Analysis of the Allocation of Priorities for the Use of Government Spending in Underdeveloped Regions in Indonesia

Abstract

Indonesia is a developing country with one of the most substantial economic growths in the Asian region, in 2021, it will be able to register a growth reaching 5.44%. With rapid economic growth, it turns out that in Indonesia, many areas are still considered underdeveloped. The government continues to pursue various policies to support the development of Indonesia, one of which is Permendes number 13 2021, which explains that the use of village funds in 2021 is a priority to manage the covid pandemic and n is not permitted for the development of village infrastructure. This needs to be considered whether its application is appropriate or not. This study uses the Sem-PLS method, which examines the use of village funds against three criteria: the Facilities/Infrastructure, Economy, and HR. The results are that the village banks have the most significant effect on HR criteria, with a percentage of 20%, followed by economic criteria, with a ratio of 15%. Meanwhile, village funds have no significant effect on the facilities/infrastructure criteria, with a percentage of only 11.5%. The Facilities/Infrastructure criterion has little impact because, in disadvantaged regions, there is the problem of the uncertainty of the documents, leading to delays in the verification process. The government can overcome this by developing organizational strategies in underdeveloped areas so that such incidents do not occur. The government can use the results of this study to see what influence village funds have spent on underdevelopment criteria in underdeveloped areas.