local autonomy? In general there is a tendency for the regional expenditure increased every year with an average per year is 18.85 percent, while central government expenditures tend to fluc-tuate with an average growth reached only 14.22 percent per annum during the period 2001-2009.

In 2001, the allocation of funds transfer to the region of Rp81.1 trillion only covers the bal-ance fund. Since 2002, there was central gov-ernment policy regarding to Papua is called Pa-pua Special Autonomy (Otsus PaPa-pua), then the allocation of transfer was intended to be suffi-ciently large in 2002. Transfers increased to Rp 98.2 trillion in 2002. The trend of transfer to the region can be seen in Figure 3. During the implementation of regional autonomy and fis-cal decentralization as stipulated by Law No. 22 of 1999 which replaced the Law No. 32 of 2004 and Law No. 25 of 1999 which had been con-verted into Law No. 33 of 2004, the trend of financial transfers from central to regional gov-ernment increased sharply, namely from Rp 81.1 trillion in 2001 to Rp320.7 trillion in 2009. During this period, the average increase per year was 185.94 trillion. Although in absolute terms the transfers has increased significantly every year, but annual growth rate fluctuated considerably. This means that during the period

Source: Finance Ministry, Finance Note various editions: processed data

(5)

Implem of dece transfe est gro percen in APB fer me ad hoc each y enough Vazque Bob 20 In which the reg 81 trill and in this pe averag averag that th on the enough encour the reg welfare Am fund, t the DA signific increas Figu mentation of entralization ers into the r owth rates oc nt, which furt BN 2009. Thi echanism. Tr highly depe year and ca h fluctuate e

ez, 2001; M 007a, 2007b). n the 2001-20 is the large gion, showed

lion in 2001 ncreased to 2

eriod, the fu ge of 177 bil ge of 18 per he implicatio e budget all

h. Of cours rage the acc gion which e of society a mong the th the highest AU. Increase

cant from ye sed ratio of

Source ure 4. Trend o

f Fiscal Dece

n, the allocat region was u ccurred in th ther decreas is may be cau ransfer mech ends on the auses the t each year (Bo Marinez-Vazq 009 period, est compone d a significa 1 to Rp279.6 297 trillion i und balance lion per yea cent per ye ons of fisca location to e the budg celeration of will ultima as a whole in

hree compo absorptive ed allocation ear to year a DAU alloca

e: Finance Minis of Balance Fu

a b d

entralization

tion portion unstable. The

he year 2006 sed to be 9 pe used by the hanisms by size of the b transfers is oex and Mar

quez and S the fund ba ent of transf

ant increase, 6 trillion in in APBN 20 e increases b ar, or grow

ar. This ind l decentraliz the regions get is expect

f the econom ately improv

n the future. onents of ba

was occupi n of DAU is associated w ation of net

stry, Finance No und (Revenu

a b d a b d

(Nursini) of the e larg-6 is 50

ercent trans-using budget large rtinez-Searle, alance fers to , from 2008, 009. In by an by an dicates zation large ted to my in ve the alance ed by quite with an reve-nu the to DA pe en of Du DA cre gr Du qu tri gr 20 an in tra un ge (20 fer co mo cia me M

te various editio ue Sharing, D

b c

d a b c d a b

ues. DAU is e formula m 2009, there AU: 25 perc eriod 2001-20 nues for the p domestic r uring the pe AU allocati eases in aver ow by an a uring this p uite sharply

illion in 200 ew by 64 p 009, DAU ab nce.

Along wi the previo ansfer in Ind nconditional eneral grant

006). The u rred to reg

nditions. In practic ore absorbe ally for paym

eans that m eanwhile, a

ons: processed d DAU, and DA

b c d a b c d a

s transferred mechanism. D

e are three cent of dom

003; 25.5 per period (2004 revenues ov eriod 2001-20 ion experie rage of Rp 1 average of 1

period, the in the year 5 to Rp 145 percent. Dur bsorbs 66 pe

ith the trans ous section donesia is d grants by by Searle a se of this tr gional gove ce in Indone ed for routi ment of gov most of the D

small porti

data

AK 2001-200 a b c d a b c d

d to the regi During the p

types of ca estic revenu rcent of dom 4-2005) and ver period 009, the port enced signi 117 trillion p 16 per cent

DAU has r 2006, from 5.67 trillion

ring the per ercent of the

sfer type as n, the appl dominated b y Rosen (2 and Martinez ransfer is fu ernment wit

sia, the use ine expendit

ernment sal DAU is clear ion of the D

9 (in trillion a b c d

ions using period 2001 alculations ues for the mestic

rev-26 percent 2006-2009. tion of the ificant in-per year, or

per year. increased m Rp 88.77

in 2006 or riod 2001-e fund bal-described ication of y DAU or 2008) and

z-Vazquez ully trans-thout any

of DAU is ture espe-laries. This r direction. DAU is the

(6)

6 a d s lo o g b ta H th a ti p g o p s m a g v d a 1 th tr 2 u 6 authority of development small portion opment acti of regional g goods. This by regional ation of re However, on he regional and capable

ies plannin priority in o goods needs

More do only found i pines. The ce sub-national mula-based allotments o grants (Ichim vernmental f dominated b average 16.5 1992-2001. In he largest ransfer cond 2007). DAU all using a form

regional g t programs n of the DA ivities demo overnments fact has bec governmen egional aut n the other l governmen

to formulat ng in accor order to th remain met ominant unc n Indonesia entral gover

governmen block grants or IRA) an mura and B fiscal transfe by a block g

percent per nversely to th

transfer ty ditional or sp

location to mula based Source Figure 5 Ju overnments s and acti AU allocatio onstrates the

to provide m come a class nt since the onomy, on

side, on the nt must be te programs dance with he provision

onditional tr , but also in rnment tran nt are of two

s (the intern nd ad hoc Bahl 2008).

ers, the tran rant which year during he case of U ype occupie

pecific purp the regions on the cal

e: Finance Minis 5. DAU Allo (The lowes

urnal Ekonom

to finance vities. The n for deve-e limitation more public sic problem

implemen-n oimplemen-ne side.

e condition, e intelligent

and activi-h tactivi-he main

n of public ransfers not n the Philip-nsfers to the

o types: for-nal revenue

categorical In intergo-nsfer type is

grew by an g the period United State, ed by the pose (Fisher,

is done by lculation of

stry, Finance No ocations by P st and the lar

mi Pembang basic dat the DAU compone the DAU (Finance a lump-s official e No. 33 o compone the Basi (CF). DA ponent o cial capa ence in each reg are regio or greate ences in fiscal gap cal capac relatively fiscal gap Base the all shows th ble. In 20 est recip of West Java and province

ote various editio Provinces in 2 rgest propor

gunan Volum ta DAU. His U formula ents: the min U allocation e Note, 2009)

sum compo expenditure.

of 2004, the ents of PM ic Allocation AU allocatio

of inter-regi ability, takin

the fiscal n gion. Based ons that rece er than othe

the fiscal ga p (that is fis city the regio y large num p.

