the role of local economies in achieving … 2 irsa suahasil.pdf · makassar, 2-3 jun 2014 u....

FISCAL POLICY AGENCYMINISTRY OF FINANCE OF THE REPUBLIC OF INDONESIA

Prof. Suahasil NazaraChairman of Fiscal Policy Agency

Ministry of Finance, Republic of Indonesia

The 14th IRSA Conference 2018 “Strengthening Regional and Local Economy”

Surakarta, July 2018

THE ROLE OF LOCAL ECONOMIES IN ACHIEVING INCLUSIVE GROWTH FOR INDONESIA

This year marks

the 20th year of IRSA Annual Meeting

2

BADAN KEBIJAKAN FISKAL - KEMENTERIAN KEUANGAN RI

The Indonesia Regional Science Association (IRSA) is an Indonesian academic organization that actively promotes the advancement of research across the country. This network has now reached a critical mass that can play a major role not only in the academic arena through research and publications but also contribute to the evidence-based regional development policies nationally, regionally, and locally

The Idea Emerged at Mid 1980s, Bandung

• The idea to form IRSA was formed during an international regional science seminar in Bandung held by Pacific Regional Science Conference Organization (PRSCO).

IRSA is Formed at 12 December 1996, Jakarta

• IRSA is formalized during a meeting between Budy P. Resosudarmo and Geoffrey Hewings at the World Bank Jakarta. Here the IRSA Working Committee was formed.

IRSA Formal Inauguration, 13 March 1997, Jakarta

• A gathering is held by IRSA Working Committee. The meeting also formed IRSA Formatur, tasked to appoint IRSA’s president.

First IRSA’s President was Appointed, August 1997

• Prof. BambangBintoro Soedjito was elected as the first president of IRSA in August 1997.


IRSA Conference consistently conducts annual conference since 1998

good collaboration: universities, policy makers, partners and sponsors

enthusiastic participants from domestics and Asian countries

4

Dates and Place Chair Topics

Jakarta, 20-21 Oct 1998 Bambang P.S. Brodjonegoro Regional Development Policy: Theory and Practice

Jakarta, 28 Feb 2000 Budy P. Resosudarmo Indonesian Regional Development Policy: Challenges in the New Millennium

Jakarta, 20-21 March 2001 Indonesia’s Sustainable Development in the Era of Decentralization

Bali, 20-21 Jun 2002U. Indonesia & Bappenas

Budy P. Resosudarmo, ArmidaAlisjahbana and Bambang P.S. Brodjonegoro

Decentralization, Natural Resource, and Regional Development in the Pacific Rim

Bandung, 18-19 Jul 2003U. Padjadjaran & Bappanes

Armida S. Alisjahbana Regional Development in a Decentralized Era: Public Services, Poverty, and The Environment

Yogyakarta, 13-14 August 2004U. Gadjah Mada & Bappenas

Catur Sugiyanto Regional Development in Transition: Governance, Public Services, and Eco-tourism

Jakarta, 3-4 August 2005U. Indonesia & Bappenas

Suahasil Nazara Natural Disasters’ Impacts and Challenges for Recovery: Economic Development Strategy Focusing on Aids, Governance, Infrastructure & Environment

Malang, 18-19 August 2006U. Brawijaya & Bappenas

Candra Fajri Ananda Empowering Regional Economic Development toward Sustainable Poverty Alleviation: Good Governance, Financing Development, and the Environment

Bandung, 2-3 Nov 2007ITB & Bappenas

Ibnu Syabri Sustainable Regional Development: The Role of Infrastructure in Achieving Millennium Development Goals


IRSA Conference consistently conducts annual conference since 1998

good collaboration: universities, policy makers, partners and sponsors

enthusiastic participants from domestics and Asian countries

5

Dates and Place Chair Topics

Palembang, 30-31 Jul 2008U. Sriwijaya & Bappenas

Bernadette Robiani The Current and Future Issues of Regional Development, Energy and Climate Change

