ProdukHukum Keuangan

GOVERNMENT REGULATION OF THE REPUBLIC OF INDONESIA NUMBER 7/2008

CONCERNING

DECONCENTRATION AND CO-ADMINISTRATION WITH THE GRACE OF GOD ALMIGHTY

THE PRESIDENT OF THE REPUBLIC OF INDONESIA

Considering That in order to provide guideline in implementing deconcentration and co-administration as referred to in Article 20, paragraph (2) of Law Number 32/2004 concerning Regional Government and Articles 92, 99 and 108 of Law Number 33/2004 concerning Financial Balance between Central and Regional Governments, it is necessary to issue Government Regulation on Deconcentration and Co-Administration; In view of 1. Article 5, paragraph (2) of the Constitution of the Republic of

Indonesia of 1945.

2. Law Number 17/2003 concerning State Finance (State Gazette of the Republic of Indonesia Number 47/2003, Supplement to State Gazette of the Republic of Indonesia Number 4286); 3. Law Number 1/2004 concerning State Treasury (State Gazette

of the Republic of Indonesia Number 5/2004, Supplement to State Gazette of the Republic of Indonesia Number 4355);

Management and Accountability (State Gazette of the Republic of Indonesia Number 66/2004, Supplement to State Gazette of the Republic of Indonesia Number 4400);

5. Law Number 25/2004 concerning National Development Planning System (State Gazette of the Republic of Indonesia Number 104/2004, Supplement to State Gazette of the Republic of Indonesia Number 4421);

6. Law Number 32/2004 concerning Regional Government (State Gazette of the Republic of Indonesia Number 125/2004, Supplement to State Gazette of the Republic of Indonesia Number 4437), as amended with Law Number 8/2005 concerning the Stipulation of Government Regulation in lieu of Law Number 3/2005 concerning Amendment to the Law Number 32/2004 concerning Regional Government into a Law (State Gazette of the Republic of Indonesia Number 108/2005, Supplement to State Gazette of the Republic of Indonesia Number 4548);

7. Law Number 33/2004 concerning Financial Balance between Central and Regional Governments (State Gazette of the Republic of Indonesia Number 126/2004, Supplement to State Gazette of the Republic of Indonesia Number 4438).

HEREBY DECIDE To

Stipulate

GOVERNMENT REGULATION CONCERNING DECONCENTRATION AND CO-ADMINISTRATION.

CHAPTER I GENERAL PROVISIONS

Article 1 In this Government Regulation, the meaning of:

1. Central government, hereinafter called Government, shall be the President of the Republic of Indonesia that holds the state administrative power of the Republic of Indonesia as referred to in the Constitution of the Republic of Indonesia of 1945.

2. State ministry, hereinafter called ministry, shall be any governmental institution that executes the governmental power for certain sectors in the administration.

3. Institution shall be any non state-ministry implementation and any other budget-user agencies established for implementing certain duties based on the 1945 Constitution or any other rules of law.

4. Regional administration shall be the administration of governmental affair by regional government and Regional House of Representative pursuant to the autonomy principle and co-administration with the widest sense of autonomy principle within the system and the principle of the unified country of the Republic of Indonesia as referred to in the Constitution of the Republic of Indonesia of 1945.

5. Regional government shall be governor, regent, or mayor and regional apparatus as the element for conducting regional government.

6. Regional House of Representative, hereinafter called DPRD, shall be the representative institution of regional people as the element for conducting regional administration.

7. Autonomous region, hereinafter called region, shall be any legally unified community having regional boundaries, authorized to govern and handle administrative matters and the interest of local community according to its own initiative based on the community aspiration within the system of the Unified Country of the Republic of Indonesia.

8. Village or any other name used for it, hereinafter called village, shall be any legally unified community having regional boundaries, authorized to govern and handle administrative matters and the interest of local community based on local origin and customs that are recognized and honored within the government system of the Unified Country of the Republic of Indonesia. 9. Regional Administrative Work Unit, hereinafter called SKPD, shall be any

implementation/institution in the regional government responsible for the implementation of deconcentration/administrative duties in certain sector in the province, regency, or city.

10. Deconcentration shall be the authority assigned by the Government to governor as the Government’s representative and/or to any vertical Agency in certain regions.

11. Co-administration shall be any assignment from the Government to any region and/or village, from provincial government to regency or city and/or village and from regency or city government to village for implementing certain duties with the obligation to report and account for its implementation to the assigning party.

12. State Budget, hereinafter called APBN, shall be the annual financial plan of the state administration approved by the House of Representative and stipulated through legislation.

13. Regional Budget, hereinafter called APBD, shall be the annual financial plan of the regional government approved by Regional House of Representative, and stipulated through regional regulation.

14. Deconcentration fund shall be any fund coming from APBN implemented by governor as the Government representative, including all revenues and expenditures in order to implement Deconcentration, excluding any fund allocated for central vertical agency in such region.

15. Co-Administration Fund shall be any fund coming from APBN implemented by region and village, including all revenues and expenditures in order to implement co-administration duties.

16. Provincial Co-Administration Fund shall be any fund coming from Provincial APBD implemented by regency or city and village, including all revenues and expenditures in order to implement such co-administration duties from Provincial Government to Regency or City and/or Village Government.

17. District Co-Administration Fund of regency/city shall be any fund coming from Regency/City APBD implemented by villages, which includes all revenues and expenditures in order to implement such co-administration duties from Regency or City Government to village.

18. Government Work Plan, hereinafter called RKP, shall be any national planning document for 1 (one) year period.

19. Ministerial/Institutional Work Plan, hereinafter called Renja-KL, shall be any ministerial/institutional planning document for 1 (one) year period.

20. Ministerial/Institutional Work Plan and Budget, hereinafter called RKA-KL, shall be any planning and budgeting document containing program and activity of certain ministry/institution that specifies the Government Work Plan and representative Ministerial/Institutional Strategic Plan in one budget year, and the necessary budget to implement it.

21. List of Budget Implementation Forms, hereinafter called DIPA or any other documents equivalent to DIPA, shall be a document for implementing budget made by minister/head of institution and legalized by the Minister of Finance and functioning as document for implementing activity funding, as well as document supporting the government accounting activity.

22. Program shall be any policy instrument containing one or more activities implemented by governmental agency/institution in order to achieve target and objective, as well as to obtain budget allocation or community activity coordinated by governmental agency.

23. Activity shall be any part of program implemented by one or more work units as part of the effort to achieve measured target in certain program, consisting of a set of actions to mobilize resources, whether personnel (human resource), capital goods, including equipment and technology, fund or the combination of several or all resources as an input for producing output in the form of goods/services.

CHAPTER II

PRINCIPLE OF IMPLEMENTATION Article 2

(1) Government implements some of the affairs under its authority in regions based on deconcentration and co-administration principles.

(2) Deconcentration is implemented by devolving some government affairs that is under the ministry/institution’s authority.

(3) Co-administration is organized is conducted by assigning some government affairs under the authority of the assignor, from Government to regional government and/or village government, from provincial government to regency/city and/or village government and from regency/city government to village government.

(4) Ministry/institution is to determine the norms, standards, procedures and criteria of the implementation of deconcentration and co-administration activity.

Article 3

(1) Devolvement of some government affairs from Government to vertical agency in regions is funded by the ministerial/institutional budget.

(2) Devolvement of some government affairs from Government to governor and assignment from Government to regional and/or village government are funded by the ministerial/institutional budget.

(3) Budget management for the devolvement of government affairs and assignment shall be conducted in an orderly manner, abiding by the rules of

law, efficiently, economically, effectively, transparently and responsibly, by taking into account the sense of fairness and appropriateness.

Article 4

(1) Part of governmental affairs devolved to governor as the government representative shall be implemented by provincial SKPD based on the stipulation of the governor.

(2) Part of governmental affairs assigned to regional government shall be implemented by provincial or regency/city SKPD based on the stipulation of the governor or regent/mayor.

(3) Part of governmental affairs assigned to village government shall be implemented by village head.

Article 5

(1) Governmental affairs devolved to governor as the government representative may not be devolved to regent/mayor.

(2) Governmental affairs assigned to provincial government may not be assigned to regency/city government.

(3) Governmental affairs assigned to regency/city government may not be assigned to village government.