ed on the D province, hat horizont 009, there ar pient of DAU

t Kalimantan d Central J es as the lo

ons: processed d 2008 (in billi rtion)

me 13, Nomor storically sin is divided nimum alloc based on the ). PM is calc onent and th Since the en e effective fo

and KF are n (AD) and on is based ional equali ng into acco needs and fi

on the FG eive less DA er regions be ap. A region

cal needs is on) receives mber compar DAU allocat district/city tal inequalit re five provi U allocation

n, Papua, W ava. While, west recipie

data

ion rupiah)

r 1, Juni 2012: nce 2001 to 2 into two m cation (AM)

e fiscal gap culated based he proportio nactment of orce since 2 e perfected d the gap F on the CF c zation of fin ount the di iscal capacit indicator, t AU allocatio ecause of di n that has a l greater than the DAU wi red with a sm tion formula y in Indon ies are still nces as the l that is Prov West Java, there are ent of DAU

: 1-17 2005, main and (KF) d on on of Law 2006, into iscal com- nan- iffer-ty of here on to iffer-arge n fis-ith a mall a for nesia visi- larg-vince East four U are

(7)

Implem

East K Jakarta ducer receive enough seem to is inter eral D such a Jawa B trict. It (i) oil-p as DKI 2009. Th the DA City. I Indone from 3 Paser, the ran Among amoun shown ance. I in a m of fisca ment is Th fund is of 51 t

mentation of

Kalimantan, a. Those pro

in Indonesi e revenue

h. In 2009, o occupy the resting for th

istricts/Citie as District B Barat, Kutai

t may be be producing d I Jakarta rec he situation AU allocatio In 2008, fou esia received 33 to 37 bill while five d nge from 95 g of them, B nt of DAU, n the creatio If the govern more significa

al decentral s increasingl he second la s revenue sh trillion per y

Source: Finan Figure 6. D

f Fiscal Dece

Riau, Riau ovince are th ia and there sharing c the four pr e same posit his year is t es that do n Bengkalis, R

District, and ecause of tw districts and ceives PAD

is different on for the en ur of 542 d DAU alloc lion, the sm districts/city 59 to 1.063 ogor City re 1.1 trillion. n of inter-re nment does ant for the f lization on r

ly unconvinc argest comp haring (DBH year for the

nce Ministry, Fin DAU Allocat in billion rup

entralization

Archipelago he largest oi

efore they w considered rovinces tha tion in 2008.

hat there ar not receive Rokan Hilir,

d South Bur wo considera

(ii) own rev by 11.1 trill

when look ntire Distric District/Citi ation in the mallest is Pen

y receives DA billion (Figu eceived the l

This fact ha egional fisca not make e future, the im

regional dev cing.

ponent of ba H) with an av period 2001

nance Note vario tion by Distr piah) (Nursini) o and il pro-would large at still What re sev-DAU Siak, ru dis-ations: venue ion in ing at ct and ies in range najam AU in ure 6). argest as not al bal-efforts mpact velop-alance verage 1-2009 (Fi the DB of rev rev to 21 co La M so res era na str the (D ing to 20 Or inc or Al an tha the ch

ous editions: pro rict/City Sele

igure 4). The e fund balan BH is calcula domestic s venues or re venues deriv

the region i and PPh 25 untry, Land and and B

eanwhile, s urces to be sources (SDA al mining, f atural resour

ry reforestati Transfer e size of the DBH taxes an g of the state the region 0.7 trillion in

r during the creased by a

an average lthough DBH nce, but the a

an the DAU e governme hanisms of D In 2008, th

ocessed data ected (the lar

e DBH abso nce. Based o ated based o shared reve evenues of n ved from tax include pers 5-29 of perso d and Build uilding Tra state revenu shared the r A) of petrole orestry, and rce DBH als ion fund (DB

of revenue e state reven nd SDA). In e revenue re

has increase n 2001 to Rp e period of r

an average e growth of H is only 27 average grow U, 16 percen ent attention DBH is quite

he district or

rgest and sm

orbed of 27 on Law No. 3 on a certain p enue, either natural resou

x revenues th sonal incom

onal tax pay ding Tax (P ansfer Fee ues from n

region inclu eum, natura d fisheries. S so includes D

BH DR). sharing de nue realizati line with th ealization sha ed each yea p 85.7 trillio realization (2

of 47 trillion f 21 percent 7 percent of wth per year nt. This indi n to the fun significant. r city that re

allest) in 200

percent of 33 of 2004, percentage from tax urces. State

hat shared e tax (PPh yers in the PBB), and

(BPHTB). natural

re-de natural al gas, gen-Since 2006, DBH fore-epends on ion shared he increas-ared, DBH r from Rp on in 2009. 2001-2008) n per year t per year. funds bal-r is gbal-reatebal-r

icates that nding me-eceived the

(8)

8 h m u r th o R fu e 2 d fr C c in v n in la o s th s in S r A 8 highest Natu mantan Prov ural resource eceived the he Province of the overal Revenue sha unds) propo entire provin 2008 and 24 district or cit rom the tot City would b cent in 2009.

n the distric vincial level. Province nue sharing

nces. In 200 argest DBH oil-producing second large

he province sharing is W

nce is a new Sulawesi Pr eceived the Alor District

Figu

ural resource vince that is

e DBH, while lowest Natu e of Yogyaka ll revenues n aring (natur ortion from t nce in Indon 4.74 percent

ty, the prop tal revenue be 11.13 perc . It seems th t or City is s es that recei are general 08, the prov is DKI Jaka g, but it has est is the Ea e that receiv West Sulawes w province an ovince. The e smallest r

t and is on

Source: Financ ure 7. DBH a (in bill

es DBH is in 38.93 percen e the district ural resource arta that is 0 natural reso ral resources

the total rev nesia is 25.26

in 2009. W portion reven the entire d cent in 2008 hat the reven

smaller than ived the gre lly oil-produ vince who r

arta. DKI Jak s the bigges ast Kaliman ved the lowe

si Province. nd is a divisi e district o revenue sha nly 6 billion

e Ministry, Fina allocations by

lion rupiah)

urnal Ekonom

n East Kali-nt of all nat-t or cinat-ty nat-thanat-t es DBH is in 0.01 percent ources DBH. s and taxes venue in the

6 percent in While at the nue sharing district and

and 17 per-nue sharing n in the pro-eatest reve-ucing prov-eceived the karta is not t PAD. The ntan. While, est revenue This prov-ion of South or city that aring is the n, while the

ance Note variou y Provinces

mi Pembang

Kutai D sharing w

DAK absorbed ance in t did not (Sidik an ous goal the DAK portant DAU for penditur The DAK investme tainmen pensates priority fiscal de tion are the coun With 2002), D which is reforesta Finance station a and mar There h

us editions: proc (the largest a

gunan Volum District rece with 4,308 b K is special d an average the period o

fully meet nd Kadjatmi ls in the des K is mainly needs that c rmula and t res that relat K is also use ent, and (3) t of a mini s for benefit

capital inves ecentralizatio based only ntry's Refore

hin two yea DAK funds

s part of 40 ation funds Note, 2009) allocated for

ritime affair has been en

cessed data and the lowe

me 13, Nomor eived the l

illion. transfer to th e 17 percent

f 2001-2009. all the obj iko, 2003). T sign of the D

intended to could not be to assist with ted to nation ed to finance

the DAK p mum stand t/cost spillo stments. In t on policy, t y on revenu station Prog ars of decent allocated fo 0 percent o s (Ministry . In 2004, D r clean wate rs and the ncouraging

ers) selected

r 1, Juni 2012: largest reve he region w

of the fund DAK alloca ectives of D here are num DAK such as

o help fund e estimated h funding of nal priorities physical cap promotes the dards, and c overs related

the beginnin he DAK all ue derived f gram.

