Regional budgets spent on salaries, not development: Hatta
Esther Samboh. The Jakarta Post, Jakarta - 08/06/2011
A senior official says most of the state money allocated for regional administrations goes to pay civil servants and not for capital expenditures, hampering development that can equalize regional economic disparities.
“Regional budgets for public services, infrastructure and development continues to decrease because it was mostly disbursed for officials’ services. It shows unhealthy symptoms that need to be improved,” Coordinating Minister for the Economy Hatta Rajasa said on Tuesday, citing an Asia Foundation report.
According to the report, 95 percent of regional budgets was allocated for to pay for the salaries and benefits of civil servants, up from 65 percent in previous years, Hatta added.
President Susilo Bambang Yudhoyono has repeatedly emphasized the importance of balanced regional growth to boost national growth and to ensure the economy was at its maximum capacity. Yudhoyono also made “growth with equity” his economic theme for the year.
The Regional Autonomy Watch (KPPOD) said proliferation funds, which have been disbursed to new regions to support their finances after gaining autonomy, needed to be eliminated as they created an additional cost for the state that provided relatively minor benefits.
“Several regions are still unable to manage [proliferation funds], so they need to be stopped. It is budget-consuming and cannot be used for development,” Sofjan Wanandi, KPPOD’s executive board chair, said.
The government is planning to stop the creation of new regions pending development of its grand design on regional administration structure.
The government allocated Rp 392.98 trillion (US$46.16 billion) for regional budget spending in 2010, representing about 32 percent of the state budget.
The amount allocated for proliferation funds has increased to Rp 14.27 trillion in 2009, up from Rp 14.01 trillion in 2008 and Rp 8.09 trillion in 2007.
The Finance Ministry’s director general for financial balance, Marwanto Harjowiyono, said the government would take measures to tackle the inefficient use of regional budgets, giving an example of imposing a budget allocation cap on provincial administrations.
“There are thoughts that salary expenditures should be capped. We are reviewing it. We don’t want to issue a regulation that cannot be implemented on the ground. We need to review data from 524 regions,” Marwanto said.
Officials agreed that if the funds were disbursed for better uses such as infrastructure, regional budgets might help the nation’s economy realize its maximum potential.
Local and international economists have agreed that infrastructure bottlenecks remained the major issue hampering Indonesia’s economic growth, which could potentially grow by 7 percent to 8 percent a year.
Indonesia’s economy was expected to grow by at least 6.4 percent this year, according to the government’s and the central bank’s estimates.
The latest survey by the KPPOD said that infrastructure was named the “most important aspect of regional economic governance” by 37.9 percent of respondents, followed by private sector development programs (14 percent), provincial administration interaction with businesses (13 percent), access to land (9 percent), business licenses (8 percent) and transaction costs (7 percent), among other things.
The survey, conducted between August 2010 to January 2011, had 12,391 firms as its respondents, which all considered infrastructure as the main impediment of business activity in the country.