The Fiscal Capacity of The Seven New Provinces and its Implications

Juli Panglima Saragih


Since 2001 the regional autonomy policies have brought out seven new provinces in Indonesia. Consequently, they require the central transfer budget to finance the delegated duties and authorities and the development programs in each province. Since its establishment until today, the fiscal capacity in seven provinces except Banten has not fulfilled the increase in local expenditure needs every year. It still much depends on the central transfer because the local revenue source like PAD is very low. This research uses a descriptive method-analysis by analyzing the secondary data relevant to the discussed topic and using the concept of fiscal capacity in the framework of the fiscal decentralization theory. The results of this qualitative research explain that the high fiscal capacity index (IKF) is obtained by four provinces those are Bangka Belitung, West Papua, Riau, and North Maluku, while the intermediate index is obtained by Banten, and the low fiscal capacity index is obtained by Gorontalo and West Sulawesi. Good fiscal capacity with high index does not guarantee that the poor population in the area will be reduced as West Papua and Riau which populations are still relatively large. Besides, Bantam with the very high PAD compared with six other provinces still has a large number of poor population of poor among seven provinces. But, overall the central transfer is recognized to be very helpful for the fiscal capacity of the seven new provinces above.


autonomy; fiscal capacity; index; budget; revenue; expenditure

Full Text:



Tanri Abeng,, (2006), the profession Management, Publisher of PT. Gramedia Pustaka Utama, Jakarta.

Andrs Rodrguez-Pose and Roberto Ezcurra; (2010); "Fiscal decentralization Is harmful for economic growth? Evidence from the OECD countries ", Journal Of Economic Geography, vol. 11, Issue 4, Published by Oxford University Press, .

Azisy Qadri, a., (2007), Change Management in the reform of the bureaucracy, the publishers of the main Library, PT Gramedia, Jakarta.

Bank Indonesia, (2009), the financial Economic Statistics Area of South Sulawesi province.

The Central Bureau of statistics, (2012), the provincial Government Finance Statistics 2009-2012. BPS.

----------------------------, (2015), Financial Statistics Government of 2012-2015. BPS Jakarta

---------------------------, (2015), Statistics Indonesia, 2016, BPS.

Bahl, Roy w., John, and Linn (1992), Urban Public Finance in Developing Countries, New York: Oxford University Press.

Dwitya Star Cahyoo; Identification of the degree of Fiscal Competition Kabupaten/Kota in East Java; Journal of Economics and development; Vol. 22/1/2014, Publisher of the Economic Research Center-LIPI Jakarta, PG. 48.

Bird, Richard M, Robert Ebel and Cristine Wallich (1995), Decentralization of the Socialist State: Intergovermmental Finance in Transition Economies, Washington, D.c., World Bank.

Bratakusumah, Professorpinch, Supriady and Deddy dadang, (2001), the Organization of the Autonomous Regional Government, a publisher of PT. Gramedia Pustaka Utama, Jakarta.

Cao x. (2010). U.s. Networks Channels of Policy Diffusion: Explaining the Worldwide Changes in

Capital Taxation, 1998 2006 . International Studies Quarterly 54 (3): 823 855.

Davoodi, h. Xie, d. and Heng-fu Zou, (1998), Fiscal Decentralization and Economics Growth: A Cross-country Study. "Journal of Urban Economics Number 43 (vol. 2), Published by Academic Press, US.

Dwirandra A. A, (2007), the effectiveness and independence of the Autonomous Region's financial district/town in Bali in 2002-2006, the Publisher of the Faculty of Economics and business (FEB)-Udayana University, Bali.

Elmi, Bachrul, (2002), the autonomous regional Government Finance in Indonesia, UI-Press Publishers, Jakarta.

Fadzil, Faudziah Hanim, and Nyoto Harryanto, (2011). "Fiscal Decentralization after Implementation of Local Government Autonomy in Indonesia". World Review of Business Research, vol. 1, no. 2, May, pp. 51-70.

Graham e. r. Shipan, c. r. and c. Volden (2013). The Diffusion of Policy Diffusion Research in Political Science. British Journal of Political Science 43 (3): 680 701.

Hadi Prayitno (Fitra), "Expansion (problem) Areas", in areas .

Kadir, Abdul, (2008), local tax and Regional Levies In the perspective of Autonomy in Indonesia, FISP USU Press, Publisher of the terrain.