ralization (2 or reforestat of total reve y of Fina AK Non ref er infrastruc fisheries sec DAK cove in 2008 : 1-17 enue which bal-ation DAK mer-s: (1) im-in a f ex-s, (2) pital e at- com-d to ng of loca-from 2001-tion, enue ance, fore-cture ctor. rage

(9)

Implementation of Fiscal Decentralization (Nursini) 9 since 2005 in agriculture sectors, environment,

family planning and forestry. To demonstrate local commitment in the implementation of DAK, the required matching funds in the budget, at least 10 percent of the amount re-ceived in DAK allocation. In line with the addi-tion of fields that are funded through the DAK, DAK realization increases from year to year. Similarly regions that receive DAK also increased due to expansion of the provincial and district or city. East Java is the highest re-gion that received DAK allocation in 2008.

From Figure 3 to 7 shows the transfer of funds from central government to regional governments (provincial and district/city). It can be concluded that the allocation of funds transfers (the fund balance) to the regional government has absorbed most of the state budget. DAU is the largest component of the balance funds. Fund balance is one source of regional government revenue. The presence of the balance of funds as one source of regional revenue affects the structure of regional govern-ment budgets. Thus, the structure of regional government budget consists of regional reve-nues, expenditure and financing. The regional revenue side consist of local own revenue (PAD), fund balance and other local revenues.

One of the purposes of the policy of regional autonomy and fiscal decentralization is the reduction of financial dependence by the

regional governments to central government. This means that regional governments are required to increase the potential revenue source that comes from their own region. In this case the question arises how far regional governments have reduced their dependency levels during the implementation of regional autonomy and fiscal decentralization?

The Degree of Fiscal Decentralization in Indonesia

Act No. 34 of 2000 mentioned that there are 11 (eleven) local taxes granted to regional govern-ments (provincial and district/city) in deter-mining the tax base, tax rates and as well as administrative and types of local taxes and user charge that may be levied by regional govern-ments. However, the Act allows regional gov-ernments to add local tax sources and user charges in accordance with predetermined cri-teria (Simanjuntak and Mahi, 2003). The eleven of the local taxes can be seen in Table 1.

With the presence of such Act, has the regional government PAD increased signifi-cantly? Realization of the sources of regional revenue for all provinces and districts/cities can be seen in Figure 8. For three years (2007-2009), fund balance position as the largest source of regional revenue with an average of Rp191.45 trillion per year, the second largest revenue is PAD with an average increase of

Table 1. Local Taxes Types Based on Law No.34/2004 in Indonesia

Revenue

Vehicle tax Vehicle transfer tax Fuel tax

Exploration tax of surface and underground water

District/City

Hotels tax Restaurants taxes Entertainment taxes Advertisement taxes Streetlighting taxes

Exploration tax of mines (type c) Parking tax

Responsibility Disposition revenue

Base Rate Adm Center Province Local

C,P P P 0 30 70

C,P P P 0 90 10

C,P P P 0 100 0

C,L L L 0 0 100

(10)

4 a y r to a s a p th r a

47.12 trillion average Rp16

This figu years, there

evenue each o Rp61.96 tr age increase smaller than ance reached periods. By

hat the con evenue com all programs

So Source: Finance Figure

n per year a 6.77 trillion ( ure shows th is a trend i h year, from rillion in 20 e only reac n the averag d 78.68 perce considering ntribution of mes from loca and activiti

ource: Finance M

Fig

e Ministry, vario e 8. Regiona City in In

a b

a b c

and others P (Figure 8). hat during th

increase in o Rp36.10 tril 09. Howeve ched 31.52 ge increase i ent during th g this fact o f regional g al own reven

es is still rela

Ministry, Finance

gure 9. PAD M

ous editions (pro l Revenue So ndonesia, 20

c b

a b c

urnal Ekonom

PAD by an he last three

own source llion in 2007 er, the

aver-percent, is n fund bal-he 2007-2009 one can say government nue to fund atively very

e Note, 2009

Map by Provi

ocessed data) ources by C 007-2009

a b c

mi Pembang

low. In o ernment consider the shar nues tha over the contribu still goin of regio tion will Figu in 2009. sia is onl

inces in 2009 (

omposition t

gunan Volum other words t dependenc red big enou re fund bala at reached a last three y uting of 19.74

ng on in the nal autonom l not yet achi ure 9 shows Total PAD ly recorded a

(in Millions r

the whole Pr

a a b c

me 13, Nomor s, the level o ce on centra ugh. This can

ance to tota an average o years, while

4 percent. If coming yea my and fisc ieved optima

the PAD ma for all provi at Rp 42.5 tr

rupiah)

rovinces and

b b

a c

r 1, Juni 2012: of regional g

l governmen n be shown f al regional r of 73.63 per the PAD is o this conditio rs, then the cal decentra

ally. ap by provi inces in Ind rillion. Only

d District/

b a

: 1-17 gov-nt is from reve-rcent

only on is goal liza-nces one-four

(11)

Implem provin Rp4 tr contrib percen Sulawe revenu If of 2000 not giv revenu district the cau are stil for exa nal gov plore p there w level w vely co harm course, and (3 Law is rejected cates th variety revenu zation mentation of

nces of 33 pr rillion, In 20 butor is DKI nt of total rev esi, Rp64 m ue.

connected w 0 one can sa

ven importa ue at the re

t/city). Ther use: (1) most

ll taken ove ample, incom

vernment do potential sou was some ca with regiona ollecting tax

local comm , this case w ) Criteria of s very strict d by the ce hat local go y of policies ue without b of increasin

Figure 10. Pr (in

(a) (b

f Fiscal Dece

rovinces tha 009, the larg Jakarta, Rp1 venue) and t

illion or 0.5 with the pres y that the ta ance to the egional leve

re are three t of the poten er by the cen me tax and

oes not work urces of othe ases that occ

al governme xes from peo munities an was not justifi f local taxes so many PE entral govern overnments

to encourag burdening th ng revenue t

roportions P n percent)

b) (c)

entralization

at have PAD gest own rev

11.1 trillion the lowest is 8 percent of sence of Act ax assignmen

increase of l (provincia main reaso ntial taxes so ntral govern

oil tax, (2) R k optimally er taxes, alth curred at the ent was agg ople who se nd investor ied under th s according

