General Purpose Central-provincial-local Transfers (DAU) in Indonesia : From Gap Filling to Ensuring Fair Access to Essential Public Services for All

Indonesia has come a long way from centralized governance to decentralized local governance, and today Indonesia ranks among the most decentralized developing countries. The Government of Indonesia is revisiting all aspects of local governance to make appropriate legal and institutional adjustments...

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Main Authors:	Shah, Anwar, Qibthiyyah, Riatu, Dita, Astrid
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCOUNTABILITY STRUCTURE ACCOUNTING ADB ALLOCATION OF RESOURCES ALLOCATION OF TRANSFERS BANK POLICY CAPITAL GRANT CAPITAL GRANTS CAPITAL MARKET CENTRAL GOVERNMENT CENTRAL REVENUES CENTRAL TRANSFERS CITIES CITIZENS CIVIL SERVICE COEFFICIENT OF VARIATION COMPARATIVE PERSPECTIVES CONSENSUS CONSTITUTION CONSTITUTIONAL COURT DECENTRALIZATION DECISION-MAKING DEMOCRATIC LOCAL GOVERNANCE DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT BANK DEVELOPMENT EXPENDITURES DIFFERENTIALS DISTRICT DISTRICT GOVERNMENT DISTRICTS ECONOMIC GROWTH EMPLOYMENT ENVIRONMENTAL TAXES EQUALIZATION EQUITY OBJECTIVES EXPENDITURE NEED EXPENDITURE NEEDS FEDERAL GOVERNMENT FEDERALISM FINANCES FISCAL CAPACITIES FISCAL CAPACITY FISCAL DECENTRALIZATION FISCAL EQUALIZATION FISCAL EQUITY FISCAL FEDERALISM FISCAL GAP FISCAL GAPS FISCAL SURPLUS FISCAL TRANSFERS GAMBLING GOVERNMENT AGENCIES GOVERNORS HOUSING HUMAN DEVELOPMENT INCOME TAXES INFLATION INSTITUTIONAL ARRANGEMENTS INTERGOVERNMENTAL FINANCE INTERGOVERNMENTAL FISCAL RELATIONS INTERGOVERNMENTAL FISCAL TRANSFERS INTERGOVERNMENTAL TRANSFER INTERGOVERNMENTAL TRANSFERS INTERNATIONAL BANK LACK OF TRANSPARENCY LARGE CITIES LEVEL PLAYING FIELD LOCAL AUTONOMY LOCAL EXPENDITURES LOCAL FINANCE LOCAL GOVERNMENT LOCAL GOVERNMENT ACCOUNTABILITY LOCAL GOVERNMENT AUTONOMY LOCAL GOVERNMENT EXPENDITURE LOCAL GOVERNMENT EXPENDITURES LOCAL GOVERNMENT ORGANIZATION LOCAL GOVERNMENT SPENDING LOCAL GOVERNMENTS LOCAL PUBLIC SERVICES LOCAL TAX MARKET ACCESS MAYORS METROPOLITAN AREAS MINISTERS MINISTRY OF FINANCE MINISTRY OF INTERIOR MUNICIPALITIES NATIONAL POLICY NATIONS NATURAL RESOURCES OPERATING EXPENDITURES OWN SOURCE REVENUE PERSONAL INCOME PERSONAL INCOME TAXES POLICY MAKERS POOL OF FUNDS PROPERTY TAXES PROVINCE PROVINCES PROVINCIAL GOVERNMENTS PUBLIC PUBLIC ECONOMICS PUBLIC EXPENDITURE PUBLIC FINANCE PUBLIC FINANCIAL MANAGEMENT PUBLIC HOUSING PUBLIC MANAGEMENT PUBLIC POLICY PUBLIC SECTOR PUBLIC SECTOR WAGES PUBLIC SERVICE PURCHASING POWER REDISTRIBUTION REDISTRIBUTION OF INCOME REDISTRIBUTIVE IMPACT RESOURCE SHARING RETURN RETURNS REVENUE ADEQUACY REVENUE AFTER TRANSFER REVENUE CAPACITY REVENUE COLLECTION REVENUE SHARING