Bogor, 22-23 Jul 2009IPB & Bappenas

D.S. Priyarsono and Ernan Rustiadi

The Political Economics of Regional Development

Surabaya, 28-29 Jul 2010U. Airlangga & Bappenas

Bambang Eko Afiatno Reintegrating Indonesian Regional Economy in the Global Era

Padang, 19-21 Jul 2011U. Andalas & Bappenas

Hefrizal Handra Regional Development and Finances: Challenges for Expanding and Financing Public Services in the Decentralized Era

Banjarmasin, 9-11 Jul 2012U. Lambung Mangkurat & Bappenas

M. Handry Imansyah Natural Resources, Environment and People’s Welfare in Decentralized Indonesia

Bandung, 2-4 Jul 2013U. Padjadjaran & Bappenas

Mohamad Fahmi Green Growth and Global Recovery: A Regional Perspective

Makassar, 2-3 Jun 2014U. Hasanuddin

Hamid Paddu Political Economy of Regional Development in Indonesia

Bali, 3-5 Aug 2015U. Udayana

I K. G. Bendesa Tourism And Sustainable Development

Malang, 25-26 Jul 2016U. Brawijaya

Devanto Pratomo Demographic Change and Regional Development

Manado, 17-18 Jul 2017U. Sam Ratulangi

Noldy Tuerah Maritime Infrastructure and Regional Development

Economic Development:Where we were and Where we are now?

6

7

Asian Financial Crisis

20 years ago, Indonesia was severly hit by the Asian Financial Crisis, an

event that made the country implement various FUNDAMENTAL CHANGES

Leading to Reforms

One of the Major

Reform: Regional

Autonomy & Fiscal

Decentralization

Regional Scientists

was taking a

significant roles on

the reform

The reform

contributes to the

economic

development

recovery but some

challenges remain

8

1998 1999 2002 2003 2004

2009 2011 2014 2015 2016

• Anti monopoly Law

• Decentralization Laws

• Central Bank Law

• Anti corruption Law

• Capital movement Law

OJK Law

• Labor Law

• State Finance Law

• Treasury Law

• State Finance Law

• SJSN Law

• Direct Presidential Election

• Revised decentralization Law

• Debt financing Law

• Bureacratic Reform

• Establishment of KPK

Insurance Law

Fuel subsidy reform

Village Law

Local government Law

• Financial Stability Law

• Tax Amnesty

Tax Sunset Policy • Reinventing Policy• Structural Reform

(policy packages)

Banking Law

Reform Series of reforms have been implemented and vital laws have been launched to significantly improve the whole nation’s governance

9

-13,1

4,6 5,1

2,6

-0,1

3,7

-15,0

-10,0

-5,0

0,0

5,0

10,0

GDP growth (%)

Indonesia

World

29,6

8,45,0

0

5

10

15

20

25

30

35

1998-2000 2001-2010 2011-2017

Average Inflation Rate (%)

1.132,6

494,0714,5 830,6

1.342,5

3.113,5

3.570,3

1997 1998 1999 2000 2005 2010 2016

GDP per capita (US$ current)AFC GFC

Source: BPS & IMF

Source: BPS

Source: WDI World Bank

Source: BPS

24,20

9,82

Poverty Rate (%)

In the course of 20 yearsthrough the reforms, growth has been more resilient, welfare increases, and inflation is more benign

10

88,7%

23,0%29,0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Indonesia Debt to GDP Ratio

2,61,5

0,4

-0,5 -1,1 -1,3 -1,5 -1,6 -2,1 -2,5 -3,0 -3,1 -3,5 -3,8 -4,0 -4,5-5,3

-6,3

-8,2-10

-8

-6

-4

-2

0

2

4

Average General Gov’t Deficit in Two Recent Decades(% of GDP, 1998-2017) 20 years after AFC

Indonesia regains investment grade status as fiscal prudence and creditworthiness improving

Source: IMF

Source: MoF

11

14,7 12,5 13,1

8,3 10,5 7,6

23,8 24,020,2

6,6 6,910,4

19,0 17,915,9

27,6 28,2 32,9

1997 2007 2017

INDONESIA’S SHARE OF GDP GROWTH (%)