ERDA which nment. This still need to ge increased he public. Op

hrough the PAD Sources (a) (b) (Nursini) D over venue (26.16 s West f total No.34 nt has f own al and ons as ources nment, Regio-to ex-hough e local gressi-eem to rs. Of he Act, to the h was s indi-o dindi-o a d local ptimi- inten-sif the see so to Am tax PA PA Ind lar ro cit ow at tio flu am oth ch pe 9.4 typ pr tax ing

to Total PAD

(c)

fication is sti Although e total regio en and an urces which the PAD a mong the fou xes, user cha AD), local ta AD the who donesia, wh rgest. Taxes le between ty. In genera wn revenue

the district o During th on of local t uctuated, but mount was e

her types harge only c

ercent, local e 44 percent fo pes of own rospects and xes without g other own

D Provinces

a) (b)

(b) (c (a)

ill badly nee h PAD is a

onal revenu nalyzed typ h provide th and has pro ur sources o arge, public axes is the ole province hile the user

and user ch different pr al, local tax source at th or city is the he period 2 tax revenue

t the average encouraging

of own re contributed enterprise is or other ow revenue sou d still need to forgetting t n revenue sou

and District/ (c) (a) c) ded. small contr ue, but it ne pes of own he largest co ospects in t f increased P

enterprises largest cont e and distri r charge is t harge have a rovincial and revenue is t he provincial user charge 2007-2009, th to total ow e is 74.13 pe when comp venue sour an average s only 4.66 pe wn revenue.

urces that h o be increas the efforts o urces.

t/City, 2007-2

(b) (c)

ribution to eeds to be n revenue ontribution the future. PAD (local and other tributor to ict/city in the second a different d district/ the largest l level and e. he propor-wn revenue rcent. This pared with rces. User e of 11.78 ercent and

Therefore, have better sed is local of

(12)

1 o fu c is R 2 tr in p in lo c o b ti r fa p ic g o s p w tu th d r r a 12 After rev of regional g

und transfer can be conclu s recorded Rp140.6 trilli 2009 or incr rillion per y ng the peri provide grea n funding t ooking at th can say that obstacle for r be expected ive correlati egional reve are.

The suc policies of ea

cy can be d gional reven oriented to th so it can crea poor people will be refle ure. There a he structure direct expend ect expendi ectly related activities. Th So Figure 11 viewing and overnment r r and other l uded that th substantial ion in 2007 reased by an year, or grow iod 2007-20 at meaning to

the provisio he magnitud

the fundin regional gov to occur is ion between enues and i ccess of a r ach regional done throug nues in pr he needs of s

ate jobs and e. Allocation ected in the are two com e of regional diture and d iture is expe d to the fin here are eigh

ource: Finance M 1. Trends in R

2007-2009 (

d analyzing revenues, bo local revenu

e total regio l and incre

to Rp364.01 n average o w by 62.56 p 009. This tr

o regional go on of public

de of this a g is no long vernments. W the existenc n the magni increase of p region depen l governmen gh the alloca ograms and society (pub d reduce the n of regiona

allocation o mponents exp

budget (AP direct expend

enditure tha nancing pro ht types of

Ministry, Finance Regional Go (in million ru

(a) (b)

(a)

urnal Ekonom

the amount oth from the e sources, it nal revenue eased from

1 trillion in of Rp255.34 percent

dur-end would overnments c goods. By amount one

ger a major What should e of a posi-itude of the

people wel-nds on the nt. The pol-ation of re-d activities blic interest),

e number of al revenues

of expendi-penditure in PBD) are

in-diture. Inat is not di-ograms and

indirect

ex-e Notex-e, variex-es sex-e overnment Ex

upiah)

) (c)

)

mi Pembang

penditur rates, su penditur lage gov provinci ments; a rect expe to the pr types o penditur and capi The iture in is still d an avera Althoug (APBN), lization. rate rea year. In penditur penditur direct e direct ex average an avera ernment 2009. By and ind ments s governm ries (processed xpenditure (P (b) (a) (b)

gunan Volum res: person ubsidy, gra re of the p

vernment; f ial/district/c and expendi

enditure is e rograms and f direct ex re, expendit ital expendit e trend of re the whole p ominated by age per year gh it seems , but it is exp

As events i ached 153 p n 2008, the

re of total re is 62 perc expenditure xpenditures

is 188,194.5 age of 46 pe t expenditur looking at direct expen

till seem to ment admini

data)

Province, Di

(c)

me 13, Nomor nnel expend ants, social provincial/d financial as city and v iture unexpe expenditure d activities. xpenditures: ture on good

ture. gional gove provinces an y indirect ex is about Rp2 a decline in pected to inc in the year 2 percent from

proportion regional g ent. The rest by 38 per was relativ 5 billion rup ercent of tot re during th

the develop nditures, re o focus on

istration rath

istrict/City) i

(b) (c)

(a)

r 1, Juni 2012: diture, inte

assistance, district/city/ ssistance to village gov ected. While directly rel There are t personnel ds and serv rnment expe nd District/ xpenditure w 222,319.8 bill n the year 2

crease in its 2008, its gro m the prev of indirect government t is allocated rcent. Trend vely stable. piah per year al regional g he period 2 pment of d egional gov expenditure her than of

n Indonesia: : 1-17 erest ex- /vil-the vern-e di-ated hree ex-vices, end-City with lion. 2009 rea-owth vious t ex-d for d of The r, or gov- 2007-irect vern-e for f de-:

(13)

Implem velopm Sala-i-M classifi routine contrib The sta indirec sonnel expend rect ex percen cated i the al creases itures. other 7 financi cial ass sonnel 62.67 p the last

Ev propor tends t 13 per service capital during dency decrea mentation of ment activiti Martin (200 ied as non e expenditur bute directly

atement is p ct expenditu expenditur diture alloca xpenditure i nt in 2008, t in 7 kinds of

location of s to 74 perc

The rest 26 7 kinds of e ial aid for 9 sistance. In t

expenditur percent of i t three years vents that dr rtion allocat to decrease rcent. Then es around 37 l expenditur g the period

for the prop sed until 20

Figure 12. T E

f Fiscal Dece

ies. Accordi 0), this typ n-productive re. This expe y to econom

proved by th ures allocate re. The num ation was 74 in 2007 and the rest 60 p

f other expe personnel cent of total 6 percent is

xpenditure percent and this case, the re increases indirect exp s.

raw in direct ted to perso

each year w for expend 7 percent and e by an aver d 2007-2009.

portion of ca 09, but it ha

Source: Finance

Trend Propor xpenditure i

entralization

ing to Barro pe of expend e expenditu

enditure doe mic develop

he distributi ed to higher mber of pers 4 percent of d decreased percent was enditures. In expenditur indirect ex s allocated t and is the l d 6 percent e allocation o by an avera penditures d t expenditur onnel expend with an avera diture good

d the largest rage of 56 pe

Despite the apital expend as shown tow

e Ministry, Finan

rtion of Direc in Indonesia a) (a) (b (Nursini) o and diture ure or es not pment. ion of r per-sonnel f indi-to 40 s allo-n 2009, re in- xpend-to the argest of so-of per-age of during re, the diture age of s and t is for

ercent e ten-diture wards be by oth vid 20 the tot wh 17 an me fie to the tur to cen ho be of de ind of dis nu (pr (3) gio

nce Note, varies

ct Expenditu , 2007-2009 (i

(b) ) )

etter for the y looking at her type of e If the allo ded by com

007-2009, the e highest ra tal regional hile, the sha 7 percent, 26 nd other exp ent expendi eld, then in carry out p e top 35 pe res. Furtherm

fund educ nt, 19 perc ousing, and h elow the allo

10 percent. It was me ecentralizatio dicators: (1)

total gove strict/city) t ue indicators

rovincial, di ) developme onal govern

series (processe

ure of Region in percent)

