Implementation Of Fiscal Decentralization Research Articles

IMPLEMENTASI DESENTRALISASI FISKAL DALAM UPAYA MENGENTASAN KEMISKINAN DI KABUPATEN DAN KOTA PROVINSI JAWA BARAT

The implementation of fiscal decentralization is driven by the belief that the regional government is the vehicle that best understands the needs of regional communities rather than the central government. This delegation of authority is then followed by budget allocation and provision of public goods to the regional government. This then opens up a new assessment that simply fiscal decentralization has an impact on poverty alleviation. However, the report on the implementation of fiscal decentralization over two decades in Indonesia shows that the rapidly increasing allocation of transfer funds has not been accompanied by a rapid reduction in poverty rates. Therefore, this research aims to determine the effect of fiscal decentralization indicators on the percentage of poverty, namely local government revenue, fiscal balance transfers and local government spending. By using Panel Least Square (PLS) regression estimates, we used specific samples based on districts and cities in West Java from 2014 to 2019. The regression results show that regional income can significantly reduce poverty, while the allocation of fiscal balance transfers makes poverty increase. Apart from that, local government spending was found to have no significant influence on the percentage of poverty. This paper is expected to help the government in carrying out financial management that is right on target. The ineffective allocation of balanced transfers in West Java needs to be responded by the regional government according to the priority scale in each disctrict or city.

Aspek Kinerja Keuangan Daerah yang Berdampak Pada Pembangunan Manusia di Daerah Pemekaran

Is it true that the implementation of fiscal decentralization through the expansion of regions can have a significant impact on development and improve the welfare of people in the regions? This study aims to analyze the influence of the government's financial performance after the division in influencing the Human Development Index as an indicator of successful development and community welfare in the regions. The research method was conducted by using multiple linear regression analysis that processed financial ratio data from the APBD Report of Kepulauan Meranti Regency from 2010 to 2022. The results showed that financial performance as measured by PAD Effectiveness, Capital Expenditure Ratio, PAD Growth, and Financial Independence has a significant effect on the Index of Human Development, while the Efficiency of Regional Expenditure has no effect.

Fiscal Decentralization and Corruption: The Facts of Regional Autonomy Policies in Indonesia

Decentralization has posed new problems in Indonesian local governments, including disparities between regions, poor public services, fiscal indiscipline, and corruption cases. Before the implementation of regional autonomy, corruption cases were reported only in a few regions. A year after decentralization started, in 2002, more corruption cases were reported in more regions nationwide. The irony is that such decentralization, initiated to reduce corruption in the government, ended up with more corruption in the regions. This study investigates the relationship between fiscal decentralization—as proxied by capital expenditure and fiscal independence index—and the corruption index. This study also analyzes the macro factors and regional characteristics: inflation, civil servants’ salaries, education levels, and the differences in the corruption index at the regional level. The method used in this study is regression analysis by using panel data from longitudinal studies involving 15 cities in Indonesia in 2008, 2010, 2015, and 2017. The finding shows that the relationship of fiscal decentralization—expenditure, inflation rates, civil servants’ salaries, and local corruption—are not statistically significant to the corruption index. By contrast, the relationship between the fiscal independence index and educational level are statistically significant. The implementation of fiscal decentralization on expenditure increases corruption risks due to ineffective budget management, individual corrupt tendencies, and weak supervision system. Meanwhile, fair allocation of local income can increase public trust and prosperity and lower corruption risks.

АНАЛІЗ ТА ОЦІНКА РЕАЛІЗАЦІЇ БЮДЖЕТНОЇ ДЕЦЕНТРАЛІЗАЦІЇ В УКРАЇНІ

The article is devoted to the analysis and evaluation of the implementation of budget decentralization in Ukraine. For the last decade, Ukraine has been operating under new conditions for the formation of inter-budgetary relations. Decentralization of power is taking place, which means reforming the local management system. This led to the formation of new administrative and territorial units - territorial communities. Legislation aimed at harmonizing Europe's international treaties is also being actively developed and adopted. However, at present, the local self-government of Ukraine has not yet acquired a powerful and financially capable form of exercise of public power. As of today, the European experience of local self-government in the implementation and implementation of fiscal decentralization has been implemented in Ukraine. In practice, this means that local self-government bodies independently and independently make decisions regarding revenues that fill their budgets and pay expenses. The article analyzes the replenishment and expenditures of local budgets, which include transfers to the state budget, and determines whether a deficit or surplus occurs in this case. The largest amount of cash receipts of local budgets was in 2018 and amounted to UAH 562,421.8 million, which is by UAH 196,278.7 million. more than in 2016. The amount of money spent by local budgets also grew every year. Studying financial decentralization, we will examine the tax component, because taxes and fees are the basis of financial support for the activities of local self-government bodies. Issues regarding the formation and formation of the optimal structure of replenishment of local budgets and the expansion of tax powers and competences of local authorities require attention.