MECHANISM REVENUE SOURCES ROADS SMALL TOWN SOCIAL PROTECTION SOCIAL WELFARE STATE GOVERNMENTS SUB-NATIONAL SUB-NATIONAL EXPENDITURES SUB-NATIONAL GOVERNMENT SUB-NATIONAL GOVERNMENTS SUBNATIONAL SUBNATIONAL EXPENDITURES TAX TAX ADMINISTRATION TAX BASE TAX BURDENS TAX DECENTRALIZATION TAX EFFORT TAX EFFORTS TAX RATE TAX REVENUE TAX REVENUE SHARING TAX SHARING TAX SHARING SYSTEM TAX SYSTEM TECHNICAL ASSISTANCE TOTAL EXPENDITURES TRANSPARENCY TREASURIES UPPER HOUSE VILLAGES VOTING
Online Access:	http://documents.worldbank.org/curated/en/2012/06/16338364/general-purpose-central-provincial-local-transfers-dau-indonesia-gap-filling-ensuring-fair-access-essential-public-services-all http://hdl.handle.net/10986/9346

id	okr-10986-9346
recordtype	oai_dc
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ACCOUNTABILITY STRUCTURE ACCOUNTING ADB ALLOCATION OF RESOURCES ALLOCATION OF TRANSFERS BANK POLICY CAPITAL GRANT CAPITAL GRANTS CAPITAL MARKET CENTRAL GOVERNMENT CENTRAL REVENUES CENTRAL TRANSFERS CITIES CITIZENS CIVIL SERVICE COEFFICIENT OF VARIATION COMPARATIVE PERSPECTIVES CONSENSUS CONSTITUTION CONSTITUTIONAL COURT DECENTRALIZATION DECISION-MAKING DEMOCRATIC LOCAL GOVERNANCE DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT BANK DEVELOPMENT EXPENDITURES DIFFERENTIALS DISTRICT DISTRICT GOVERNMENT DISTRICTS ECONOMIC GROWTH EMPLOYMENT ENVIRONMENTAL TAXES EQUALIZATION EQUITY OBJECTIVES EXPENDITURE NEED EXPENDITURE NEEDS FEDERAL GOVERNMENT FEDERALISM FINANCES FISCAL CAPACITIES FISCAL CAPACITY FISCAL DECENTRALIZATION FISCAL EQUALIZATION FISCAL EQUITY FISCAL FEDERALISM FISCAL GAP FISCAL GAPS FISCAL SURPLUS FISCAL TRANSFERS GAMBLING GOVERNMENT AGENCIES GOVERNORS HOUSING HUMAN DEVELOPMENT INCOME TAXES INFLATION INSTITUTIONAL ARRANGEMENTS INTERGOVERNMENTAL FINANCE INTERGOVERNMENTAL FISCAL RELATIONS INTERGOVERNMENTAL FISCAL TRANSFERS INTERGOVERNMENTAL TRANSFER INTERGOVERNMENTAL TRANSFERS INTERNATIONAL BANK LACK OF TRANSPARENCY LARGE CITIES LEVEL PLAYING FIELD LOCAL AUTONOMY LOCAL EXPENDITURES LOCAL FINANCE LOCAL GOVERNMENT LOCAL GOVERNMENT ACCOUNTABILITY LOCAL GOVERNMENT AUTONOMY LOCAL GOVERNMENT EXPENDITURE LOCAL GOVERNMENT EXPENDITURES LOCAL GOVERNMENT ORGANIZATION LOCAL GOVERNMENT SPENDING LOCAL GOVERNMENTS LOCAL PUBLIC SERVICES LOCAL TAX MARKET ACCESS MAYORS METROPOLITAN AREAS MINISTERS MINISTRY OF FINANCE MINISTRY OF INTERIOR MUNICIPALITIES NATIONAL POLICY NATIONS NATURAL RESOURCES OPERATING EXPENDITURES OWN SOURCE REVENUE PERSONAL INCOME PERSONAL INCOME TAXES POLICY MAKERS POOL OF FUNDS PROPERTY TAXES PROVINCE PROVINCES PROVINCIAL GOVERNMENTS PUBLIC PUBLIC ECONOMICS PUBLIC EXPENDITURE PUBLIC FINANCE PUBLIC FINANCIAL MANAGEMENT PUBLIC HOUSING PUBLIC MANAGEMENT PUBLIC POLICY PUBLIC SECTOR PUBLIC SECTOR WAGES PUBLIC SERVICE PURCHASING POWER