(a) (b)

interests of t the larger expenditure. ocation of reg mposition, th

e share of per anked an ave governmen are of goods 6 percent for penditure of

iture is div 2007, region public servic

ercent of to more, region ational func cent for the health funct ocation for t entioned tha on can be m

expenditur ernment exp

to the state s: the ratio istrict/city) t ent expendi nment deve ed data) nal Governm ( ( regional dev proportion . gional expen hen during t

rsonnel expe erage of 37 nt expenditu expenditure r capital exp 18 percent. vided by fu nal expendit ce function otal regional nal expendit ction reache e function tions only 8 the economi at the degre easured thro re indicators penditure (p

expenditure of regional to state reve iture: the ra elopment ex

(c)

ment by Selec

(b) (a) 13 velopment than any nditure di-the period enditure is percent of ure. Mean-es reached penditures If govern-unction or tures used that ranks l expendi-tures used ed 23

per-of public percent or ic function ee of fiscal ough three s: the ratio provincial, e, (2)

reve-l revenues enues, and atio of re-xpenditure

(14)

(p o c fi F tu th p o p g a

provincial, d opment expe

One of t cator of expe iscal decent Figure 14: (1) ure to the na he subsidies penditure to of district/ci penditure. Ba gree of fisca and district/

Degree o

Figu

Source: Fina Figure 14

(a)

district/city) enditure.

the indicator enditure. The tralization m ) the ratio o ational expe s, (2) the ra

the total tra ity expenditu ased on the al decentrali city vary fro of fiscal dece

Source: ure 13. Regio 2007-2

ance Ministry, Fi 4. Degree of F

by Expendi (b) (c) (a) (

) to governm rs used here ere are three measures is of district/ci enditure afte atio of distr ansfer, and ( ure to total n

three measu ization both om year to ye

entralization

Finance Ministr onal Governm

2009 (in perc (a) (b) (c) (a)

inance Note, var Fiscal Decen iture Indicato

b) (c) (a) (b

urnal Ekonom

ment devel-e is an indi-e dindi-egrindi-eindi-es of s shown in ity

expendi-r deducting rict/city

ex-(3) the ratio national ex-ures, the de-h provincial

ear.

n to districts

ry, Finance Note ment Expend cent)

(a) (b) (c )

ries editions (pro ntralization in

or b) (c)

mi Pembang

based on pears to 2008), al clined b crease. spending subsidy cent per zation u tures for seems t enough developm reached

e, varies series (p diture by sele (b) (a) c)

(b)

ocessed data) n Province an

gunan Volum n three type o have incre lthough in but the real The ratio g of the nat

increased b year. If the using the rat r district/ci the ability

to fund the ment. This an average

processed data) ected expend

(c)

) (a)

(c)

nd District/C (a) (b) (c) (a)

me 13, Nomor es of state e eased for tw

the year 20 lization is e

of distric tional expen by an averag e degree of f

tio of gover ity of the to

of district/ e governme

is indicate of 115.99 pe

diture in ind (c) (b)

City Indones (b) (c) (a) (b)

r 1, Juni 2012: xpenditures wo years (2 009 (APBN)

expected to cts governm nditure after

ge of 44.78 fiscal decent nment expe otal transfer /city looks

ntal affairs ed by the r ercent. Howe

donesia,

sia, 2007-2009 (c)

: 1-17 s ap- 2007- de-o in-ment r the per- trali- endi-rs, it

big and ratio ever,

(15)

Implementation of Fiscal Decentralization (Nursini) 15 if the total expenditure of district/city

com-pared to the total national expenditures, the de-gree of fiscal decentralization is still considered low at only 34.6 percent.

In general one can say that government's ability District/City to finance the functions which are the responsibility has increased. The same thing for the province, the degree of fiscal decentralization is also showing signs encour-aging enough, but the average ratio of the in-crease is not as much as at the district level. The ratio increased by an average 9.98 percent, 26.62 percent and 7.79 percent respectively (expend-itures minus state subsidies), the total transfer fund, and the total national expenditure (Figure 14).

Fiscal decentralization has the objective to support the funding of affairs that has been submitted to the region, so that regions can im-prove the efficiency and effectiveness of public service. Through fiscal decentralization is ex-pected to provide an opportunity for the region to improve the welfare of society, which in turn will promote economic development of regional development. However, the efforts of regional economic improvement and improvement of social welfare cannot be simply handed over to the fiscal decentralization policy. A good re-gional development can only be done if there is a balance of three pillars, namely the govern-ment, private sector, and society. All three each have the different functions and roles in carry-ing out the development. Government role is to create political and legal environment condu-cive to private sector and the community. Private sector role is to create jobs and income that should be supported by the government sector. Society plays a role in the creation of social interaction, economic, and political. Syn-ergy between the three sectors in the era of regional autonomy should be implemented.

To analyze the success of fiscal decentrali-zation may be associated with the success of regional economic development. There are sev-eral indicators that can be used, among others; regional economic growth, low inflation and stable, employment opportunities, increased investment and exports, and poverty reduction. Economic growth is one indicator to analyze the

impact of fiscal decentralization on regional economic development. In 2006, the average economic growth of the region was 4.75 per-cent. In this year, there were 7 provinces were under the average and the 26 provinces were above average. In 2007, the average regional economic growth increased to 5.6 percent. There were 10 provinces that were below aver-age and the 23 provinces were above averaver-age. By comparing with the performance of the na-tional economic growth, there were 18 prov-inces that have economic growth rates above the national economic growth, 6.28 percent in 2007. South Sulawesi Province has the largest economic growth rates reached 11.2 percent. In 2008, the national economic growth has dropped to 6.06 percent. In this year, there were 11 provinces that were above the national eco-nomic growth. Papua Province is the highest reached 38.2 percent. The fluctuations of re-gional economic growth is determined by many factors, among others; economic and political conditions in the region, the potential of human resources, natural resources, and the effective-ness of regional financial management.

The success of fiscal decentralization also highly depends on the effectiveness of budget (APBD) expenditure policy. Expenditure of APBD has a very important role in the imple-mentation of regional governance. Effectiveness of budget expenditures will directly influence the effectiveness of public services, which in turn will determine the success of regional development. Effectiveness of budget expend-iture is influenced by internal factors and exter-nal regioexter-nal government. Interexter-nal factor in-cludes budget formulation process, the role of community participation, political support from the Parliament, while external factor such as synergy between regional programs and central government programs. These factors are still challenge for regional governments to realize. Budget formulation process is a challenge be-cause the budget formulation process is not a simple process. This process is related to the planning mechanisms involving various parties with widely divergent interests. The challenge is how to create a clear relationship between inputs (budget in APBD) and outputs and

(16)

out-Jurnal Ekonomi Pembangunan Volume 13, Nomor 1, Juni 2012: 1-17

comes of programs and activities. Budgets are just an end of the planning.