Article 6

(1) Government may assign village government to implement some of its particular affairs.

(2) In the event that any ministry/institution gives assignment as referred to in paragraph (1), such assignment shall be approved by the President.

(3) President will approve such assignment after receiving consideration from the Minister of Home Affairs, Minister of Finance and the State Minister for National Development Planning.

Article 7

(1) Minister/Head of Institution shall issue Ministerial Regulation/Head of Institution Regulation for giving assignment to village government after obtaining approval from the President.

(2) Ministerial Regulation/Head of Institution Regulation shall be given to village head through regent/mayor as the fundament for implementing co-administration with a copy sent to the Minister of Home Affairs, Minister of Finance, State Minister for National Development Planning and the Governor.

CHAPTER III SCOPE Article 8

The scope of deconcentration and co-administration shall include the aspects of implementation, fund management, accountability and reporting, guidance and supervision, audit, as well as the sanctions.

Article 9

(1) Implementing deconcentration as referred to in Article 8 shall include: a. Devolvement of government affairs;

b. assignment method;

c. implementation method; and

(2) The management of Deconcentration Fund as referred to in Article 8 shall include:

a. funding principle; b. planning and budgeting;

c. distribution and implementation; and

d. management of state-owned property resulting from the implementation of deconcentration.

(3) Accountability and the reporting of deconcentration as referred to in Article 8 shall include:

a. Implementation of deconcentration; and b. Management of Deconcentration Fund.

Article 10

(1) The implementation of co-administration as referred to in Article 8 shall include:

a. Assignment on government affairs; b. Assignment method;

c. Implementation method; and d. Termination of co-administration.

(2) The management of Co-Administration Fund as referred to in Article 8 shall include:

a. Funding principle; b. Planning and budgeting;

c. Distribution and implementation; and

d. Management of state-owned property produced from the implementation of deconcentration.

(3) Accountability and the reporting of Co-Administration as referred to in Article 8 shall include:

a. Implementation of Deconcentration; and b. The management of Deconcentration Fund

CHAPTER IV

IMPLEMENTING DECONCENTRATION Part One

Devolvement of Governmental Affairs Article 11

(1) Part of Government affairs may be devolved to governor.

(2) Other than the governor, some of the government affairs may also be devolved to:

a. vertical agency;

b. government officials in regions.

(3) The scope of service for implementing some of the devolved Government affairs as referred to in paragraph (2) may exceed the administrative region of any provincial government.

(4) Implementing government affairs as referred to in paragraph (3) shall be coordinated with governor of respective regions.

Article 12

Vertical agency implementing government affairs in provinces and regencies/cities as referred to in paragraph (2) of Article 11 shall be obligated to:

a. coordinate with governor or regent/mayor and relevant agencies in planning, funding, implementation, evaluation and reporting, according to the norms, standards, guideline, direction and government policy that are adjusted to the spatial planning and regional development program, as well as other policies of regional government; and

b. give suggestion to minister/head of institution and governor or regent/mayor related to the implementation of the devolved government affairs.

Article 13

(1) Government affairs under the authority of Government in the field of foreign politics, defense, security, justice, monetary and national fiscal, as well as religion that are being deconcentrated shall be carried out by vertical agency in regions.

(2) Government affairs under the authority of Government in addition to those referred to in paragraph (1) that are being deconcentrated to central apparatus in regions shall be self implemented by certain vertical agency in the regions. (3) Government affairs that may be devolved by Government to governor as the

government representative shall constitute part of government affairs that pursuant to the rules of law is stipulated as Government affairs.

(4) Implementation method of government affairs as referred to in paragraphs (1) and (2) shall be implemented in accordance with the rules of law.

(5) Implementation method of government affairs as referred to in paragraph (3) shall be implemented in accordance with this Government Regulation.

(1) Government affairs that may be devolved as referred to in paragraph (3) of Article 13 shall be specified in the form of ministerial/institutional program and activity having been stipulated in Renja-KL by referring to RKP.

(2) Government affairs that may be devolved as referred to in paragraph (1) must consider the criteria of externality, accountability and efficiency, as well as the harmonious relationship among the government elements.

Part Two Devolvement Method

Article 15

(1) The planning of deconcentration program and activity shall constitute an integrated part of the national development planning system.

(2) The planning of deconcentration program and activity shall consider the aspects of authority, efficiency, effectiveness, state financial capacity and the synchronization between deconcentration activity plan and regional development activity plan.

(3) Undertaking the planning of Deconcentration program and activity shall be carried out in accordance with the rules of law.

Article 16

(1) After the indicative ceilings have been established, ministry/institution shall initiate and formulate some of the government affairs to be devolved to the governor as the government representative in the region no later than March for the following fiscal year.

(2) Formulation on parts of government affairs that will be assigned to the governor shall be set forth in the draft of Renja-KL and submitted to the State

Minister for National Development Planning as a coordination material during the National Development Planning Meeting (Musrenbangnas).

(3) The State Minister for National Development Planning, together with the minister/head of institution, shall conduct a study on the draft of Renja-KL containing the formulation on part of government affairs to be devolved, and the results will be used as the material for drafting the Renja-KL and RKP. (4) Ministry/institution shall inform the governor about the scope of government

affairs to be devolved no later than mid June for the subsequent fiscal year after the temporary ceilings have been established.

(5) The scope of government affairs to be devolved shall be set forth in the form of Ministerial Regulation/Head of Institution Regulation.

(6) Ministerial Regulation/Head of Institution Regulation shall be delivered to governor, with a copy sent to the Minister of Home Affairs, Minister of Finance and State Minister for National Development Planning no later than the first week of December for the subsequent fiscal year after the enactment of Presidential Regulation concerning Specification the of Central Government Budget.

Part Three Implementation Method

Article 17

(1) In implementing government affairs devolved by the Government, the governor as the government representative shall:

a. synchronize with the implementation of regional government affairs; b. prepare regional apparatus that will implement deconcentration

c. coordinate, control, guide, supervise and report.

(2) Governor shall establish a coordinating team by enacting a Governor Regulation that refers to the Minister of Home Affairs Regulation with respect to the implementation of government affairs as referred to in paragraph (1). (3) Governor shall inform the Regional House of Representative regarding the

implementation of government affairs as referred to in paragraph (1).

Article 18

In implementing devolved government affairs as referred to in paragraph (1) of Article 11, governor shall refer to the norms, standards, guidelines, criteria and government policies, as well as the harmony, benefit, smooth implementation of government’s duties and regional development.

Part Four

Method for Withdrawing Devolvement Article 19

(1) Any government affairs devolvement may be withdrawn if:

a. Such government affairs cannot be continued, since the Government changed its policy; and/or

b. The implementation of the said government affairs is not in line with the rules of law.

(2) Any devolvement from government shall be withdrawn through Ministerial Regulation/Head of Institution Regulation, with a copy sent to the Minister of Home Affairs, Minister of Finance and State Minister for National Development Planning.

(3) Minister of Finance shall use the Ministerial Regulation/Head of Institution Regulation as the fundament for blocking in the budget document and ending the withdrawal of the Deconcentration Fund.

CHAPTER V

MANAGEMENT OF DECONCENTRATION FUND Part One

Funding Principle Article 20

(1) Government affairs that may be devolved to governor as referred to in paragraph (3) of Article 13 shall be funded by APBN that is allocated for the budget of ministry/institution through the Deconcentration Fund as regulated by this Government Regulation.

(2) Deconcentration funding shall be allocated after the government authority has been devolved via the ministry/institution to governor as the government representative in regions.

(3) Deconcentration Fund shall be allocated for non-physical activity.

Part Two

Planning and Budgeting Article 21

(1) Programs and activities of the ministry/institution that will be deconcentrated must be in accordance with Renja-KL and RKP.

(2) Location and budget plan for programs and activities that will be deconcentrated shall be compiled by taking into account the financial capacity of the state, fiscal balance in the region and the requirement of regional development.

(1) Deconcentration Fund shall be budgeted according to the prevailing provisions for APBN.

(2) The budgeting of Deconcentration Fund shall be set forth in formulation of RKA-KL.

(3) The formulated RKA-KL shall become the fundament for joint discussion between the ministry/institution and the relevant commission in the House of Representative.