Case Study on Regional Original Income: Analysis of Effectiveness, Efficiency, Fiscal Decentralization, and Regional Financial Dependence Ratio

This study aims to analyze the financial performance of the Kubu Raya Regency Government using the Effectiveness Ratio Analysis, Efficiency Ratio, Fiscal Decentralization Ratio, and Regional Financial Dependency Ratio. This study uses quantitative research, with secondary data in the form of the Kubu Raya Regency Government Budget Realization Report 2018-2020 obtained using a documentation study. The results showed that the Effectiveness Ratio resulted in an average of 101.12%, which means that it is classified as very effective. Furthermore, the Efficiency Ratio is 86.08%, which means that it is classified as an efficient criterion. Then the Fiscal Decentralization Ratio is 33.34%, which means that it is classified as moderate. And the average Regional Financial Dependency Ratio is 79.13%, which means it is classified as very high criteria. The implication of the results of this study is that the Kubu Raya Regency Government should further explore the existing regional potential in order to increase PAD, so as to reduce regional financial dependence in the implementation of fiscal decentralization in the following years.

The General Allocation Fund (DAU) Formulation Policy: Incentives or Disincentives to the Fiscal Independence of Local Governments

The implementation of fiscal decentralization in Indonesia is expected to improve economic welfare for the people in the regions because it can bring the government closer to the community in providing public services according to people's preferences. As a consequence of decentralization, the central government provides transfer funds to local governments. The amount of transfer funds to local governments is around thirty percent of total National Budget (APBN), excluding central expenditure funds allocated to regions. Central government expect the fiscal dependence of local governments to be reduced. In fact, since regional autonomy was implemented in 2001 until 20 years later, regional independence has never been achieved. Ratio of local revenues (Pendapatan Asli Daerah,PAD) to total revenues in Regional Budget (APBD) ranged from 36.8 percent in Java to only 6.1 percent in Maluku and Papua., the rest still expects transfer funds from the central government. It is suspected that regional independence is closely related to the formulation of the General Allocation Fund (Dana Alokasi Umum, DAU) where PAD is a component of reducing DAU in the formulation. It can be seen from this formulation that the central government has ambiguous policies. On the one hand, it punishes local governments whose PAD efforts are high by providing a smaller DAU, but on the other hand they hope that the regional fiscal dependence will be decrease through an increase in PAD. When there is a view that the effort to collect local taxes is not an important factor for the regions, the regions will prefer to receive a higher DAU rather than increasing their tax collection effort but reducing the DAU. This study will try to analyze the efforts of local governments and will examine the data on variables related to the DAU whether it is consistent with its formulation. Through Weight Least Square (WLS) analysis which is more suitable for heteroscedasticity data that may arise from the diversity of data between regions, this study will see whether the DAU formulation becomes an incentive or disincentive for regional fiscal independence through increasing PAD. The results showed that the PAD variable had a negative relationship with DAU. This means that the DAU formula actually becomes a disincentive for regions to increase their PAD. The greater the PAD, the smaller the DAU received by the local government. Review this policies or reformulate the DAU formulation in accordance with the principles of local government fiscal independence need to be implemented immediately.

Enhancing Socio-Economic Rights in the Mashonaland Central Province of Zimbabwe through Fiscal Decentralization: Progress and Challenges

Background: Since 2019, the government of Zimbabwe has been making fiscal transfers to local governments as part of fulfilling the constitutional provisions to improve the socio-economic wellbeing of communities. Despite these transfers, there is limited research that establishes whether the funds are achieving the intended results.
 Objective: The main focus of this paper was to assess progress towards the enhancement of the socio-economic rights of communities in the Mashonaland Central province of Zimbabwe through fiscal decentralization.
 Method: This paper adopted qualitative methodology and the case study as the design. The Mashonaland Central province was purposively selected as it is one of the regions lagging in terms of development. Data was collected through, documentary analysis and key informant interviews with ten councilors, one Town clerk, nine Chief Executive Officers as well as ten focus group discussions with community members.
 Findings: The study noted that since the transfer of funds to local authorities started in 2019, significant progress has been achieved in the fulfillment of socio-economic rights. However, local governments were facing challenges such as the unavailability of an administrative manual to guide them in the implementation of fiscal decentralization, lack of clear funds allocation criteria, untimely and unpredictable distribution of funds, price instability, cumbersome procurement processes and lack of a monitoring and evaluation framework. These challenges were negatively affecting the attainment of the desired goals.
 Conclusions and Recommendations: Fiscal devolution has already started paying dividends in enhancing the socio-economic rights of communities in the Mashonaland Central Province of Zimbabwe in key sectors such as water and sanitation, education, healthcare, infrastructure development, governance and administration, and peace and security. There is a need to develop an administrative manual for implementing fiscal devolution, timely disbursement devolution funds, use of virtual meetings in the wake of the Covid- 19 pandemic, integration of monitoring and evaluation mechanisms, and capacity building of local government policymakers and administrators.