Community participation and political support is also crucial to the effectiveness of budget expenditures because these two ele-ments determine the outcome to be achieved and at the same time assess whether regional governments have been successful. Another challenge is the external factor is how to create synergy between the programs and activities at the national level and regional policies. Ex-penditure budget becomes ineffective if not in line with national development programs, or vice versa. This is not a simple way to create synergy between programs and activities at various levels of government.

CONCLUSION

First, the trend of State government expenditure during the era of regional autonomy and de-centralization shows the central government expenditure tends to decreased and the transfer expenditure tends to increased. The transfer has increased significantly every year in absolutely, but annual growth rate fluctuated considerably. This means that during the period of decentra-lization, the allocation portion of the transfers into the region was unstable. The fund balance is the largest component of transfers to the re-gion which showed a significant increase every year and general allocation fund (DAU) is the largest components of fund balance.

Second, regional government expenditure for both provinces and District/City is more dominated by indirect expenditure than direct expenditure.

Third, degree of fiscal decentralization for districts/city shows increased for two years (2007-2008). The same thing for the province, the degree of fiscal decentralization is also showing signs encouraging enough. These mean that regional government's ability to finance their functions have encouraged. How-ever, by looking at the development of direct and indirect expenditures, fund allocation for indirect expenditure is still bigger than direct expenditure.

Fourth, the success of fiscal decentralization

highly depends on the effectiveness of budget (APBD) expenditure policy. Expenditure of APBD has a very important role in the imple-mentation of regional governance. Effectiveness of budget expenditures will directly influence the effectiveness of public services, which in turn will determine the success of regional de-velopment.

Fifth, it is recommended to regional gov-ernment (district/city and province) to improve public finance management and also to allocate bigger their budget for public interest than for government administration.

REFERENCES

Abimayu, Anggito, and Andie Megantara. 2009. New Era of Fiscal policy. Though, Concept, and Implementation. Jakarta: Kompas

Barro, R.J., and Sala-i-Martin. 1992. Public Finance in Models of Economic Growth. Review of Economic Studies 59 (201):645-662.

Boex, Jameson and Martinez-Vazquez, Jorge. 2001. The Design of Equalization Grants: Theory and Applications (Part 1). Fiscal Decentralization: A Review of Concepts and Application for Indonesia. Fiscal Pol-icy Summer Training Course. Andrew Young School of Public Studies. Georgia State University. Atlanta.

Fisher, 2007

Fisher, Ronald. C. 2007. State and Local Public Finance. South – Western: Thomson

Ichimura, Shinichi and Bahl, Roy. 2009. Decen-tralization Policies in Asian Development. Singapore: World Scientific Publishing Co.Pte.Ltd.

Khuzaini, M. 2006. Public Economics Fiscal De-centralization and Regional Development. Su-rabaya: BPFE Unibraw.

Martinez-Vazquez, Jorge and McNab, RM. 2001. Fiscal Decentralization And Eco-nomic Growth. ISP. Working Paper #01-1 January 2001. Andrew Young School of

(17)

Implementation of Fiscal Decentralization (Nursini) 17 Public Studies. Georgia State University.

Atlanta.

Martinez-Vazquez and Sri Mulyani Indrawati, 2004. Reforming Intergovernmental Fiscal Relations and the Rebuilding of Indonesia. The Big Bang Program and its Economic Consequences. EE Cheltenham, UK. Northampton, MA, USA

Martinez-Vazquez, Jorge and Searle, Bob. 2007a. Fiscal Equalization Challenges in the Design of Intergovernmental Trans-fers. United States of America: Springer Martinez-Vazquez, Jorge and Searle, Bob.

2007b. Challenges in the Design of Fiscal Equalization and Intergovernmental Transfer. In Fiscal Equalization Challenges in the design of Intergovernmental Transfer. United States of America. Springer

Martinez-Vazquez, Jorge and Sri Mulyani. 2004. Series Edition: Wallace E. Oates. Chelten-ham, UK* Northampton, MA. USA. Ed-ward Elgar Publishing Limited.

Financial Note of Republic of Indonesia, State Budget, 2001-2009.

Phillips, Kerk.L and Woller, Garry. 1997. Does Fiscal Decentralization lead to Economic Growth? Working Paper 97(7): September 1-13.

Rodriguez-Pose, Andres and Kroijer, Anne. 2009. Fiscal Decentralization and

Eco-nomic growth in Central and Eastern Eu-rope. Growth and Change 40(3):387-417. Rosen, Harvey S and Gayer, Ted. 2008. Public

Finance. Eight edition New York: McGraw Hill/Irwin Companies.

Simanjuntak, R and Mahi, B.Raksasa. 2004. Lo-cal Tax Revenue Mobilization in Indone-sia’s decentralizing era. In Reforming In-tergovernmental Fiscal Relations and the Re-building of Indonesia. The Big Bang Program and Its Economic Consequences. Studies in Fiscal Federalism and State-Local Finance. Alm, James.

Searle, Bob and Martinez-Vazquez, Jorge. 2007. The Nature and Function of Tied Grants. In Fiscal Equalization Challenges in the De-sign of Intergovernmental Transfer Marti-nez-Vazquez and Searle. United States of America: Springer.

Suzan, Steiner. 2005. Decentralization and Po-verty Reduction: A Conceptual Frame-work for the Economic Impact. http:// ideas.repec.org/wpa/wuwppe/0508006.h tml. Retrieved 2 April 2009.

Zhang, Tao and Heng-Fu Zou (1998). Fiscal De-centralization, Public Spending & Eco-nomic Growth. Journal of Public Economics 67(2):221-40.

World Bank. 2007a Analysis of Public Expend-iture in Gorontalo Province.

(1)

1 o fu c is R 2 tr in p in lo c o b ti r fa p ic g o s p w tu th d r r a 12 After rev of regional g

The suc policies of ea

the provisio he magnitud

the fundin regional gov to occur is ion between enues and i ccess of a r ach regional done throug nues in pr he needs of s

ate jobs and e. Allocation ected in the are two com e of regional diture and d iture is expe d to the fin here are eigh

ource: Finance M

1. Trends in R 2007-2009 (

Ju d analyzing

revenues, bo local revenu

e total regio l and incre

to Rp364.01 n average o w by 62.56 p 009. This tr

o regional go on of public

de of this a g is no long vernments. W the existenc n the magni increase of p region depen l governmen gh the alloca ograms and society (pub d reduce the n of regiona

allocation o mponents exp

budget (AP direct expend

enditure tha nancing pro ht types of

Ministry, Finance

Regional Go (in million ru

(a) (b)

(a)

urnal Ekonom the amount oth from the e sources, it nal revenue eased from

1 trillion in of Rp255.34 percent

dur-end would overnments c goods. By amount one

ger a major What should e of a posi-itude of the

people wel-nds on the nt. The pol-ation of re-d activities blic interest),

e number of al revenues

of expendi-penditure in PBD) are

in-diture. Inat is not di-ograms and

indirect

ex-e Notex-e, variex-es sex-e

overnment Ex upiah) ) (c)