Agriculture Mining Manufacturing

Construction Trade Services

-

10,0

20,0

30,0

40,0

50,0

60,0

19

91

19

92

19

93

19

94

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Manufacture

Service

Agriculture and Mining

SHARE OF EMPLOYMENT BY SECTOR(%)

20 years after AFCEconomic Structure Has Been Shifting – Service Sector Play Higher Role in the Economy

BADAN KEBIJAKAN FISKAL - KEMENTERIAN KEUANGAN RI12

79

,6

78

,38

74

,59

71

,2

67

,671

,05

69

,13

7070

,73

73

,65

69

,62

70

69

,33

70

,05

69

,98

68

,24

69

,76

67

,65

69

,31

67

,47

69

,05

69

,74

65

,88

63

,13

58

,05

65

,81 7

2,5

68

,7

67

,8

67

,3

67

,2

67

,1

66

,7

66

,6

65

,8

65

,7

65

,4

65

,3

64

,8

64

,6

64

,6

63

,9

63

,6

63

62

,9

62

,8

62

,2

61

,8

60

,6

60

,4

58

,8

54

,2

DK

I

DIY

Kal

tim

Ria

u

Mal

uku

Sulu

t

Kal

ten

g

Sum

ut

Sum

bar

Bal

i

Jam

bi

Ace

h

Be

ngk

ulu

Jab

ar

Jate

ng

Sum

sel

Suls

el

Lam

pu

ng

Sult

ra

Sult

eng

Kal

sel

Jati

m

Kal

bar

NTT

Pap

ua

NTB

2016 1999

20 years after AFCRegional Development Improves – Human Development Index Increases in all regions but Papua

BADAN KEBIJAKAN FISKAL - KEMENTERIAN KEUANGAN RI13

26

,7

13

,9

11

,9

11

,2

10

,3

19

,2 22

,1

22

,2

9,5

10

,3

4,6

13

,6

20

,4

19

,0

20

,0

9,1

6,6

25

,0 27

,5

12

,9

9,4

7,0

11

,0

0,0

11

,4

22

,4

14

,1

21

,3

27

,4

19

,0

31

,1

12

,0

39

,3 40

,8

16

,0

9,2

6,7 7,4 7,9

12

,8 15

,4

13

,1

5,3 6,2

3,6

7,5

11

,3

12

,1

11

,0

5,2

4,0

14

,8

21

,4

7,8

5,2

4,5 6

,0 7,1 7,8

14

,0

9,1 1

1,6

16

,8

11

,3

18

,1

6,6

23

,0

27

,7

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

Ace

h

Sum

ut

Sum

bar

Ria

u

Jam

bi

Sum

sel

Ben

gku

lu

Lam

pu

ng

Bab

el

Ke

pri

DK

I

Jab

ar

Jate

ng

DIY

Jati

m

Ban

ten

Bal

i

NTB

NTT

Kal

bar

Kal

ten

g

Kal

sel

Kal

tim

Kal

tara

Sulu

t

Sult

eng

Suls

el

Sult

ra

Go

ron

talo

Sulb

ar

Mal

uku

Mal

ut

Pab

ar

Pap

ua

2007 2018National poverty rate

16.6% 9.8%

20182007

20 years after AFCRegional Development Improves – Poverty Rate Declines in All Regions


14

22.39% 21.34%

57.28% 58.59%

3.03% 3.03%

9.41% 8.43%

5.19% 6.04%

2010 2017

2.70% 2.57%

Sumatera

Jawa

Bali & Nusra

Kalimantan

Sulawesi

Maluku & Papua

GDP Distribution

Challenges #1 Unequal Growth

Among Regions RemainThe majority of growth contribution is still

coming from Java

2010 2017

Picture: two women in Labengki Island, Sulawesi

15

Population living in Urban Areas (to total population)

Note: Selected countries with different periodsSources: WDI, World Bank & DRC (2014), Urban China

Absolute change in share urban population, 1975–2015

Challenges #2 Indonesia Experiences Rapid Urbanization

The pace of population growth and urban land expansion has been uneven across regions