(4) The RKA-KL that has been approved by the relevant commission in the House of Representative shall be submitted to the Minister of Finance and State Minister for National Development Planning for study.

(5) The results of RKA-KL study shall be included in Budget Unit per Work Unit (SAPSK).

(6) RKA-KL that has been included in SAPSK shall be submitted to the ministry/institution.

(7) The ministry/institution shall submit RKA-KL that has been set forth as SAPSK to the governor.

(8) After receiving RKA-KL, governor shall appoint the Authorized Budget User, Commitment Making Official, Official for Examining Invoices/Signing Payment Orders and the Expenditure Treasurer, and submit it to the minister/head of institution and the Minister of Finance.

(9) The governor shall inform RKA-KL as referred to in paragraph (7) to the provincial House of Representative during the discussion of RAPBD.

(10) The method for compiling the RKA-KL shall refer to the rules of law. Article 23

(1) RKA-KL that has been set forth as SAPSK as referred to in paragraph (6) of Article 22 shall become the fundament for formulating the DIPA.

(2) The method for formulating DIPA and its stipulation/legalization shall refer to the rules of law.

Article 24

The Minister of Finance shall use the Ministerial Regulation/Head of Institution Regulation as referred to in paragraph (5) of Article 16, along with RKA-KL and DIPA as referred to in paragraph (1) of Article 23 as the basis in monitoring and evaluating the Deconcentration Fund, as well as for formulating policy and controlling national fiscal.

Part Three

Distribution and Implementation Article 25

(1) Deconcentration Fund shall be distributed by State General Treasurer or its representative through State General Cash Account.

(2) The method for distributing Deconcentration Fund shall carried out in accordance with the rules of law.

Article 26

(1) Any revenue coming from the implementation of deconcentration shall become the State revenue and must be deposited by Authorized Budget User Official to the State General Cash Account pursuant to the rules of law.

(2) If there is any cash balance in the implementation of deconcentration at the end of fiscal budget year, it shall be deposited into the State General Cash Account.

Part Four

Management of State-Owned Property Resulting from Implementation of Deconcentration

Article 27

(1) Any goods purchased or acquired from the implementation of Deconcentration Fund shall become the state’s property.

(2) The goods as referred to in paragraph (1) shall be used for supporting the implementation of deconcentration activity.

(3) SKPD shall administer the state’s property as referred to in paragraph (1) pursuant to the rules of law.

Article 28

(1) Any state’s property as referred to in paragraph (1) of Article 27 may be granted to regions.

(2) In the event that the state’s property is granted to regions, its administration and utilization shall be administered by the provincial government as regional property.

Article 29

(1) Any grant, administration and utilization of property as referred to paragraph (2) of Article 28 shall constitute an integral part of the management of state/regional property.

(2) The procedure for management, control and supervision of state property shall be in accordance with the rules of law.

CHAPTER VI

Article 30

(1) The accountability and reporting of deconcentration shall include the managerial and accountability aspects.

(2) The managerial shall consist of the progress of realizing the funds being used, achieving output targets, any obstacles confronted and follow-up suggestions. (3) The accountability aspect shall consist of reporting the budget realization,

balance sheet, note on financial report and goods report.

Part One Implementation

Article 31

(1) The head of provincial SKPD shall be responsible for the reporting of deconcentration activity.

(2) The reporting of deconcentration activity shall be drafted and submitted with the following stages:

a. The head of provincial SKPD implementing deconcentration shall draft and submit an activity report each quarter and at the end of fiscal year to governor through the SKPD for planning and to the ministry/institution providing fund for the deconcentration.

b. Governor shall assign SKPD for planning to consolidate the report as referred to in point a and to submit it each quarter and at the end of fiscal year to the Minister of Home Affairs, Minister of Finance and the State Minister for National Development Planning.

(3) The report as referred to in point b of paragraph (2) shall be used as the fundament for planning, guiding, controlling and evaluating.

(4) The format and content of the report on the implementation of deconcentration activity shall refer to the rules of law.

Part Two Fund Management

Article 32

(1) The head of provincial SKPD as the Authorized Budget/Property User for deconcentration shall be responsible for the implementation of Deconcentration Fund.

(2) The head of provincial SKPD as the Authorized Budget/Property User in the deconcentration is required to carry out accounting, as well as compile and submit the financial and goods accountability report.

(3) Financial and goods administration during the implementation of deconcentration activity shall be undertaken separately from that in the implementation of both co-administration and decentralization activities. (4) Financial and goods administration as referred to in paragraph (3) shall be

carried out by provincial SKPD pursuant to the rules of law. Article 33

(1) The financial and goods accountability report as referred to in paragraph (2) of Article 32 shall be compiled and submitted in the following stages:

a. The head of provincial SKPD undertaking deconcentration on behalf of the governor shall compile and submit financial and goods accountability report each quarter and at the end of fiscal year to the ministry/institution providing the deconcentration fund, with a copy sent to SKPD for the financial management of the region;

b. The Governor shall consolidate the financial and goods accountability reports on the implementation of Deconcentration Fund and submit it quarterly and at the end of fiscal year to the Minister of Finance; c. Minister/Head of Institution allocating Deconcentration Fund shall

submit financial and goods accountability report at the end of fiscal year to the President through the Minister of Finance.

(2) The format and content of the financial and goods accountability report shall refer to the rules of law.

Article 34

(1) The annual financial accountability report on the implementation of deconcentration drafted by the governor shall attach an Accountability Report on APBD implementation to the Regional House of Representative.

(2) The attachment as referred to in paragraph (1) shall be submitted either together with or separately from the Accountability Report on APBD implementation.

CHAPTER VII

IMPLEMENTATION OF CO-ADMINISTRATION Part One

Assignment of Government Affairs Article 35

(1) Government may assign the co-administration to provincial or regency/city government and/or village government to implement part of government affairs.

(2) Provincial government may assign the co-administration to regency/city government and/or village government to implement part of the provincial government affairs.

(3) Regency/city government may assign the co-administration to village government to implement part of the provincial government affairs.

Article 36

(1) Government affairs that may be assigned by the Government to the provincial or regency/city government and/or village government shall constitute part of government affairs beyond the six affairs, which nature is absolute that pursuant to the rules of law are stipulated as Government affairs.

(2) Government affairs that may be assigned by provincial government to regency/city government and/or village government shall constitute part of government affairs that pursuant to the rules of law are stipulated as provincial government affairs.

(3) Government affairs that may be assigned by regency/city government to village government shall constitute part of government affairs that pursuant to the rules of law are stipulated as regency/city government affairs.

Article 37

(1) Government affairs that may be assigned by the Government shall be specified in the form of ministerial/institutional program and activity having been set forth in the Renja-KL by referring to RKP.

(2) Government affairs that may be assigned by provincial government to regency/city and village government shall be specified in the form of

provincial government program and activity having been set forth in the Work Plan of Regional Apparatus Work Unit (Renja SKPD) of the province by referring to provincial RKPD.

(3) Government affairs that may be assigned by regency/city government to village government shall be specified in the form of regency/city program and activity having been set forth in Renja SKPD of the regency/city by referring to regency/city RKPD.

(4) Government affairs that may be assigned shall take into account the criteria of externality, accountability and efficiency, as well as harmonious national and regional development.

Part Three Assignment Method

Section 1 Assignment Planning

Article 38

(1) Planning of co-administration program and activity shall constitute an integral part of the national development planning system.

(2) Planning of co-administration program and activity shall consider the aspects of authority, efficiency, effectiveness, state financial capacity and the synchronization between the co-administration activity plan and regional development activity plan.

(3) Formulation of co-administration program and activity shall be carried out in accordance with the rules of law.

Section 2

Assignment from Government to Regions and/or Villages Article 39

(1) After the indicative ceilings have been specified, ministry/institution shall initiate and formulate part of government affairs that will be assigned to governor or regent/mayor and/or village head no later than March for the subsequent fiscal year.

(2) Formulation of part of government affairs that will be assigned to governor or regent/mayor and/or village head shall be put in the draft of Renja-KL and submitted to the State Minister for National Development Planning as a coordination material during the National Development Planning Meeting (Musrenbangnas).