)

mi Pembang penditur rates, su penditur lage gov provinci ments; a rect expe to the pr types o penditur and capi The iture in is still d an avera Althoug (APBN), lization. rate rea year. In penditur penditur direct e direct ex average an avera ernment 2009. By and ind ments s governm ries (processed xpenditure (P (b) (a) (b) gunan Volum res: person ubsidy, gra re of the p

vernment; f ial/district/c and expendi

enditure is e rograms and f direct ex re, expendit ital expendit e trend of re the whole p ominated by age per year gh it seems , but it is exp

As events i ached 153 p n 2008, the

re of total re is 62 perc expenditure xpenditures

is 188,194.5 age of 46 pe t expenditur looking at direct expen

till seem to ment admini

data)

Province, Di

(c)

me 13, Nomor nnel expend ants, social provincial/d financial as city and v iture unexpe expenditure d activities. xpenditures: ture on good

ture. gional gove provinces an y indirect ex is about Rp2 a decline in pected to inc in the year 2 percent from

proportion regional g ent. The rest by 38 per was relativ 5 billion rup ercent of tot re during th

the develop nditures, re o focus on

istration rath

istrict/City) i (b) (c) (a)

r 1, Juni 2012: diture, inte

assistance, district/city/ ssistance to village gov ected. While directly rel There are t personnel ds and serv rnment expe nd District/ xpenditure w 222,319.8 bill n the year 2

crease in its 2008, its gro m the prev of indirect government t is allocated rcent. Trend vely stable. piah per year al regional g he period 2 pment of d egional gov expenditure her than of

n Indonesia: : 1-17 erest ex- /vil-the vern-e di-ated hree ex-vices, end-City with lion. 2009 rea-owth vious t ex-d for d of The r, or gov- 2007-irect vern-e for f de-:

(2)

Implem velopm Sala-i-M classifi routine contrib The sta indirec sonnel expend rect ex percen cated i the al creases itures. other 7 financi cial ass sonnel 62.67 p the last

Ev propor tends t 13 per service capital during dency decrea mentation of ment activiti Martin (200 ied as non e expenditur bute directly

atement is p ct expenditu expenditur diture alloca xpenditure i nt in 2008, t in 7 kinds of

location of s to 74 perc

The rest 26 7 kinds of e ial aid for 9 sistance. In t

expenditur percent of i t three years vents that dr rtion allocat to decrease rcent. Then es around 37 l expenditur g the period

for the prop sed until 20

Figure 12. T E

f Fiscal Dece ies. Accordi 0), this typ n-productive re. This expe y to econom

proved by th ures allocate re. The num ation was 74 in 2007 and the rest 60 p

f other expe personnel cent of total 6 percent is

xpenditure percent and this case, the re increases indirect exp s.

raw in direct ted to perso

each year w for expend 7 percent and e by an aver d 2007-2009.

portion of ca 09, but it ha

Source: Finance

Trend Propor xpenditure i (a

entralization ing to Barro pe of expend e expenditu

enditure doe mic develop

d the largest rage of 56 pe

Despite the apital expend as shown tow

e Ministry, Finan

ercent e ten-diture wards be by oth vid 20 the tot wh 17 an me fie to the tur to cen ho be of de ind of dis nu (pr (3) gio

nce Note, varies

ct Expenditu , 2007-2009 (i

(b) ) )

etter for the y looking at her type of e If the allo ded by com

007-2009, the e highest ra tal regional hile, the sha 7 percent, 26 nd other exp ent expendi eld, then in carry out p e top 35 pe res. Furtherm

fund educ nt, 19 perc ousing, and h elow the allo

10 percent. It was me ecentralizatio dicators: (1)

total gove strict/city) t ue indicators

rovincial, di ) developme onal govern

series (processe

ure of Region in percent)

(a) (b)

interests of t the larger expenditure. ocation of reg mposition, th

e share of per anked an ave governmen are of goods 6 percent for penditure of

iture is div 2007, region public servic

ercent of to more, region ational func cent for the health funct ocation for t entioned tha on can be m

expenditur ernment exp

to the state s: the ratio istrict/city) t ent expendi nment deve ed data) nal Governm ( ( regional dev proportion . gional expen hen during t

expenditure of regional to state reve iture: the ra elopment ex

(c)

ment by Selec (b) (a) 13 velopment than any nditure di-the period enditure is percent of ure. Mean-es reached penditures If govern-unction or tures used that ranks l expendi-tures used ed 23

per-of public percent or ic function ee of fiscal ough three s: the ratio provincial, e, (2)

reve-l revenues enues, and atio of re-xpenditure cted

(3)

1 (p o c fi

tu th p o p g a

provincial, d opment expe

One of t cator of expe iscal decent

Figure 14: (1) ure to the na he subsidies penditure to of district/ci penditure. Ba gree of fisca and district/

Degree o Figu

Source: Fina

Figure 14

(a)

district/city) enditure.

the indicator enditure. The tralization m ) the ratio o ational expe s, (2) the ra

the total tra ity expenditu ased on the al decentrali city vary fro of fiscal dece

Source:

ure 13. Regio 2007-2

ance Ministry, Fi

4. Degree of F by Expendi

(b) (c) (a) (

Ju ) to governm rs used here ere are three measures is of district/ci enditure afte atio of distr ansfer, and ( ure to total n

three measu ization both om year to ye

entralization

Finance Ministr

onal Governm 2009 (in perc

(a) (b) (c) (a)

inance Note, var

Fiscal Decen iture Indicato

b) (c) (a) (b

urnal Ekonom ment devel-e is an indi-e dindi-egrindi-eindi-es of s shown in ity

expendi-r deducting rict/city

ex-(3) the ratio national ex-ures, the de-h provincial

ear.

n to districts

ry, Finance Note

ment Expend cent)

(a) (b) (c )

ries editions (pro

ntralization in or

b) (c)

mi Pembang based on pears to 2008), al clined b crease. spending subsidy cent per zation u tures for seems t enough developm reached

e, varies series (p

diture by sele (b) (a) c)

(b)

ocessed data)

n Province an

gunan Volum n three type o have incre lthough in but the real The ratio g of the nat

increased b year. If the using the rat r district/ci the ability

to fund the ment. This an average

processed data)

ected expend (c)

) (a)

(c)

nd District/C

(a) (b) (c) (a)

me 13, Nomor es of state e eased for tw

the year 20 lization is e

of distric tional expen by an averag e degree of f

tio of gover ity of the to

of district/ e governme

is indicate of 115.99 pe diture in ind

City Indones

(b) (c) (a) (b)

r 1, Juni 2012: xpenditures wo years (2 009 (APBN)

expected to cts governm nditure after

ge of 44.78 fiscal decent nment expe otal transfer /city looks

ntal affairs ed by the r ercent. Howe donesia,

sia, 2007-2009

(c)

: 1-17 s ap- 2007- de-o in-ment r the per- trali- endi-rs, it

big and ratio ever,

(4)

Implementation of Fiscal Decentralization (Nursini) 15 if the total expenditure of district/city

com-pared to the total national expenditures, the de-gree of fiscal decentralization is still considered low at only 34.6 percent.