Fiscal Supports Inclusive Growth

16

17

Sustainable

development to

achieve people’s

welfare

Industries

DIMENSIONOBJECTIVE

Human-being

Regions

FISCAL: EFFECTIVE &

SUSTAINABLE

Revenue Mobilization

Spending Better

Prudent Financing

• Increasing Tax Ratio

• Fiscal Incentive to improve

investment climate

• Optimum Non-Tax Revenue

FISCAL STRATEGY TO SUPPORT INCLUSIVE GROWTH

• Well targeted Subsidy

• Efficiency & Simplification

• Priority Based, Planning and Sinergy

• Toward productivity & risk control

• Innovative and creative financing (LPDP/SWF, LMAN, PPP)

PRIORITY PROGRAMS FOR

INCLUSIVE GROWTH

Human Capital Development:

Health & Education

Accelerate Infrastructure

Development: National

Strategic Projects

Accelerate Poverty Eradication

& Inequality Reduction:

Comprehensive Social

Protection & Well-targeted

Subsidy

Improve the Effectiveness of

Fiscal Decentralization & Village

Fund: Synergy Central & Local

Governments

BADAN KEBIJAKAN FISKAL - KEMENTERIAN KEUANGAN RI 18

Maintain 20% Budget Allocation For Education…equalizing access & quality of education, strengthening vocational and SWF for education

Targeted Program

Smart Indonesia Program (Program Indonesia Pintar)

19,7 million student

School Operational Assistance (Bantuan OperasionalSekolah/BOS)

56 million student

Assistance for College Student (Bidik Misi)

401,5 thousand college students

Development/rehabilitation of school/classroom

61,2 thousand

Teacher allowances

• Non PNS 213,7 thousand teachers

257,2 thousand teachers • PNS

POLICY DIRECTIONS1. Expanding access to education (particularly for the poor) and improving

quality of education

2. Improving the quality of school facilities

3. Synergizing between central and sub national government

4. Strengthening vocational schools and synchronizing the curriculum of SMK (link and match)

5. Synergizing programs to improve the access (BOS, PKH, PIP, Bidik Misi dan DPPN) for sustainable education

8,6

2,0%

3,3%

Transfer to Region

Rp279,3T

Central Government

Rp146,6T

SWFRp15T

375,4 408,5 416,6 426,7

440,9

340

360

380

400

420

440

460

2014 2015 2016 2017 2018

IDR

Tri

llio

n

8,7%

8,8%2,0%

2,4%

3,3%

BADAN KEBIJAKAN FISKAL - KEMENTERIAN KEUANGAN RI 19

Allocating 5% For Health Budget Since 2016

Jaminan Kesehatan Nasional (JKN)/ National Health Insurance

92,4 million people

Family planning (KB) 1,8 million people

Immunization for baby 0-11 month

92,5%

High quality health care facilities

49 hospitals/ health facilities

Certification of drugs and food

74,0 thousand

Malaria and HIV treatment 95% Malaria cases treated

52% HIV cases treated

39,2%

8,6

26,3 %

22,6%

3,3%

2,5%

Central Government

Rp80,7T

Transfer to Region

Rp29,5T

POLICY DIRECTIONS1. Increasing and improving the uneven distribution of health facilities and and health

professionals

2. Strengthening promotive and preventive programs focused on NCDs and programs for maternity through Gerakan Masyarakat Sehat (Germas)

3. Improving the effectivity and sustainability of JKN

4. Strengthening local government role for supply side and improving the quality of health care

61,0 74,8 104,1 106,7

110,2

0,0

20,0

40,0

60,0

80,0

100,0

120,0

2014 2015 2016 2017 2018

IDR

Tri

llio

n

8,7%

8,8%

2,0% 2,4%3,3%

Targeted Program

…expanding supply side, improving access and quality of health care and maintaining the sustainability of JKN


20

AIRPORTTRAINS

ROADS

OTHERS

144226

HOUSING OIL&GAS

1.000 591 733 328 507

TELCO &IT

280 987

ELECTRICITY PORT

Source : RPJMN2015-2019

• Allocating more money does not necessarily mean an increase in infrastructure quality. The capacity of spending and the quality of spending relation does not align perfectly.