(3) The State Minister for National Development Planning, together with the minister/head of institution, shall conduct a study on the draft Renja-KL containing the formulation of some of the government affairs that will be assigned, and the results will be used as the material for drafting Renja-KL and RKP.

(4) Ministry/institution shall inform the governor or regent/mayor and/or village head about the scope of government affairs to be assigned no later than mid June for the subsequent fiscal year after the temporary ceilings have been specified.

(5) The scope of government affairs to be assigned shall be set forth in the form of Ministerial Regulation/Head of Institution Regulation.

(6) Ministerial Regulation/Head of Institution Regulation shall be delivered to governor or regent/mayor and/or village head, with a copy sent to the Minister

of Home Affairs, Minister of Finance and State Minister for National Development Planning no later than the first week of December for the subsequent fiscal year after the enactment of Presidential Regulation on Details of Central Government Budget.

Section 3

Assignment from Province to Regency/City and/or Villages Article 40

(1) Provincial government shall inform regent/mayor and/or village head about the scope of provincial government affairs to be assigned in the subsequent fiscal year immediately after the Temporary Budget Priority and Ceilings (PPAS) have been set forth.

(2) Such information shall be given for the sake of efficiency and effectiveness of government administration, as well as synchronization between co-administration activity plan and regional development activity plan of the regency/city and/or village.

(3) Such information may be used for consideration by the regency/city and/or village administration in compiling the regional budget and planning.

(4) If the information as referred to in paragraph (1) is deemed appropriate, regency/city and/or village government shall make the acceptance statement to implement the assignment from provincial government.

(5) The scope of government affairs to be assigned to regent/mayor and/or village head shall be set forth in the form of Governor Regulation.

(6) Governor Regulation shall be enacted after receiving input from Coordinating Team for Provincial Co-Administration.

(7) Governor Regulation shall become the fundament for implementing and allocating the budget for the Provincial Co-Administration.

Section 4

Assignment from Regency/City to Villages Article 41

(1) Regency/city government shall inform village head about the scope of government affairs to be assigned in the subsequent fiscal year after the Temporary Budget Priority and Ceiling (PPAS) have set forth.

(2) Such information shall be given for the sake of efficiency and effectiveness of regency or city government implementation, as well as synchronization between co-administration activity plan and regional development activity plan of the village.

(3) Such information may be used for consideration by the village government in drafting the regional planning and budget of the village.

(4) If the information as referred to in paragraph (1) is deemed appropriate, village government shall make the acceptance statement to implement the assignment from regency or city government.

(5) The scope of government affairs to be assigned to village head shall be set forth in the form of Regent/Mayor Regulation.

(6) Regent/Mayor Regulation shall be set forth after receiving input from Coordinating Team for Regency/City Co-Administration.

(7) Regent/Mayor Regulation shall become the fundament for implementing and allocating the budget for the Regency/City Co-Administration.

Part Four

Method for Implementing Co-Administration Section 1

Co-Administration from Government to Regional Government Article 42

(1) In implementing government affairs assigned by the Government, regional head shall:

a. synchronize it with the implementation of regional government affairs; b. prepare regional apparatus that will implement co-administration

program and activity; and

c. coordinate, control, guide, supervise and report its implementation. (2) Regional head shall establish a coordinating team under a Regional Head

Regulation by referring to the Minister of Home Affairs Regulation regarding the implementation of government affairs as referred to in paragraph (1). (3) Regional head shall inform the Regional House of Representative about the

implementation of government affairs as referred to in paragraph (1).

Article 43

In implementing assigned government affairs as referred to in paragraph (1) of Article 42, Regional head shall refer to the norms, standards, guidelines, criteria and government policies, as well as the harmonious, beneficial, smooth implementation of government’s duties and regional development.

Section 2

Article 44

(1) In implementing government affairs assigned by the provincial government, the regent/mayor shall:

a. synchronize the assigned government affairs with the implementation of regional government affairs;

b. prepare regional apparatus that will implement such co-administration program and activity; and

c. coordinate, control, guide, supervise and report its implementation (2) Regent/mayor shall establish a coordinating team under Regent/Mayor

Regulation by referring to the Minister of Home Affairs Regulation with respect to the implementation of government affairs as referred to in paragraph (1).

(3) Regent/mayor shall inform the Regional House of Representative about the implementation of government affairs as referred to in paragraph (1).

Article 45

In implementing assigned government affairs as referred to in paragraph (1) of Article 44, Regent/Mayor shall refer to the norms, standards, guidelines, criteria and government policies, as well as the harmonious, beneficial, smooth implementation of government’s duties and regional development.

Section 3

Co-Administration from Government and/or Provincial Government and/or Regency/City Government to Village Government

(1) Village head shall make preparation and coordination with the conference body of village, district, and regency/city government with respect to implementing the government affairs assigned by Government and/or provincial government.

(2) Village head shall make preparation and coordination with the conference body of village and district with respect to implementing the government affairs assigned by regency/city government

(3) In implementing assigned government affairs as referred to in paragraphs (1) and (2), village head shall consider the norms, standards, guidelines, criteria and Government or provincial and regency/city government policies.

(4) Head of district (camat) or known otherwise shall coordinate the implementation of co-administration from the Province/Regency/City that is assigned to the village.

Part Five

Method of Terminating Assignment Article 47

(1) Any assigned government affairs may be withdrawn if:

a. The government affairs cannot be continued because assignor has changed its policy; and/or

b. The implementation of such government affairs is not in line with the rules of law; and/or

c. The assignee suggests having it terminated either partially or entirely. (2) Termination of co-administration from the government shall be carried out

Regulation, with a copy sent to the Minister of Home Affairs, Minister of Finance and State Minister for National Development Planning.

(3) Minister of Finance shall use the Ministerial Regulation/Head of Institution Regulation as the fundament for blocking in the budget document and for halting the withdrawal of the Co-Administration Fund.

(4) If within 30 (thirty) days as of the proposed termination of the assignment the Ministerial Regulation/Head of Institution Regulation hasn’t been stipulated, the regional head and village head may temporarily stop implementing the assigned government affairs.

(5) The co-administration from provincial government shall be terminated under the Governor Decree after having received input from Coordinating Team for Provincial Co-Administration, with copies sent to provincial House of Representative.

(6) The co-administration from regency or city government shall be terminated under the Regent/Mayor Decree after receiving input from Coordinating Team for Regency/City Co-Administration, with copies sent to Regency/City’s House of Representative.

(7) As long as the Ministerial Regulation/Head of Institution Regulation or Governor or Regent/Mayor Decree has not been issued, the assignee may carry out the assigned government affairs.

CHAPTER VIII

MANAGEMENT OF CO-ADMINISTRATION FUND Part One

Article 48

(1) Government affairs that may be assigned by Government to provincial or regency/city and/or village governments shall be funded by APBN allocation for ministry/institution budget through the Co-Administration Fund as regulated under this Government Regulation.

(2) Government affairs assigned by provincial to regency/city and/or village governments shall be funded by the Provincial APBD.

(3) Government affairs assigned by regency/city government to village government shall be funded by APBD of such regency/city.

(4) Funding method of the Co-Administration as referred to in paragraphs (2) and (3) shall be further regulated under a Minister of Home Affairs Regulation by referring to the rules of law.

Article 49

(1) Funding for co-Administration as referred to in paragraph (1) of Article 48 shall be allocated after the government has made an assignment through the ministry/institution to governor or regent/mayor and/or village head.

(2) Co-Administration Fund shall be allocated for physical activities. Part Two

Planning and Budgeting Article 50

(1) Programs and activities of the ministry/institution to be assigned shall be in accordance with Renja-KL and RKP.

(2) Location and budget plan for such programs and activities to be assigned shall be arranged by taking into account the financial capacity of the state, funding balance in the region, and the requirement of regional development.

Article 51

(1) Co-Administration Fund shall be budgeted according to the prevailing provisions for APBN.

(2) The budgeting of Co-Administration Fund shall be included in the formulation of RKA-KL.

(3) The drafted RKA-KL shall become the fundament for collective discussion between the ministry/institution and the relevant commission in the House of Representative.

(4) RKA-KL having been approved by the relevant commission in the House of Representative shall be submitted to the Minister of Finance and the State Minister for National Development Planning for study.