Khusaim,, (2006), a study of Fiscal Decentralization, its effects on the economy of public sector Efficiency, economic growth and welfare of society (Study On district/town in East Java Brawijaya University, Malang).

Ministry of Finance of INDONESIA, (2007), the reform of the system of Budgeting: concept and implementation of the 2005-2007.

---------------------, (2010), the Central and regional Synergies in the broader perspective of fiscal Decentralization.

Kuncoro, Mudrajad, (2004), Autonomy and regional development: reform, Planning strategies and opportunities, Publisher of the PT. Eason. Jakarta.

Maggetti Martino, Fabrizio Gilardi. (2015). "the Problems (and solutions) in the measurement of policy diffusion mechanisms". Journal of Public Policy. Vol 36/1/March 1999, pp. 87-107

Mardiasmo, (2002), autonomy and financial management Areas: Regional Autonomy, Publisher, Series Andi Yogyakarta, Yogyakarta.

Makagansa, HR, (2008), Challenges of the expansion Area, Publisher of Fuspad, Yogyakarta.

Vasques, Jorge Martinez. M and Mcnab, r. (1997), "Fiscal Decentralization Economics Growth and Democratic Governance", Working Paper, October.

Masita Machmud, et al; (2014), analysis of financial performance area in North Sulawesi province in 2007-2012, in the Periodic Journal of scientific efficiency, Vo. 14, no. 2, may 2014, Publisher Universitas Sam Ratulangi FEB, North Sulawesi-Manado.

Fadel Muhammad, (2008), Reinventing Local Government, Publisher of PT Elex Media Komputindo.

----------------------------, (2006), Surefire Solution Build Area, Publisher of CV. Jakarta Art Arena.

Mahmudi, (2010), financial management Area, Publisher of Eason, Jakarta.

Nasir, the Moh., (1983), research methods, the Publisher of the Graha Indonesia, Jakarta.

Oates, W.E. (1993) "Fiscal Decentralization and Economics Development." National Tax Journal, Number 46 (vol. 3), Published by the Department of Economics, Rice University, Houston, Texas at US.

Phillips, Kerk. L., and Woller, (1997), "Does Fiscal Decentralization Leads to Economics Growth?", Working Paper, Number 97, vol. 7, September.

Prud'homme, Remy, (1999), "Macroeconomics", 4th Edition, Worth Publishers, Madison Avenue, New York, US.

PP Number 55 in 2005 about the Equalization Funds.

PP Number 78 in 2007 about the requirements and procedures for the establishment, Expansion, deletion Criteria, and the merging of the region.

Regulation of the Minister of finance REPUBLIC of INDONESIA Number 33/FMD. 07/2015 Fiscal Capacity Map of the area.

Rosidin, debt., (2010), Regional Autonomy and decentralization, the Publisher of the CV. A Loyal Reader.

Sarundayang, sh., (2001), the power Center of Backflow into theLibrary, Publisher of Sinar Harapan in Jakarta.

Prints, Mahfud. (1999), autonomy and Fiscal Decentralization , Penerit BPFE-UGM, Yogyakarta.

Surtikanti, (2013), "problems of the autonomous region in terms of the financial aspect of the balance of the Central Government and the regions, Unikom scientific journal, vol. 11, no. 1/2013, Publisher of Computer University, Bandung.

Syaukani, h., Gaffar, a., & Rashid, MR.., (2002). Regional Autonomy In A Unitary State, Student Library, Publisher Of Yogyakarta.

Sujamto, (1993), the autonomous region's perspective, the Publisher of the PT. Rineka Reserved, Jakarta.

LAW Number 32 of 2004 concerning regional Government sebagaiman been replaced by LAW Number 23 of 2014.

ACT Number 33 Years 20114 about financial equalization Between the Central Government and regions.

LAW Number 45 in 1999 on the establishment of the province of West Papua (formerly Irian Jaya Barat).

LAW Number 46 of 1999 regarding the establishment of the North Maluku province.

LAW Number 23 of 2000 on the establishment of Banten Province.

ACT Number 27 in 2000 on the establishment of the province of Bangka Belitung.

LAW Number 38 in 2000 about the formation of Gorontalo Province.

LAW number 25 of 2002 on the establishment of the province of Riau Islands.

ACT number 26 of 2004 concerning the formation of the province of West Sulawesi.

Yowono, Sony, et al, (2005), public sector Budgeting, Publisher, Bayumedia Publishing Malang, East Java.



  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.