LOCAL PUBLIC FINANCE AND ECONOMIC DEVELOPMENT: The Indonesian Context*

Ford, J. Fitz G; Quigley, John M.

doi:10.1111/j.1467-940x.1990.tb00020.x

Cited by 3 publications

(1 citation statement)

References 3 publications

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“…While others have examined the regional distribution of central government transfers in the aggregate in Indonesia (Booth, 1977;Ford and Quigley, 1990;Azis, 1990;Salim, 1990), less attention has been given to regional distributions within specific sectors like water supply. As a sector, water supply is important not only because it has been a dominant focus of past infrastructure investments in Indonesia but also because potable water is a basic need and is clearly one of the most important prerequisites to sustained economic growth in developing areas.…”

Section: Introductionmentioning

confidence: 99%

Regional Distribution of Development Grants in Indonesia's Water Supply Sector

Cervero

1992

Rev Urban & Reg Develop

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Over successive five-year development plans, Indonesia has channeled large sums of foreign loans and domestic funds into water supply projects with the aim of providing clean water for a majority of households. Most projects have been planned and financed through the central government's public works ministry, though a growing share of rural water projects are being funded through earmarked grants provided to local governments. This paper examines how these central government transfers, in the aggregate, have responded to various indicators of expenditure needs. Overall, past allocations have matched existing demand and supply levels closely-funding has generally favored provinces with large populations, large numbers of water enterprises, extensive dismbution networks in place, and high production capacity. They have not, however, worked in favor of either equalization or economic productivity objectives, as reflected by per capita income or GRDP growth rates. This analysis suggests that equity would be promoted either by including income-related factors in future block grant allocation formulas or by shifting funding emphasis in the water supply sector from grants-in-kind controlled by the central government to sectoral grants controlled mainly at the local level. Such policy reforms would also further promote the nation's professed goal of decentralizing infrastructure development.

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Section: Introductionmentioning

confidence: 99%

Regional Distribution of Development Grants in Indonesia's Water Supply Sector

Cervero

1992

Rev Urban & Reg Develop

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The practice of regional development in Indonesia: Resolving central‐local coordination issues in planning and finance

Crane

1995

Public Admin & Development

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Renewed interest by the Indonesian government in decentralization and cost‐recovery practices has led to both real and illusory reforms, though the distinction between the two is often not clear. This is particularly true with respect to infrastructure planning and finance. Recently, the allocation criteria for capital grants to local governments have been substantially revised, nearly every year, to reflect long lasting concerns regarding differences in interregional development needs and resources. In addition, the level of funding for local government investment has risen dramatically to support increased local responsibility in planning. Most development spending does not pass through local budgets, however. In either case, the project planning process has remained firmly under the direction of the central government's technical ministries. Infrastructure investment thus tends to be segmented, not only by sector, but also by funding source. The rate at which these two factors balance off in current practice does not indicate a strong commitment to effective decentralization. The article suggests that greater regional government participation in the national planning process would be beneficial. To deal with the fragmented nature of sectoral planning is more problematic, as a more integrated approach would in the long term require either a new layer of bureaucracy or a substantial reorganization of the technical ministries. In the shorter term, a gradual shift toward general purpose grants would also generate regional development plans more consistent with the goals of decentralization while maintaining substantial central control and oversight.

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The Effect of Sound Governance and Public Finance Management on the Performance of Local Governments

Saputra¹

2021

RJOAS

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LOCAL PUBLIC FINANCE AND ECONOMIC DEVELOPMENT: The Indonesian Context*

Cited by 3 publications

References 3 publications

Regional Distribution of Development Grants in Indonesia's Water Supply Sector

Regional Distribution of Development Grants in Indonesia's Water Supply Sector

The practice of regional development in Indonesia: Resolving central‐local coordination issues in planning and finance

The Effect of Sound Governance and Public Finance Management on the Performance of Local Governments

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