Proceedings of the 1st International Conference on Social-Humanities in Maritime and Border Area, SHIMBA 2022, 18-20 September 2022, Tanjung Pinang, Kep. Riau Province, Indonesia

Research Article

Fiscal Decentralization: Reformulation of the General Allocation Funds (GAF) Policy for Archipelagic Provinces in Indonesia

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  • @INPROCEEDINGS{10.4108/eai.18-9-2022.2326047,
        author={Bismar  Arianto and Oksep  Adhayanto and Winata  Wira and Nurhasanah  Nurhasanah and Sekar Nur Wulandari and Zulkarnaen  Adijaya and Pery Rehendra Sucipta},
        title={Fiscal Decentralization: Reformulation of the General Allocation Funds (GAF) Policy for Archipelagic Provinces in Indonesia},
        proceedings={Proceedings of the 1st International Conference on Social-Humanities in Maritime and Border Area, SHIMBA 2022, 18-20 September 2022, Tanjung Pinang, Kep. Riau Province, Indonesia},
        publisher={EAI},
        proceedings_a={SHIMBA},
        year={2022},
        month={12},
        keywords={fiscal decentralization reformulation archipelagic regions},
        doi={10.4108/eai.18-9-2022.2326047}
    }
    
  • Bismar Arianto
    Oksep Adhayanto
    Winata Wira
    Nurhasanah Nurhasanah
    Sekar Nur Wulandari
    Zulkarnaen Adijaya
    Pery Rehendra Sucipta
    Year: 2022
    Fiscal Decentralization: Reformulation of the General Allocation Funds (GAF) Policy for Archipelagic Provinces in Indonesia
    SHIMBA
    EAI
    DOI: 10.4108/eai.18-9-2022.2326047
Bismar Arianto1,*, Oksep Adhayanto1, Winata Wira1, Nurhasanah Nurhasanah1, Sekar Nur Wulandari2, Zulkarnaen Adijaya2, Pery Rehendra Sucipta1
  • 1: Universitas Maritim Raja Ali Haji
  • 2: Research and Development Board (BARENLITBANG) of the Kepulauan Riau
*Contact email: bismar@umrah.ac.id

Abstract

After the 1998 reform, the fiscal decentralization adopted in Indonesia did not benefit the archipelagic regions. It is evident through the General Allocation Fund (GAF) policy, which employs the width, size of the mainland, and population as leading indicators. As a result, provincial archipelagos with little continent tend to be underfunded in terms of development funds. This study proposes a revised GAF scheme for equitable budget distribution in Indonesia's archipelago regions. It generates two models that capture archipelagic provincial regions' features in the GAF formula: first, the addition of the Distance between provincial capital to district capital in the form of coefficient variance index of Distance for the GAF formulation. Second, an additional percentage of the GAF baseline ceiling for the archipelagic provinces special fund, a particular scheme proposed by eight provincial archipelagos to the central government. Through these two schemes, we demonstrate that the development fund policy allotted to archipelagic regions, covering eight provinces and eighty-five districts/municipalities, will improve substantially more than in the past.