(5)

out-Jurnal Ekonomi Pembangunan Volume 13, Nomor 1, Juni 2012: 1-17 16

comes of programs and activities. Budgets are just an end of the planning.

CONCLUSION

Second, regional government expenditure for both provinces and District/City is more dominated by indirect expenditure than direct expenditure.

Fourth, the success of fiscal decentralization

REFERENCES

Abimayu, Anggito, and Andie Megantara. 2009.

New Era of Fiscal policy. Though, Concept, and Implementation. Jakarta: Kompas

Barro, R.J., and Sala-i-Martin. 1992. Public Finance in Models of Economic Growth.

Review of Economic Studies 59 (201):645-662.

Fisher, 2007

Fisher, Ronald. C. 2007. State and

Local Public Finance. South – Western: Thomson

Ichimura, Shinichi and Bahl, Roy. 2009. Decen-tralization Policies in Asian Development. Singapore: World Scientific Publishing Co.Pte.Ltd.

Khuzaini, M. 2006. Public Economics Fiscal De-centralization and Regional Development. Su-rabaya: BPFE Unibraw.

Martinez-Vazquez, Jorge and McNab, RM. 2001. Fiscal Decentralization And Eco-nomic Growth. ISP. Working Paper #01-1 January 2001. Andrew Young School of

(6)

Implementation of Fiscal Decentralization (Nursini) 17 Public Studies. Georgia State University.

Atlanta.

2007b. Challenges in the Design of Fiscal Equalization and Intergovernmental Transfer. In Fiscal Equalization Challenges in the design of Intergovernmental Transfer.

United States of America. Springer

Martinez-Vazquez, Jorge and Sri Mulyani. 2004. Series Edition: Wallace E. Oates. Chelten-ham, UK* Northampton, MA. USA. Ed-ward Elgar Publishing Limited.

Financial Note of Republic of Indonesia, State Budget, 2001-2009.

Phillips, Kerk.L and Woller, Garry. 1997. Does Fiscal Decentralization lead to Economic Growth? Working Paper 97(7): September 1-13.

Rodriguez-Pose, Andres and Kroijer, Anne. 2009. Fiscal Decentralization and

Eco-nomic growth in Central and Eastern Eu-rope. Growth and Change 40(3):387-417. Rosen, Harvey S and Gayer, Ted. 2008. Public

Finance. Eight edition New York: McGraw Hill/Irwin Companies.

Suzan, Steiner. 2005. Decentralization and Po-verty Reduction: A Conceptual Frame-work for the Economic Impact. http:// ideas.repec.org/wpa/wuwppe/0508006.h tml. Retrieved 2 April 2009.

Zhang, Tao and Heng-Fu Zou (1998). Fiscal De-centralization, Public Spending & Eco-nomic Growth. Journal of Public Economics

67(2):221-40.

World Bank. 2007a Analysis of Public Expend-iture in Gorontalo Province.

IMPLEMENTATION OF FISCAL DECENTRALIZATION IN INDONESIA: 2001-2009

IMPLEMENTATION OF FISCAL DECENTRALIZATION IN

INDONESIA: 2001-2009

INTRODUCTION

RESEARCH METHOD

RESULTS AND ANALYSIS

CONCLUSION

REFERENCES

Fisher, 2007

CONCLUSION

REFERENCES

Fisher, 2007

Parts

Dokumen yang terkait

THE INFLUENCE OF FISCAL DECENTRALIZATION ON THE LOCAL ORIGINAL RENEVUE AND PUBLIC EXPENDITURE IN INDONESIA

Decentralization in Action: Decentralization Implementation in Jogyakarta City

Fiscal Decentralization and Disparity of Access to Primary Education in Indonesia

PUBLIC SECTOR EFFICIENCY IN INDONESIA (FISCAL DECENTRALIZATION ERA, 2001 –2008 | Kirana | Journal of Indonesian Economy and Business 6281 10687 1 PB

Azwardi The Impact Of Fiscal Decentralization To Interregion

PUBLIC SECTOR EFFICIENCY IN INDONESIA (FISCAL DECENTRALIZATION ERA, 2001 –2008 | Kirana | Journal of Indonesian Economy and Business 6281 67609 1 PB

Chapter 9 Issues of Local Government Expenditure after Fiscal decentralization: Experience from Indonesia and South Korea

Decentralization of ﬁsheries management in Indonesia

IMPLEMENTASI KEBIJAKAN DESENTRALISASI PEMERINTAHAN DI INDONESIA POLICY IMPLEMENTATION DECENTRALIZATION GOVERNMENT IN INDONESIA

ANALYSIS OF DIRECT AND INDIRECT EFFECTS OF FISCAL DECENTRALIZATION ON REGIONAL DISPARITY (CASE STUDY OF PROVINCES IN EASTERN AND WESTERN OF INDONESIA, 2006-2015)

Dukungan

Links

IMPLEMENTATION OF FISCAL DECENTRALIZATION IN INDONESIA: 2001-2009

IMPLEMENTATION OF FISCAL DECENTRALIZATION IN

INDONESIA: 2001-2009

INTRODUCTION

RESEARCH METHOD

RESULTS AND ANALYSIS

CONCLUSION

REFERENCES

Fisher, 2007

CONCLUSION

REFERENCES

Fisher, 2007

Parts

Dokumen yang terkait

THE INFLUENCE OF FISCAL DECENTRALIZATION ON THE LOCAL ORIGINAL RENEVUE AND PUBLIC EXPENDITURE IN INDONESIA

Decentralization in Action: Decentralization Implementation in Jogyakarta City

Fiscal Decentralization and Disparity of Access to Primary Education in Indonesia

PUBLIC SECTOR EFFICIENCY IN INDONESIA (FISCAL DECENTRALIZATION ERA, 2001 –2008 | Kirana | Journal of Indonesian Economy and Business 6281 10687 1 PB

Azwardi The Impact Of Fiscal Decentralization To Interregion

PUBLIC SECTOR EFFICIENCY IN INDONESIA (FISCAL DECENTRALIZATION ERA, 2001 –2008 | Kirana | Journal of Indonesian Economy and Business 6281 67609 1 PB

Chapter 9 Issues of Local Government Expenditure after Fiscal decentralization: Experience from Indonesia and South Korea

Decentralization of ﬁsheries management in Indonesia

IMPLEMENTASI KEBIJAKAN DESENTRALISASI PEMERINTAHAN DI INDONESIA POLICY IMPLEMENTATION DECENTRALIZATION GOVERNMENT IN INDONESIA

ANALYSIS OF DIRECT AND INDIRECT EFFECTS OF FISCAL DECENTRALIZATION ON REGIONAL DISPARITY (CASE STUDY OF PROVINCES IN EASTERN AND WESTERN OF INDONESIA, 2006-2015)

Dokumen yang Anda mencari sudah siap untuk unduhkan