(5) The results of RKA-KL study shall be set forth as Budget Unit per Work Unit (SAPSK).

(6) The RKA-KL that has been set forth as SAPSK shall be submitted to the ministry/institution.

(7) The ministry/institution shall submit RKA-KL as referred to in paragraph (6) to the governor or regent/mayor to be informed to provincial or regency/city’s House of Representative during the discussion of RAPBD.

(8) After receiving RKA-KL, governor or regent/mayor shall submit the proposal made by financial management official for co-administration to be stipulated by the ministry/institution.

Article 52

(1) RKA-KL having been stipulated as referred to in paragraph (6) of Article 51 shall become the fundament for making DIPA.

(2) The method for formulating and approving DIPA shall refer to the rules of law.

Article 53

The Minister of Finance shall use such Ministerial Regulation/Head of Institution Regulation as referred to in paragraph (5) of Article 39, along with RKA-KL and DIPA as referred to in paragraph (1) of Article 52 as the basis in monitoring and evaluating the Co-Administration Fund, as well as for formulating national fiscal policy and control.

Part Three

Distribution and Implementation Article 54

(1) Co-Administration Fund shall be distributed by Authorized State General Treasurer through the State General Cash Account.

(2) The method for distributing the Co-Administration Fund shall be in accordance with the rules of law.

Article 55

(1) Any revenue resulting from the implementation of Co-Administration shall become the State revenue and must be deposited by Authorized Budget User Official into the State General Cash Account pursuant to the rules of law.

(2) If there is any cash balance during the implementation of Co-Administration at the end of fiscal budget year, it shall be deposited into the State General Cash Account.

Part Four

Management of State-Owned Goods Resulting from Co-Administration Article 56

(1) Any goods purchased or acquired from the implementation of Co-Administration Fund shall become the state’s property.

(2) SKPD shall administer the state’s property as referred to in paragraph (1) pursuant to the rules of law.

Article 57

(1) Any state’s property as referred to in paragraph (1) of Article 56 above may be granted to the region.

(2) In the event that the state’s property is granted to regions, its administration and utilization shall be administered by the provincial or regency/city government as regional property.

Article 58

(1) Any grant, administration, and utilization of goods as referred to paragraph (2) of Article 57 shall constitute an integral part of the management of state/regional property.

(2) The method for managing, controlling and supervising the states property shall be in accordance with the rules of law.

CHAPTER IX

ACCOUNTABILITY AND REPORTING OF CO-ADMINISTRATION Article 59

(1) The accountability and reporting of the Co-Administration shall include the managerial and accountability aspects.

(2) The managerial aspect shall consist of the progress of realizing the use of fund, achieving output targets, obstacles confronted, and follow-up suggestion. (3) The accountability aspect shall consist of the reporting of budget realization,

balance sheet, note on financial statement, and goods report.

Part One The Implementation

Section 1

Co-Administration from Government to Provincial, Regency, or City Government

Article 60

(1) The head of provincial or regency/city’s SKPD shall be responsible for the reporting of Co-Administration activity.

(2) The reporting of Co-Administration activity shall be drafted and submitted in the following stages:

a. The head of provincial SKPD implementing the Co-Administration shall draft and submit an activity report each quarter and at the end of fiscal year to governor through SKPD for planning and to the ministry/institution providing the Co-Administration fund.

b. The head of regency/city’s SKPD implementing the Co-Administration shall draft and submit an activity report each quarter and at the end of fiscal year to regent/mayor through SKPD for planning and to the ministry/institution providing the Co-Administration fund, with copies to provincial SKPD having the same duties and authority.

c. Governor shall ask SKPD for planning to consolidate the reports as referred to in point a and to submit it quarterly and at the end of fiscal year to the Minister of Home Affairs, Minister of Finance and the State Minister for National Development Planning.

d. Regent/Mayor shall assign the SKPD for planning to consolidate the report as referred to in points a and b above and to submit them quarterly and at the end of fiscal year to governor through the provincial SKPD for planning, the Minister of Home Affairs, Minister of Finance and the State Minister for National Development Planning. (3) The report as referred to in point c and d of paragraph (2) shall be used for

planning, guiding, controlling and evaluating.

(4) The format and content of the report on the implementation of co-administration activity shall refer to the rules of law.

Section 2

Co-Administration from the Government to Village Government Article 61

(1) Co-administration activity shall be implemented by village head. (2) Village head shall be responsible for reporting such activity.

(3) The reporting of co administration activity shall be coordinated by regency/city SKPD for village administration.

(4) The reporting of Co-Administration activity shall be drafted and submitted in the following stages:

a. Village head shall draft and submit the activity report quarterly and at the end of fiscal year to regency/city SKPD;

b. The head of regency/city SKPD is to gather and submit the activity report each quarter and at the end of fiscal year to regent/mayor through SKPD for planning;

c. Regent/mayor shall submit the activity report each quarter and at the end of fiscal year to the ministry/institution that provides the fund for the co-administration, with a copy sent to the governor;

d. Governor shall assign SKPD for planning to consolidate the regent/mayor’s report as referred to in point c above and to submit it quarterly and at the end of fiscal year to the Minister of Home Affairs, Minister of Finance and the State Minister for National Development Planning.

(5) The report as referred to in point c and d of paragraph (4) shall be used for planning, guiding, controlling and evaluating.

(6) The format and content of the report on the implementation of co-administration activity shall refer to the rules of law.

Section 3

Co-Administration from Province to Regency/City Government Article 62

(1) Co-administration activity for province shall be implemented by regency/city SKPD decided by regent/mayor.

(2) The head of regency/city SKPD shall be responsible for reporting the provincial co-administration activity.

(3) The reporting of Co-Administration activity for province shall be drafted and submitted in the following stages:

a. The head of regency/city SKPD is to draft and submit the activity report each quarter and at the end of fiscal year to regent/mayor through SKPD for planning;

b. Regent/mayor shall assign SKPD for planning to consolidate the report as referred to in point a above and to submit it each quarter and at the end of fiscal year to the governor through the SKPD for planning; (4) The report as referred to in point b of paragraph (3) shall be used for planning,

guiding, controlling and evaluating.

(5) Further provision pertaining to the drafting and submission of activity report as referred to in paragraph (3) shall be regulated under Minister of Home Affairs Regulation.

Co-Administration from Province to Village Government Article 63

(1) Co-administration activity from province to village government shall be implemented by village head.

(2) Village head shall be responsible for reporting the provincial co-administration activity.

(3) Such reporting activity shall be coordinated by regency/city SKPD for village administration.

(4) The reporting of Co-Administration activity for province shall be drafted and submitted in the following stages:

a. Village head is to draft and submit the activity report quarterly and at the end of fiscal year to regency or city SKPD;

b. The head of regency/city SKPD is to compile and submit the activity report quarterly and at the end of fiscal year to regent/mayor through the SKPD for planning;

c. Regent/mayor is to submit the activity report quarterly and at the end of fiscal year to the governor.

(5) The report as referred to in point c of paragraph (4) shall be used for planning, guiding, controlling and evaluating.

(6) Further provision pertaining to the drafting and submission of activity report as referred to in paragraph (4) shall be regulated under Minister of Home Affairs Regulation.

Section 5

Article 64

(1) Co-administration activity from regency/city to village government shall be implemented by village head.

(2) Village head shall be responsible for reporting such activity.

(3) Such reporting activity shall be coordinated by regency/city SKPD for village administration.

(4) The reporting of Co-Administration activity shall be drafted and submitted in the following stages:

a. Village head is to draft and submit the activity report quarterly and at the end of fiscal year to regency or city SKPD;

b. The head of regency/city SKPD is to compile and submit the activity report quarterly and at the end of fiscal year to regent/mayor through SKPD for planning;

(5) The report as referred to in point b of paragraph (4) shall be used for planning, guiding, controlling and evaluating.

(6) Further provision pertaining to the drafting and submission of activity report as referred to in paragraph (4) shall be regulated under Minister of Home Affairs Regulation.

Part Two Fund Management

Article 65

(1) The head of provincial or regency/city SKPD as the Authorized Budget/Goods User in the co-administration shall be responsible for the implementation of Co-Administration Fund.