• For infrastructure spending, Indonesia should invite more private capital (through PPP). Infrastructure funding gap, expected to be potentially fulfilled by either SOE & Private Sector

Ab

ove

th

e li

ne

Tax Allowance, Tax Holiday, Fiscal Incentives

STATE REVENUE

STATE EXPENDITURELine Ministries(Ministry of Public Works, Ministry of Transportation, Ministry of Energy, etc)

Non Line Ministries(o/w. VGF, PDF, grants, PSO)

Transfer to the Regions & Vilage Fund(o/w. DAU (25%), Physical DAK, Vilage Fund)

Be

low

th

e li

ne FINANCING

Revolving Fund (o/w. FLPP), Project based bonds (e.g. SUKUK), Capital injection in PT SMI & PT IIF (financing) as well as PT IIGF (guarantee), Subsidiary Loan Agreement, Guarantee, Investment (capital injection) in SOE, Capital injection in BLU LMAN for land clearing

Area of infrastructure financing alternative

Infrastructure Needs by Sector 2015 - 2019 (Rp Trillions)

Strategy To Improve Infrastructure… developing new ways to attract infrastructure investment`

145,5 155,9 154,7

256,1 269,1

401,1 409,0

2012 2013 2014 2015 2016 2017 2018

Budget Allocation (Rp Trillions)


2014 2015 20162017

Real Sem

2018

APBNBantuan Sosial

PKH 4,4 6,4 9,1 12,8 17,1 PIP 6,7 11,7 11,0 10,0 10,8 PBI JKN 19,9 19,9 24,8 25,5 25,5 Bidik Misi 2,2 2,8 3,2 3,4 4,1 BPNT - - - 1,5 13,2

Bansos Rastra - 7,3

Subsidi

Subsidi BBM 240,0 60,8 43,7 50,6 46,9 Listrik 101,8 58,3 63,1 50,6 47,7 Rastra 18,2 21,8 22,1 19,4 - KUR 2,348 1,433 4,18 3,17 11,98

Total 395,6 183,1 181,1 176,9 184,5

Accelerate Poverty Alleviation And Disparity…encourage effectiveness of social protection program

21

Budget Allocation (Rp Trillions)

Welfare enhancement running slowly

Acces limited and not equally distribute

Optimalizing program implementation

Synergizing Central and Local Government

CHALLENGE

Fiscal Decentralization

22


FISCAL DECENTRALIZATION OF INDONESIA : THE VOYAGE

BEFORE 20012001 – 2018 (CURRENT)

Regional AdministrationsProvince

Districts/Municipalities

542

34

415/93

373

32

268/73

Political DecentralizationNational and local leader elected by the Legislatif National and local leader Elected by the people

Administration Decentralization• CG authoriy is dominant and LG authority is limited• Local Government Expenditure Responsiblity (share) is

limited

• CG authoriy is limited and LG authority has Increased

significantly

• Local expenditure responsibility (share) increases

(around 40% to total government expenditures).

Fiscal Decentralization

• Transfer to the region very limited (18 % from

national budget 2000).

• A dominant role of specific transfer (DAK), known

as Presidential Instruction transfer- (“Inpres

transfer”).

• a very limited revenue sharing (DBH) mechanism

• Taxing authority for LG is still limited

• Transfer to the region has increased considerably

(34,5% from national budget 2018).