REDISTRIBUTION REDISTRIBUTION OF INCOME REDISTRIBUTIVE IMPACT RESOURCE SHARING RETURN RETURNS REVENUE ADEQUACY REVENUE AFTER TRANSFER REVENUE CAPACITY REVENUE COLLECTION REVENUE SHARING MECHANISM REVENUE SOURCES ROADS SMALL TOWN SOCIAL PROTECTION SOCIAL WELFARE STATE GOVERNMENTS SUB-NATIONAL SUB-NATIONAL EXPENDITURES SUB-NATIONAL GOVERNMENT SUB-NATIONAL GOVERNMENTS SUBNATIONAL SUBNATIONAL EXPENDITURES TAX TAX ADMINISTRATION TAX BASE TAX BURDENS TAX DECENTRALIZATION TAX EFFORT TAX EFFORTS TAX RATE TAX REVENUE TAX REVENUE SHARING TAX SHARING TAX SHARING SYSTEM TAX SYSTEM TECHNICAL ASSISTANCE TOTAL EXPENDITURES TRANSPARENCY TREASURIES UPPER HOUSE VILLAGES VOTING
spellingShingle	ACCOUNTABILITY STRUCTURE ACCOUNTING ADB ALLOCATION OF RESOURCES ALLOCATION OF TRANSFERS BANK POLICY CAPITAL GRANT CAPITAL GRANTS CAPITAL MARKET CENTRAL GOVERNMENT CENTRAL REVENUES CENTRAL TRANSFERS CITIES CITIZENS CIVIL SERVICE COEFFICIENT OF VARIATION COMPARATIVE PERSPECTIVES CONSENSUS CONSTITUTION CONSTITUTIONAL COURT DECENTRALIZATION DECISION-MAKING DEMOCRATIC LOCAL GOVERNANCE DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT BANK DEVELOPMENT EXPENDITURES DIFFERENTIALS DISTRICT DISTRICT GOVERNMENT DISTRICTS ECONOMIC GROWTH EMPLOYMENT ENVIRONMENTAL TAXES EQUALIZATION EQUITY OBJECTIVES EXPENDITURE NEED EXPENDITURE NEEDS FEDERAL GOVERNMENT FEDERALISM FINANCES FISCAL CAPACITIES FISCAL CAPACITY FISCAL DECENTRALIZATION FISCAL EQUALIZATION FISCAL EQUITY FISCAL FEDERALISM FISCAL GAP FISCAL GAPS FISCAL SURPLUS FISCAL TRANSFERS GAMBLING GOVERNMENT AGENCIES GOVERNORS HOUSING HUMAN DEVELOPMENT INCOME TAXES INFLATION INSTITUTIONAL ARRANGEMENTS INTERGOVERNMENTAL FINANCE INTERGOVERNMENTAL FISCAL RELATIONS INTERGOVERNMENTAL FISCAL TRANSFERS INTERGOVERNMENTAL TRANSFER INTERGOVERNMENTAL TRANSFERS INTERNATIONAL BANK LACK OF TRANSPARENCY LARGE CITIES LEVEL PLAYING FIELD LOCAL AUTONOMY LOCAL EXPENDITURES LOCAL FINANCE LOCAL GOVERNMENT LOCAL GOVERNMENT ACCOUNTABILITY LOCAL GOVERNMENT AUTONOMY LOCAL GOVERNMENT EXPENDITURE LOCAL GOVERNMENT EXPENDITURES LOCAL GOVERNMENT ORGANIZATION LOCAL GOVERNMENT SPENDING LOCAL GOVERNMENTS LOCAL PUBLIC SERVICES LOCAL TAX MARKET ACCESS MAYORS METROPOLITAN AREAS MINISTERS MINISTRY OF FINANCE MINISTRY OF INTERIOR MUNICIPALITIES NATIONAL POLICY NATIONS NATURAL RESOURCES OPERATING EXPENDITURES OWN SOURCE REVENUE PERSONAL INCOME PERSONAL INCOME TAXES POLICY MAKERS POOL OF FUNDS PROPERTY TAXES PROVINCE PROVINCES PROVINCIAL GOVERNMENTS PUBLIC PUBLIC ECONOMICS PUBLIC EXPENDITURE PUBLIC FINANCE PUBLIC FINANCIAL MANAGEMENT PUBLIC HOUSING PUBLIC MANAGEMENT PUBLIC POLICY PUBLIC SECTOR PUBLIC SECTOR WAGES PUBLIC SERVICE PURCHASING POWER REDISTRIBUTION REDISTRIBUTION OF INCOME REDISTRIBUTIVE IMPACT RESOURCE SHARING RETURN RETURNS REVENUE ADEQUACY REVENUE AFTER TRANSFER