(2) The Head of provincial SKPD as the Authorized Budget/Goods User in the co-administration is required to carry out the accounting, as well as responsible to draft and submit the accountability report on finance and goods.

(3) Finance and goods administration in the implementation of co-administration activity shall be carried out separately from that of deconcentration and decentralization activities.

(4) Financial and goods administration as referred to in paragraph (3) shall be undertaken by provincial or regency/city’s SKPD pursuant to the rules of law.

Article 66

(1) The financial and goods accountability report as referred to in paragraph (2) of Article 65 shall be drafted and submitted in the following stages:

a. The head of provincial SKPD implementing the co-administration on behalf of the governor shall draft and submit financial and goods accountability report quarterly and at the end of fiscal year to the minister/head of institution that provides fund for the co-administration, with a copy sent to SKPD running the financial management of the region.

b. The head of regency/city SKPD implementing the co-administration on behalf of the regent/mayor shall draft and submit financial and goods accountability report quarterly and at the end of fiscal year to the minister/head of institution that provides Co-Administration Fund, with a copy sent to SKPD running the financial management of the region.

c. Governor shall consolidate the financial and goods accountability report on the implementation of Co-Administration Fund and submit it quarterly and at the end of fiscal year to the Minister of Finance; d. Regent/mayor shall consolidate the financial and goods accountability

report on the implementation of Co-Administration Fund and submit it quarterly and at the end of fiscal year to the Minister of Finance, with a copy sent to the governor;

e. Minister/Head of Institution allocating Co-Administration Fund shall make financial and goods accountability report at the end of fiscal year to the President through the Minister of Finance.

(2) The format and content of the financial and goods accountability report shall refer to the rules of law.

Article 67

(1) The financial and goods accountability report on the implementation of co-administration activity at the end of fiscal year as referred to in point c and d of paragraph (1) in Article 66 above shall be attached in the Accountability Report on APBD Implementation to the Regional House of Representative. (2) The attachment as referred to in paragraph (1) may be submitted either

together with or separately from the accountability report on APBD implementation.

CHAPTER X

GUIDANCE AND SUPERVISION Part One

Article 68

(1) Minister/Head of Institution shall guide and supervise the implementation of government affairs devolved to governor.

(2) Governor as the assignee of such government affairs from the Government shall guide and supervise the deconcentration activity implemented by Provincial SKPD.

(3) The guidance as referred to in paragraph (1) shall include the manual, standard, facilitation, and technical guidance, as well as monitoring and evaluation on the implementation of the deconcentration.

(4) The guidance as referred to in paragraph (3) shall be undertaken to improve performance, transparency, and accountability of the deconcentration implementation.

Article 69

(1) Minister of Finance shall guide and supervise the management of Deconcentration Fund.

(2) Guidance as referred to in paragraph (1) shall include the coordination, manual provision, facilitation, and technical guidance, as well as monitoring and evaluation in the management of Deconcentration Fund.

(3) The guidance as referred to in paragraph (2) shall be undertaken for improving the performance, transparency, and accountability in the management of Deconcentration Fund.

(4) Supervision as referred to in paragraph (1) shall be implemented for achieving efficiency in the management of Deconcentration Fund.

Co-Administration Article 70

(1) Minister/Head of Institution shall guide and supervise the implementation of government affairs assigned to governor or regent/mayor.

(2) Governor or regent/mayor as the assignee of such government affairs from the Government shall guide and supervise the co-administration activity implemented by SKPD.

(3) Guidance as referred to in paragraph (1) shall include the manual, standard, facilitation, and technical guidance, as well as monitoring and evaluation on the implementation of the co-administration.

(4) Guidance as referred to in paragraph (3) shall be undertaken for improving the performance, transparency, and accountability of the co-administration’s implementation.

Article 71

(1) Minister of Finance shall guide and supervise the management of Co-Administration Fund.

(2) Guidance as referred to in paragraph (1) shall include the coordination, manual provision, facilitation, and technical guidance, as well as monitoring and evaluation in the management of Co-Administration Fund.

(3) Guidance as referred to in paragraph (2) shall be undertaken for improving the performance, transparency, and accountability in the management of Co-Administration Fund.

(4) Supervision as referred to in paragraph (1) shall be implemented for achieving efficiency in the management of Co-Administration Fund.

Part Three

Coordination of Guidance and Supervision Article 72

(1) In order to improve the effectiveness in implementing and managing Deconcentration Fund and Co-Administration Fund, Minister/Head of Institution shall conduct the coordination, together with the Minister of Finance and Minister of Home Affairs in the implementation of such guidance and supervision.

(2) Results of such guidance and supervision as referred to in paragraph (1) shall be used for formulating policy for the deconcentration and co-administration.

Article 73

Guidance and supervision in implementing and managing of Deconcentration and Co-Administration Fund shall be carried out pursuant to the rules of law.

CHAPTER XI AUDIT Article 74

(1) Deconcentration and co-administration audit shall include the financial, performance matters and that for specific purposes.

(2) Financial audit shall be carried out on financial statement.

(3) Performance audit shall be carried out on the management of state finance that consists of the economic, efficiency and effectiveness aspects.

(4) Audit for specific purposes shall include audit on other matters such as finance, investigation, and the government’s internal control system.

(5) Deconcentration and co-administration audit as referred to in paragraph (1) shall be undertaken by internal audit unit of the ministry/institution and/or government’s external audit unit.

(6) Further provisions on the audit on finance, performance and matters for specific purposes as referred to in paragraphs (2), (3) and (4) shall refer to the rules of law.

CHAPTER XII SANCTION

Article 75

(1) SKPD that intentionally fails and/or neglects to submit deconcentration and co-administration report may be subject to sanction in the form of:

a. Delayed withdrawal of Deconcentration Fund and Co-Administration Fund for the subsequent quarter; or

b. Termination of allocation of Deconcentration Fund and Co-Administration Fund for the subsequent fiscal year.

(2) The imposed sanction as referred to in paragraph (1) shall not release SKPD from the obligation to submit the deconcentration and co-administration report as referred to in this Government Regulation.

(3) Provisions on sanction method as referred to in paragraph (1) shall be carried out pursuant to the rules of law.

CHAPTER XIII

TRANSITIONAL PROVISION Article 76

(1) Part of budget from ministry/institution used for financing the government affairs that constitutes the regional authority shall be converted as Special Allocation Fund.

(2) In terms of conversion as referred to in paragraph (1), the Minister/Head of Institution, Minister of Finance and State Minister for National Development Planning shall previously identify and segregate the programs and activities that will be funded by some of the ministry/institution’s budget.

(3) Such programs and activities shall be identified and segregated during the drafting of the Renja-KL.

Article 77

(1) Based on such the identification and segregation as referred to in paragraph (2) of Article 76, the ministry/institution shall submit a proposal on the amount of some of the ministry/institution’s budget that will be converted as the Specific Allocation Fund to the Minister of Finance.

(2) Minister of Finance shall set the amount of some of the budget from ministry/institution that will be converted as Specific Allocation Fund.

(3) The amount of some of the ministry/institution’s budget as referred to in paragraph (2) shall be deposited gradually as of the enactment of this Government Regulation.

(4) Ministry/institution’s programs and activities that according to the rules of law have been set as government affairs and implemented based on the principles of deconcentration and co-administration must have its financing abide by the stipulations as regulated in this Government Regulation.

CLOSING PROVISION Article 78

By the time of this Government Regulation enactment,

1. Government Regulation Number 106/2000 concerning the Financial Management and Accountability in Implementing Deconcentration and Co-Administration (State Gazette of the Republic of Indonesia Number 203/2000, and Supplement to State Gazette of the Republic of Indonesia Number 4023); 2. Government Regulation Number 39/2001 concerning the Implementation of

Deconcentration (State Gazette of the Republic of Indonesia Number 62/2001, and Supplement to State Gazette of the Republic of Indonesia Number 4095); and

3. Government Regulation Number 52/2001 concerning the Implementation of Co-Administration (State Gazette of the Republic of Indonesia Number 77/2001, and Supplement to State Gazette of the Republic of Indonesia Number 4106);

are hereby annulled and no longer valid.

Article 79

Further provisions pertaining to the guideline for the management of Deconcentration Fund and Co-Administration Fund will be regulated under Minister of Finance Regulation.