• A dominant role of general purpose transfer (DAU)

• There is a significant revenue sharing (DBH)

mechanism

• Village Fund transfer stipulated since 2015

• Taxing authority for LG has increased significantly.23

KEMENTERIAN KEUANGAN RI 24

REGIONAL FISCAL SUPPORT …equalization the central budget taxes and transfer to regions to support fiscal decentralisation

Triliun Rp

I. Pendapatan 144,1

a. Pajak 66,9

b. Bea & Cukai 6,8

c. PNBP 70,4

II. Belanja 232,3

a. TKDD 176,1

b. Belanja K/L 56,2

Neto (I-II) (88,2)

SUMATERA

Triliun Rp

I. Pendapatan 1.143,2

a. Pajak 884,9

b. Bea & Cukai 161,6

c. PNBP 96,6

II. Belanja 302,8

a. TKDD 201,8

b. Belanja K/L 101,0

Neto (I-II) 840,4

JAWA

Triliun Rp

I. Pendapatan 86,0

a. Pajak 32,0

b. Bea & Cukai 1,1

c. PNBP 52,9

II. Belanja 93,9

a. TKDD 73,6

b. Belanja K/L 20,3

Neto (I-II) (7,9)

KALIMANTAN Triliun Rp

I. Pendapatan 19,7

a. Pajak 16,6

b. Bea & Cukai 0,6

c. PNBP 2,5

II. Belanja 104,5

a. TKDD 73,3

b. Belanja K/L 31,2

Neto (I-II) (84,8)

SULAWESI

Triliun Rp

I. Pendapatan 18,4

a. Pajak 10,7

b. Bea & Cukai 1,7

c. PNBP 6,0

II. Belanja 89,6

a. TKDD 71,7

b. Belanja K/L 17,9

Neto (I-II) (71,3)

MALUKU dan PAPUA

Triliun Rp

I. Pendapatan 15,5

a. Pajak 11,7

b. Bea & Cukai 1,5

c. PNBP 2,3

II. Belanja 56,4

a. TKDD 39,5

b. Belanja K/L 17,0

Neto (I-II) (40,9)

BALI dan NUSRA

Description:1. Revenues => collected from Regions to Centers2. Spending => returned from Central to Region3. Data in Trillion Rp4. Average data 2014-2016

Expansion budget policy to outside Java to support accelerating the equalization of Java and outside Java

KEMENTERIAN KEUANGAN RI

Revenue Sharing

General Allocation Fund/DAU

Physical DAK

Non Physical DAK

• Expanding the utilization of DBH Cukai Hasil Tembakau (CHT)

• 25% for infrastructure spending

• 25% for infrastructure spending To reduce burden for public services

• Focusing on public infrastructure gap• Money follow program; • Affirmative policy

Village Fund

Regional incentives Fund

• Stimulating performance improvement of public services and financial management

Special Autonomy Fund

• Accelerating infrastructure development in Papua & Papua Barat.

• Better formulation focusing on poverty reduction and regional disparity

• Performance based

6,8

25

IMPROVING QUALITY OF TRANSFER TO REGION AND VILLAGE FUND…enhancing the quality of public services, creating job oppurtunity, reducing poverty and inequality between regions

98,2

2002

344,7

2010

766,2

2018

Allocation (Rp Triliun)

Allocation increases with average growth 13,7% per year.

In the last five years Transfer to Region and Village Fund funded more than 70% of local government budget every year.

Transfer to Region


78,1

90,5 88,2 89,2

2015 2016 2017 2018

Revenue Shar ing ( Rp Tr i l l ion )

352,9

385,4 398,6 401,5

2015 2016 2017 2018

General Al locat ion Fund ( Rp Tr i l l ion)

BALANCE FUNDS 2015-2018…the strengthening of balance funds policy is continuously conducted to achieve better outcomes

General Transfer (DTU)

54,9

75,2 62,1 62,4

2015 2016 2017 2018

Physical Specific Allocation Fund (Rp Trillion)

97,2 88,7 105,6

123,5

2015 2016 2017 2018

Non-Physical Al location Fund (Rp Tri l l ion)

26

Reducing vertical fiscal imbalances Reducing horizontal fiscal imbalances

0,769 0,7930,837

0,776 0,8010,723

0,731 0,742 0,7590,726 0,725

0,6720,693 0,691 0,681 0,676 0,648 0,621

2012 2013 2014 2015 2016 2017

Indeks Williamson 2012-2017

Provinsi Nasional Kab/Kota

The Smaler IW shows better fiscal equity

Accelerate national priority achievement Helping LG in providing basic services

Roads:

maintenance 1.503 kmenhancement 9.798 kmbuild 1.033 km

Infrastructure

Among other 2017 output

fixed 28.278 broken class room

Build 5.284 new class room BOS for 45,12 million student BOP PAUD for 5,12 million

children TPG for 1,22 million teacher.