REVENUE CAPACITY REVENUE COLLECTION REVENUE SHARING MECHANISM REVENUE SOURCES ROADS SMALL TOWN SOCIAL PROTECTION SOCIAL WELFARE STATE GOVERNMENTS SUB-NATIONAL SUB-NATIONAL EXPENDITURES SUB-NATIONAL GOVERNMENT SUB-NATIONAL GOVERNMENTS SUBNATIONAL SUBNATIONAL EXPENDITURES TAX TAX ADMINISTRATION TAX BASE TAX BURDENS TAX DECENTRALIZATION TAX EFFORT TAX EFFORTS TAX RATE TAX REVENUE TAX REVENUE SHARING TAX SHARING TAX SHARING SYSTEM TAX SYSTEM TECHNICAL ASSISTANCE TOTAL EXPENDITURES TRANSPARENCY TREASURIES UPPER HOUSE VILLAGES VOTING Shah, Anwar Qibthiyyah, Riatu Dita, Astrid General Purpose Central-provincial-local Transfers (DAU) in Indonesia : From Gap Filling to Ensuring Fair Access to Essential Public Services for All
geographic_facet	East Asia and Pacific Indonesia
relation	Policy Research Working Paper; No. 6075
description	Indonesia has come a long way from centralized governance to decentralized local governance, and today Indonesia ranks among the most decentralized developing countries. The Government of Indonesia is revisiting all aspects of local governance to make appropriate legal and institutional adjustments based on lessons leaarned during the past decade. An important area of this re-examination and possible reform is the central financing of subnational expenditures. The system of intergovernmental finance represents one of the most complex systems ever implemented by any government in the world. The system is primarily focused on a gap-filling approach to provincial-local finance in an objective manner to ensure revenue adequacy and local autonomy but without accountability to local residents for service delivery performance. This paper takes a closer look at Dana Alokasi Umum -- the most dominant program of unconditional central transfers to finance provincial-local government expenditures in Indonesia. The paper also presents illustrative simulations of alternative programs and compares these with the existing Dana Alokasi Umum allocations. The paper concludes that super complexity leads to lack of transparency, inequity, and uncertainty in allocation. Simpler alternatives are available that have the potential to address autonomy and equity objectives while also enhancing efficiency and citizen-based accountability. Such alternatives would represent a move away from the complex gap-filling approach to simple output-based transfers to finance operating expenditures. Capital grants would deal with infrastructure deficiencies. And the alternatives would institute fiscal capacity equalization as a residual program with an explicit standard to ensure that all local jurisdictions have adequate means to deliver reasonably comparable levels of public services at reasonably comparable levels of tax burdens across the country.