Article 80

All provisions in the rules of law pertaining to the implementation of deconcentration, of co-administration, as well as the funding of deconcentration and co-administration must be based on and adjusted to this Government Regulation.

Article 81

This Government Regulation shall be in effect on the date of its enactment. In order for the people to take recognizance, this Government Regulation is hereby ordered to be and placed in the State Gazette of the Republic of Indonesia.

Enacted in Jakarta On 4 February 2008

THE PRESIDENT OF THE REPUBLIC OF INDONESIA signed

DR. H. SUSILO BAMBANG YUDHOYONO Stipulated in Jakarta

On 4 February 2008

MINISTER OF JUSTICE AND HUMAN RIGHTS AFFAIRS OF THE REPUBLIC OF INDONESIA

Signed,

ANDI MATTALATA

STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 20/2002

Copy Thereof Is in Conformity with the Original STATE SECRETARY OF RI

Head of Legislation Bureau For Politics and People Welfare

ELUCIDATION ON

GOVERNMENT REGULATION OF THE REPUBLIC OF INDONESIA NUMBER 7/2008

CONCERNING

DECONCENTRATION AND CO-ADMINISTRATION

I. GENERAL

In implementing the administration, the Unified Country of the Republic of Indonesia follows the principles of the decentralization, deconcentration and co-administration. Deconcentration and co-administration are implemented because not all government’s authorities and duties can be conducted by using decentralization principles. Additionally, as a consequence of being a unified country, it is not possible to decentralize all of government authorities and make the regions autonomous.

Deconcentration principle is adopted in provincial regions as the administrative region in order to implement any government authorities devolved to governors as the government’s representatives in the province. Governors as the head of provinces also functions as Government’s representatives in the regions, in the sense to bridge and shorten the line of control in implementing of Government’s duties and functions, as well as to guide and supervise the implementation of government affairs in regencies and cities. The basic consideration and the purpose of implementing deconcentration principles are:

a. To maintain the integration of the Unified Country of the Republic of Indonesia;

b. To implement national policy in reducing the gap among the regions;

c. To create harmonious relationship among the government levels and among regional governments.

d. To identify potentials and to maintain the social and cultural diversity in the regions;

e. To achieve efficiency and effectiveness in implementing the administration, as well as in managing the development and serving for public interest.

f. To create social and cultural communications in the administrative system of the Unified Country of the Republic of Indonesia.

The implementation of co-administration principles is the reflection of the system and procedure of Government’s assignment to regions and villages, from provincial government to regencies/cities and/or villages, as well as from regency/city government to villages in implementing the government and development affairs, accompanied by the requirement to report their implementation and accountability to the assignor. Co-administration is carried out because not all government’s authorities and duties may be conducted by using the principles of decentralization and deconcentration. Such co-administration assignment is meant to improve efficiency and effectiveness of government administration, development management, and public service. The purpose of assigning co-administration is to facilitate implementation of duties and solve problems, as well as to help implementing the administration and development progress for regions and villages.

Co-administration assigned by the Government to regions and/or villages includes part of its duties that will be more efficient and effective if implemented by regions and/or villages. Co-administration assigned by provincial government as an autonomous region to regencies/cities and/or villages includes part of their duties such as, among others are those which whose nature is cross regency and city, and those of other governmental sectors, including some of provincial government’s duties which are not or cannot be implemented by regency and city. Co-administration assigned by

the regency/city’s government to villages includes some of the duties in governmental sector under its authority.

The implementation of the three principles described above has the consequences in the funding arrangement. All government affairs that have been granted and fall under the authority of regional government have to be financed by APBD, whereas government affairs under the authority of the Government have to be financed by APBN through some of the ministry/institution’s budget. The funding of Government’s authority through APBN includes the funding of some of government affairs that will be devolved to governor based on deconcentration principle, and some government affairs that will be assigned to provincial and regency/city’s regions based on co-administration principle. This is in line with the Law Number 33/2004 concerning Fiscal Balance between Central and Regional Governments, which state that fiscal balance between central and regional governments constitutes a comprehensive system in terms of funding the implementation of the principle of decentralization, deconcentration and co-administration. Fiscal balance is implemented in line with the distribution of government affairs between the Government and regional governments, which arrangement not only includes the aspect of regional revenue, but also management and accountability. As such, granting, devolving government’s authority, as well as assigning from Government in order to implement the principles of decentralization, deconcentration and co-administration must be followed by efficient and effective funding arrangement and utilization of national resources.

Deconcentration Fund essentially constitutes part of ministry/institution’s budget allocated to governor as the Government’s representative in provincial region, according to the load and the type of the devolved authority, with the obligation to

make a report and be accounted for to the assignor. Meanwhile, Co-Administration Fund constitutes part of ministry/institution’s budget allocated to provincial, regency/city, and village regions according to the load and the type of the assigned assignment with the obligation to report and account for to the assignor. The funding for co-administration from the Government to village government may only be conducted for some certain government affairs after obtaining approval of the President.

Allocation of Deconcentration and Co-Administration Fund is meant to improve the performance, efficiency and effectiveness in the government administration, and public service, and regional development, as well as to produce nationwide harmony and synergy between the program and activities of deconcentration/co-administration funded by APBN and the decentralization activities funded by APBD. Moreover, the allocation of Deconcentration and Co-Administration Fund is also meant to ensure the availability of ministerial/institutional budget for implementing programs and activities set forth in Renja-KL referring to RKP.

To achieve harmony and synergy as mentioned above, prior to drafting the RKA-KL, a proper communication and planning process is conducted between the ministry/institution and governors that will receive the devolved authority, and provinces or regencies/cities and/or villages that will receive co-administration. Such communication and planning process is expected to create an integrated planning and budgeting system in terms of harmonizing and adjusting the Renja-KL with RKA-KL that have been specified according to the organization units, along with its programs and activities, including temporary allocation of fund for the deconcentration and co-administration activities.

Based on the rationale as described above, it is extremely important that the implementation and management of Deconcentration and Co-Administration Fund to have a more fundamental and comprehensive arrangement in this Government Regulation.

II. ARTICLE BY ARTICLE Article 1

Self-explanatory Article 2

Paragraph (1)

In addition to being based on deconcentration and co-administration principles, the Government may also undertake by themselves some of government affairs under its own authority.

Paragraph (2)

Self-explanatory Paragraph (3)

Self-explanatory Paragraph (4)

Self-explanatory Article 3

Paragraph (1)

Ministerial/institutional budget allocated for vertical agencies in regions refers to some of the budget allocated for central office (KP) and/or regional office (KD).

Self-explanatory Paragraph (3)

Self-explanatory Article 4

Paragraph (1)

Governor shall establish SKPD no later than the first week of July in the current year after setting the temporary ceiling.

Paragraph (2)

Governor, regent or mayor shall establish SKPD no later than the first week of July in the current year after setting the temporary ceiling. Paragraph (3)

Self-explanatory Article 5

Self-explanatory Article 6

Paragraph (1)

Certain government affairs refer to those under the authority of the Government that is special and would be effective if implemented by village government.

Paragraph (2)

Self-explanatory Paragraph (3)

In requesting approval from the President, ministry/institution should also specify the type of certain government affairs to be assigned to village government.

Article 7

Self-explanatory Article 8

Self-explanatory Article 9

Self-explanatory Article 10

Self-explanatory Article 11

Paragraph (1)

Self-explanatory Paragraph (2)

Self-explanatory Paragraph (3)

Beyond the administrative region of any provincial government refers to devolvement of government affairs in implementing deconcentration to vertical agencies whose region covers more than one province. Paragraph (4)

Self-explanatory Article 12

Self-explanatory Article 13

Deconcentrated government affairs to vertical agencies refer to government affairs that have been established as duties and functions of vertical agencies at the time of its establishment.

If the region has yet to establish vertical agency for foreign affairs, defense, security, justice, national monetary & fiscal, and religion, part of such affairs shall be assigned to the governor as the government’s representative.

Paragraph (2)

Certain vertical agency refers to central agency in the region that is part of the ministry/institution other than that for foreign affairs, defense, security, justice, national monetary & fiscal, and religion. Paragraph (3)

Rules of law refer to the Government Regulation concerning the Distribution of Government Affairs between the Government, Provincial Government, and Regency/City Government.

