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Jun '07

Govt to issue decree on fiscal power-sharing

As the central government will soon issue a regulation on power-sharing to help speed up the implementation of regional autonomy, it is now under pressure to issue another regulation to ensure fair fiscal balance and accommodate accelerated development in regions nationwide.

“The draft regulation (on power sharing) has been in the hands of the state secretariat, waiting for the approval of the President. It will be issued in the immediate future,” chief spokesman for the Home Ministry Saut Situmorang told The Jakarta Post here Sunday.

Saut said the regulation, mandated by the 2004 Regional Administration Law to be issued at the latest in October last year, could not appear in time because it took months for the central government, provinces, regencies and municipalities to agree on its substance.

He declined to explain in detail the draft regulation but said land and investment were the two most crucial issues that the three sides had disputed.

The Association of Provincial Administrations (APP) has criticized the government for being slow in issuing such an important regulation. APP Secretary General Fadel Muhammad said in a recent meeting with the Regional Representatives Council (DPD) that the power-sharing regulation was the first the government should issue to avoid hierarchical conflicts between the central government and provinces and between provinces and regencies and municipalities.

Meanwhile, head of the regional financial subdirectorate at the Home Ministry’s Directorate General of Regional Financial Administration Affairs, Fermin Silaban, said the current fiscal balance distribution system was unbalanced because only a small part of the government’s total revenues from taxes and resources exploration were distributed to the regions.

“The government could not repair the way the fiscal balance has been set because it is based on the two laws approved by the House of Representatives and it has been shown in the state budgets in the past eight years. To make it fairer, the two laws have to be revised through a consultation with the regions,” Fermin said, while referring to the regional administration law and the 2004 Fiscal Balance Law.

Based on the two laws, regions are entitled to only 20 percent of income tax, 40 percent of reforestation funds, 16.5 percent of oil exploration and 30.5 percent of gas exploration revenue, while the central government receives a higher percentage of those revenues to finance the centralized defense, foreign affairs, courts, monetary and fiscal and religious affairs systems and to pay civil servants.

Head of the regional finance evaluation subdirectorate at the Home Ministry, Syarifuddin, concurred and said resource-rich provinces had demanded special autonomy to obtain higher fiscal balance funds and budget allocations.

He cited that Riau and East Kalimantan had frequently protested over the fiscal balance since the resource-rich provinces had received only a small portion of the government’s revenue from oil and gas exploration.

Fermin said the central government had received higher portion of the taxes and natural resources exploration revenues to pay the country’s foreign debts, to finance its own affairs and help empower the least-developed regions, while too many poor regions still needed financial assistance to progress.

The DPD recently warned the government against the increasing demand for fair fiscal balance, saying unfair distribution of the government’s revenues from taxes and resources exploration could incite the resource-rich provinces to demand separation from Indonesia.

It said only 40 percent of the state budgets were allocated to regions and 80 percent of the budget allocated to regions had been distributed to Java because 60 percent of the population live there, while it was only one-third the size of Sumatra, causing slow development in regions and a widening gap between Java and other islands.

The unfair fiscal balance has meant some regions have not been able to properly take part in handling the malnutrition, bird flu and dengue fever in the health sector, improve education quality and repair damaged infrastructure, the council said.

Sumber : (Ridwan Max Sijabat) The Jakarta Post, Anyer, BantenĀ 

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