Education

Spesific Transfer (DTK)


POLICY of DID, OTSUS, AND DANA KEISTIMEWAAN DIY 2015-2018…strengthening the policy continuously for improving the quality of regional development

27

Dana Keistimewaan DIY Special fund for DIY to finance special activities for DIY consist of DIY Sultan coronation, cultural maintenance, land management, and spatial planning.

Regional Incentives Fund (DID)

• DID is rewarded to LG for good performance in fiscal management, public services, and enhancing social welfare.

• Allocation of DID based on main criteria and performance categories.

• Assessment is connected to innovation, creativity, and output/outcome of local government.

Special Autnomy Fund (Dana Otonomi Khusus/Otsus) • Special fund for Papua, Papua Barat, and Aceh Province to accelerate

the government priority program (education health and infrastructure).

• Otsus Papua applied 20 years form 2002 until 2021 and otsus Aceh applied 20 years from 2007 until 2027

• Distribution is based on performance of budget realization.

17,7

18,8

20,2

21,1

2015 2016 2017 2018

SPECIAL AUTONOMY FUND AND DANA KEISTIMEWAAN DIY

(Rp Tril l ion)

1,7

5,0

7,5 8,5

2015 2016 2017 2018

Regional Incentif Fund (DID)(Rp Tri l l ion)

KEMENTERIAN KEUANGAN RI 28

STRENGTHENING VILLAGE FUND TO SUPPORT NAWACITA AND FISCAL DECENTRALIZATION

Reducing inequality and affirmative policy for villages in special region “Tertinggal, Perbatasan, dan Kepulauan”

The 3rd Nawa Cita:

“Membangun Indonesia dari pinggiran denganmemperkuat daerah-daerah dan desa dalam

kerangka NKRI”

Village Fund as a key instrument of fiscal decentralization has strategic roles for

Reducing inequality between regions

Alleviating poverty

Affirmative policy villages in special region “Tertinggal, Perbatasan, dan Kepulauan”

Allocation and Distribution of Village Fund

• Improving allocation up to 10% of State Budget exclude the Transfer to Region

• Reformulation of Village Fund considering distribution and equality.

20,77

46,98

60,00 60,00 74.093

74.75474.910 74.958

2015 2016 2017 2018

Village Funds (IDR Trillion)

Sumatera JavaBali & NusaTenggara

Borneo SulawesiMaluku &

Papua

2015 6,26 6,51 1,30 1,81 2,38 2,51

2018 17,25 19,23 4,05 5,27 6,84 7,36

0,0

5,0

10,0

15,0

20,0

25,0

IDR Trillion

Village Funds Allocation per Region, 2015 vs 2018


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Output dan Outcome of Village Funds

Achieving output on the utilization of Village Funds can be increased significantly through synergy of village-funded management that is oriented

towards poverty alleviation, employment creation, reduction of unemployment, and encourage inclusive economic growth

Rural Gini Ratio

Number of Rural Poor

Percentage of rural poor population

2014 2017

National 0,34 0,32

2014 2017

National 17,37 mill 16,31 mill

2014 2017

National 14,2% 13,5%

Source: Central Agency on Statistics

(Inequality)

(Poverty)

(Poverty)

OUTCOME

VILLAGE ROADS

199.100 km

BRIDGE

1.599 km

CLEAN WATER

325.599 unit

VILLAGE POND

4.656 unit

POSYANDU

48.271 unit

VILLAGE MARKET

19.794 unit

EARLY CHILDHOOD EDUCATION IN VILLAGE (PAUD)

43.723 unit

WELLS & LATRINES

342.407 unit

DRAINAGE & IRIGATION

299.345 unit

OUTPUT

Output of Village Funds, 2015-2017


Thank You

30

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