Paragraph (4)

Self-explanatory Paragraph (5)

Self-explanatory Article 14

Paragraph (1)

Self-explanatory Paragraph (2)

Externality refers to the criteria for distributing government affairs by taking into account any impact incurred by implementing certain

government affairs. If the said impact is local in nature, then the government affairs fall under the authority of regency/city government. If it is cross regencies or cities and/or regions, such government affairs fall under the authority of provincial government; If it is cross provinces and/or nations, then it falls under the authority of the Government.

Accountability is the criteria for distributing Government affairs by taking into account the accountability of the Government, provincial and regency/city’s government in implementing certain government affairs for the community. If the impact of implementing part of government affairs is only directly experienced by the locals (a regency/city), the regency/city government shall be responsible for governing and handling the said government affairs. If the impact of implementing some of government affairs is directly experienced by more than one regency/city in a single province, the provincial government shall be responsible for governing and handling such government affairs; and if the impact of implementing part of government affairs directly is experienced by more than one province and/or nationwide, the Government shall be responsible for governing and handling such government affairs.

Efficiency refers to the criteria for distributing government affairs by taking into account the highest efficiency may be attained from implementing a government affair. In case the government affair is more efficiently handled by regional government at regency/city level, then it shall be delivered to regional government at regency/city level.

In case governance affairs will be more efficient if handled by regional government at provincial level, it will be delivered to the provincial government. If a government affair will be more efficient handled by central Government, it remains under the central Government’s authority.

Harmonious relationship between governmental levels refers to the criteria for distributing governmental affairs by taking into account structure of harmony among government administrators.

Article 15

Paragraph (1)

Self-explanatory Paragraph (2)

Self-explanatory Paragraph (3)

Rules of law refer to the Law concerning National Development Planning System and Government Regulation concerning Government’s Work Plan.

Article 16

Paragraph (1)

Self-explanatory Paragraph (2)

Self-explanatory Paragraph (3)

Self-explanatory Paragraph (4)

The purpose of notification is to inform the results of setting the temporary ceiling as the fundament for consideration by the governor in establishing SKPD that will implement the deconcentration program and activity.

Paragraph (5)

Self-explanatory Paragraph (6)

Governor shall use the Ministerial Regulation/Head of Institution Regulation as the fundament for budget implementation and activity management.

Article 17

Paragraph (1)

Governor as the Government’s representative in the provincial area in implementing the attributive authority and that devolved by the Government will have its funding imposed on the APBN and part of the Ministry of Home Affairs budget through the Deconcentration mechanism. Some of the said budget shall be managed properly, abiding by the rules of law, efficiently, economically, effectively, transparently and accountably by taking into consideration the sense of justice, propriety and state finance capacity.

Letter a

Synchronization is included in planning and budgeting. Letter b

Self-explanatory Letter c

Self-explanatory Paragraph (2)

Self-explanatory Paragraph (3)

Notice by the governor to provincial House of Representative is meant to give information on the program and activity to be implemented in terms of conducting deconcentration.

Article 18

Self-explanatory Article 19

Self-explanatory Article 20

Paragraph (1)

Self-explanatory Paragraph (2)

Assignment of government authority refers to the devolvement from ministry/institution to governor to implement some certain authorities pursuant to the rules of law.

Paragraph (3)

The activity of non-physical nature such as, among others is coordination, planning, facilitation, training, guidance, supervision, and control.

Most of Deconcentration Fund shall be used for non-physical activity, and small portion may be used for supporting activity in the form of goods procurement that may produce fixed asset.

The level of budget for said supporting activity shall be adjusted with the characteristics of respective activities of the ministry/institution based on the principle of compliance, appropriateness, economy, and efficiency.

Article 21

Paragraph (1)

Self-explanatory Paragraph (2)

State financial capacity refers to the allocation of Deconcentration Fund that is adjusted with the capacity of APBN in financing central government affairs through some of ministerial/institutional budget. Funding balance in regions means that the allocation of Deconcentration Fund shall consider the amount of budget transferred from central to regional government and the financial capacity of regions so that the Deconcentration Fund can be allocated more effectively and more efficiently, and not concentrated in certain region. Regional development’s requirement means that the allocation of Deconcentration Fund shall be adjusted with national and regional development priority.

Article 22

Paragraph (1)

Self-explanatory Paragraph (2)

Self-explanatory Paragraph (3)

and Minister of Finance Regulation concerning Accounting System for State Property.

Article 67

Paragraph (1)

Annual financial accountability report for the implementation of co-administration shall not be an integral part of the accountability report on APBD implementation.

Paragraph (2)

Self-explanatory Article 68

Paragraph (1)

Self-explanatory

Paragraph (2)

Self-explanatory

Paragraph (3)

Guideline and standards for implementing deconcentration, which the ministry/institution provides to regions, should be adjusted with the condition and availability of human resource in the regions.

Paragraph (4)

Guidance is meant to synchronize the planned activity and the achieved outcome, implementation impact, and compliance with the rules of law.

Article 69

Paragraph (1)

Paragraph (2)

Self-explanatory

Paragraph (3)

Guidance is meant to synchronize the planned activity and the achieved outcome, implementation impact, and compliance with the rules of law.

Paragraph (4)

In addition to achieving efficiency, supervising the management of deconcentration fund, it is also meant to formulate policy on the allocation of Deconcentration Fund.

Article 70

Paragraph (1)

Self-explanatory

Paragraph (2)

Self-explanatory

Paragraph (3)

Guidelines and standards for implementing co-administration, which the ministry/institution provides to regions, should be adjusted with the condition and availability of human resource in the regions.

Paragraph (4)

Guidance is meant to synchronize the planned activity and achieved outcome, implementation impact, and compliance with the rules of law.

Article 71

Self-explanatory

Paragraph (2)

Self-explanatory

Paragraph (3)

Guidance is meant to synchronize the planned activity and achieved outcome, implementation impact, and compliance with the rules of law.

Paragraph (4)

In addition to achieving efficiency, supervising the management of co-administration fund is also meant to formulate policy on the allocation of Co-Administration Fund.

Article 72

Self-explanatory Article 73

Self-explanatory Article 74

Paragraph (1)

Self-explanatory

Paragraph (2)

Self-explanatory

Paragraph (3)

Self-explanatory

Paragraph (4)

Self-explanatory

The ministry/institution’s internal auditor may delegate and/or work together with regional supervising apparatus.

The government’ external auditor shall be the chief auditor of BPK for the relevant ministry/institution.

Paragraph (6)

Rules of law refer to the Law concerning the Audit of State Financial Management and Accountability.

Article 75

Paragraph (1)

Self-explanatory

Paragraph (2)

Self-explanatory

Paragraph (3)

Such rules of law include, among others, Minister of Finance Regulation concerning the Accounting and Financial Reporting System of Central Government.

Article 76

Paragraph (1)

Some of ministerial/institutional budget to be converted as Special Allocation Fund refers to budget that is actually still being used to implement program and activity that constitute regional affairs, especially set forth in Renja-KL.

Converting the ministerial/institutional budget shall consider the requirement of ministerial/institutional budget to finance sector/activity

of national scale/national priority, which nature is both policy and operational.

Paragraph (2)

Identification and segregation are made based on the database of ministerial/institutional program and activity that constitutes the description of government affairs that fall under the authority of the Government.

Paragraph (3)

Minister of Finance shall use the outcome of such identification and segregation as the fundament for setting the amount of ministerial/institutional budget to be converted as Special Allocation Fund.

Article 77

Paragraph (1)

Proposal on the outcome of such identification and segregation by the ministry/institution to the Minister of Finance shall be submitted no later than the first week of May.

Paragraph (2)

Self-explanatory

Paragraph (3)

The stages of conversion shall be completed no later than two (2) fiscal years as of the issuance of this Government Regulation, with the purpose of giving the opportunity to the ministry/institution in formulating programs and activities according to the distribution pattern of government affairs.

Paragraph (4)

Self-explanatory Article 78

Self-explanatory Article 79

Self-explanatory Article 80

Self-explanatory Article 81

Self-explanatory

SUPPLEMENT TO STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 4816