format	Publications & Research :: Policy Research Working Paper
author	Shah, Anwar Qibthiyyah, Riatu Dita, Astrid
author_facet	Shah, Anwar Qibthiyyah, Riatu Dita, Astrid
author_sort	Shah, Anwar
title	General Purpose Central-provincial-local Transfers (DAU) in Indonesia : From Gap Filling to Ensuring Fair Access to Essential Public Services for All
title_short	General Purpose Central-provincial-local Transfers (DAU) in Indonesia : From Gap Filling to Ensuring Fair Access to Essential Public Services for All
title_full	General Purpose Central-provincial-local Transfers (DAU) in Indonesia : From Gap Filling to Ensuring Fair Access to Essential Public Services for All
title_fullStr	General Purpose Central-provincial-local Transfers (DAU) in Indonesia : From Gap Filling to Ensuring Fair Access to Essential Public Services for All
title_full_unstemmed	General Purpose Central-provincial-local Transfers (DAU) in Indonesia : From Gap Filling to Ensuring Fair Access to Essential Public Services for All
title_sort	general purpose central-provincial-local transfers (dau) in indonesia : from gap filling to ensuring fair access to essential public services for all
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2012/06/16338364/general-purpose-central-provincial-local-transfers-dau-indonesia-gap-filling-ensuring-fair-access-essential-public-services-all http://hdl.handle.net/10986/9346
_version_	1764409216697630720
spelling	okr-10986-93462021-04-23T14:02:45Z General Purpose Central-provincial-local Transfers (DAU) in Indonesia : From Gap Filling to Ensuring Fair Access to Essential Public Services for All Shah, Anwar Qibthiyyah, Riatu Dita, Astrid ACCOUNTABILITY STRUCTURE ACCOUNTING ADB ALLOCATION OF RESOURCES ALLOCATION OF TRANSFERS BANK POLICY CAPITAL GRANT CAPITAL GRANTS CAPITAL MARKET CENTRAL GOVERNMENT CENTRAL REVENUES CENTRAL TRANSFERS CITIES CITIZENS CIVIL SERVICE COEFFICIENT OF VARIATION COMPARATIVE PERSPECTIVES CONSENSUS CONSTITUTION CONSTITUTIONAL COURT DECENTRALIZATION DECISION-MAKING DEMOCRATIC LOCAL GOVERNANCE DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT BANK DEVELOPMENT EXPENDITURES DIFFERENTIALS DISTRICT DISTRICT GOVERNMENT DISTRICTS ECONOMIC GROWTH EMPLOYMENT ENVIRONMENTAL TAXES EQUALIZATION EQUITY OBJECTIVES EXPENDITURE NEED EXPENDITURE NEEDS FEDERAL GOVERNMENT FEDERALISM FINANCES FISCAL CAPACITIES FISCAL CAPACITY FISCAL DECENTRALIZATION FISCAL EQUALIZATION FISCAL EQUITY FISCAL FEDERALISM FISCAL GAP FISCAL GAPS FISCAL SURPLUS FISCAL TRANSFERS GAMBLING GOVERNMENT AGENCIES GOVERNORS HOUSING HUMAN DEVELOPMENT INCOME TAXES INFLATION INSTITUTIONAL ARRANGEMENTS INTERGOVERNMENTAL FINANCE INTERGOVERNMENTAL FISCAL RELATIONS INTERGOVERNMENTAL FISCAL TRANSFERS INTERGOVERNMENTAL TRANSFER INTERGOVERNMENTAL TRANSFERS INTERNATIONAL BANK LACK OF TRANSPARENCY LARGE CITIES LEVEL PLAYING FIELD LOCAL AUTONOMY LOCAL EXPENDITURES LOCAL FINANCE LOCAL GOVERNMENT LOCAL GOVERNMENT ACCOUNTABILITY LOCAL GOVERNMENT AUTONOMY LOCAL GOVERNMENT EXPENDITURE LOCAL GOVERNMENT EXPENDITURES LOCAL GOVERNMENT ORGANIZATION LOCAL GOVERNMENT SPENDING LOCAL GOVERNMENTS LOCAL PUBLIC SERVICES LOCAL TAX MARKET ACCESS MAYORS METROPOLITAN AREAS MINISTERS MINISTRY OF FINANCE MINISTRY OF INTERIOR MUNICIPALITIES NATIONAL POLICY NATIONS NATURAL RESOURCES OPERATING EXPENDITURES OWN SOURCE REVENUE PERSONAL INCOME PERSONAL INCOME TAXES POLICY MAKERS POOL OF FUNDS PROPERTY TAXES PROVINCE PROVINCES PROVINCIAL GOVERNMENTS PUBLIC PUBLIC ECONOMICS PUBLIC EXPENDITURE PUBLIC FINANCE PUBLIC FINANCIAL MANAGEMENT PUBLIC HOUSING PUBLIC MANAGEMENT PUBLIC POLICY PUBLIC SECTOR PUBLIC SECTOR WAGES PUBLIC SERVICE PURCHASING POWER REDISTRIBUTION REDISTRIBUTION OF INCOME REDISTRIBUTIVE IMPACT RESOURCE SHARING RETURN RETURNS REVENUE ADEQUACY REVENUE AFTER TRANSFER REVENUE CAPACITY REVENUE COLLECTION REVENUE SHARING MECHANISM REVENUE SOURCES ROADS SMALL TOWN SOCIAL PROTECTION SOCIAL WELFARE STATE GOVERNMENTS SUB-NATIONAL SUB-NATIONAL EXPENDITURES SUB-NATIONAL GOVERNMENT SUB-NATIONAL GOVERNMENTS SUBNATIONAL SUBNATIONAL EXPENDITURES TAX TAX ADMINISTRATION TAX BASE TAX BURDENS TAX DECENTRALIZATION TAX EFFORT TAX EFFORTS TAX RATE TAX REVENUE TAX REVENUE SHARING TAX SHARING TAX SHARING SYSTEM TAX SYSTEM TECHNICAL ASSISTANCE TOTAL EXPENDITURES TRANSPARENCY TREASURIES UPPER HOUSE VILLAGES VOTING Indonesia has come a long way from centralized governance to decentralized local governance, and today Indonesia ranks among the most decentralized developing countries. The Government of Indonesia is revisiting all aspects of local governance to make appropriate legal and institutional adjustments based on lessons leaarned during the past decade. An important area of this re-examination and possible reform is the central financing of subnational expenditures. The system of intergovernmental finance represents one of the most complex systems ever implemented by any government in the world. The system is primarily focused on a gap-filling approach to provincial-local finance in an objective manner to ensure revenue adequacy and local autonomy but without accountability to local residents for service delivery performance. This paper takes a closer look at Dana Alokasi Umum -- the most dominant program of unconditional central transfers to finance provincial-local government expenditures in Indonesia. The paper also presents illustrative simulations of alternative programs and compares these with the existing Dana Alokasi Umum allocations. The paper concludes that super complexity leads to lack of transparency, inequity, and uncertainty in allocation. Simpler alternatives are available that have the potential to address autonomy and equity objectives while also enhancing efficiency and citizen-based accountability. Such alternatives would represent a move away from the complex gap-filling approach to simple output-based transfers to finance operating expenditures. Capital grants would deal with infrastructure deficiencies. And the alternatives would institute fiscal capacity equalization as a residual program with an explicit standard to ensure that all local jurisdictions have adequate means to deliver reasonably comparable levels of public services at reasonably comparable levels of tax burdens across the country. 2012-06-29T21:46:14Z 2012-06-29T21:46:14Z 2012-06 http://documents.worldbank.org/curated/en/2012/06/16338364/general-purpose-central-provincial-local-transfers-dau-indonesia-gap-filling-ensuring-fair-access-essential-public-services-all http://hdl.handle.net/10986/9346 English Policy Research Working Paper; No. 6075 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research East Asia and Pacific Indonesia

General Purpose Central-provincial-local Transfers (DAU) in Indonesia : From Gap Filling to Ensuring Fair Access to Essential Public Services for All

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