The Analysis of Regional Expenditure Responses to Block Grants Transfer from Central Government

The implementation of fiscal decentralization in Indonesia is exactly two decades in year 2021, during this time the policies in the field of transfers to regions have developed with a significant increase in the budget. The budget increasing of transfer to regions is expected to increase the region in providing services to the community and increase development. Furthermore, the objectives of fiscal decentralization are to reduce fiscal gaps and encourage regional governments to be more independent. This study aims to determine the response or behavior of regional spending to transfer funds (block grants) from the central government. The research locus are all districts/cities in West Java, Central Java, and East Java Provinces and used a panel data equation, with variables are regional expenditure, general allocation fund (DAU), sharing allocation fund (DBH), and local revenues (PAD). The results showed that the block grant in the form of DAU encouraged an increase in regional spending. Meanwhile, DBH does not cause a flypaper effect. In the future, in order to achieve the region’s independence, the influence of the flypaper effect from the DAU should be minimized, and the exploration of potential regional revenues needs to be optimized.

ECONOMIC GROWTH: IMPACT OF LOCALLY-GENERATED REVENUE AND BALANCE FUNDS MODERATED BY CAPITAL EXPENDITURE

The allocation of development budget can accelerate the pace of economic growth in the implementation of fiscal decentralization. Through locally-generated revenue management and regional government, balance funds can increase their income through the use of appropriate capital expenditure however economic growth is not always linear with all sources of revenue. The purpose of this study is to analyze the effect of regional revenue and balance funds partially and simultaneously on capital expenditure and its impact on economic growth. The research method is quantitative with a longitudinal research time-series design. The study was conducted in the Regency / City of West Sumatra Province with secondary data from the Central Statistics Agency in 2009-2018. Research analysis using multiple linear regression test and path analysis. The results showed that Locally-generated revenue, general, and special allocation fund partially and simultaneously have a significant effect on capital expenditure, but the profit-sharing fund partially has no significant effect on capital expenditure. Locally-generated revenue, profit-sharing funds, general and special allocation fund, and capital expenditure partially and simultaneously have a significant effect on economic growth. Likewise, capital expenditure has a positive effect on economic growth which is mediated by locally-generated revenue and special allocation funds, while capital expenditure does not significantly influence economic growth mediated by general allocation funds and profit-sharing funds

Does Fiscal Decentralization Increases Regional Income Inequality in Indonesia?

This paper examines the impact of fiscal decentralization on regional income inequality in Indonesia. This study employs dynamic panel data analysis–the two-step system generalized method of moments (GMM) on 2008-2017 regional level datasets. This study found that regional income inequality indeed increases during the implementation of fiscal decentralization and appears to be exceptionally high for rich provinces. Essentially, this study suggest that fiscal decentralization appears to increase regional income inequality in Indonesia. The results might be due to low regional fiscal capacity in Indonesia, which induces high dependency of local government that further restraints local competition in public goods provision. 
 
 Keywords: fiscal decentralization, regional income inequality, generalized method of moments (GMM).

DOES FISCAL DECENTRALIZATION AFFECT ON THE CONVERGENCE OF PER CAPITA INCOME IN INDONESIA?

Nearly two decades since 2001 Indonesia has implemented a decentralized system. The basis of decentralization implemented in Indonesia is at the regency/municipality level while fiscal decentralization is carried out fully in the area of expenditure. It is important to know whether the implementation of fiscal decentralization has an effect on national development. One indicator to determine the impact of fiscal decentralization on development is whether there is economic convergence between regions during the period of regional autonomy. Using panel data of 411 regencies and 94 municipalities in Indonesia during the implementation period of decentralization from 2001-2017, this study aims to examine indications of economic convergence between regions in Indonesia. This study uses indicators of fiscal decentralization in terms of expenditure assignment, namely regional spending on education, health, and infrastructure. Based on the test results of both static convergence and dynamic convergence testing, it was found that there was a convergence of per capita income between regency/municipality in Indonesia.

The Impact of the Original Local Government Revenue and Balanced Budget toward Capital Expenditure of the Government of Palangka Raya City

The implementation of fiscal decentralization in improving services and necessity in various sectors including public sector has lead the Regional Government to allocate higher Capital Expenditure for the development of sectors that are considered beneficial in each region. The purpose of this study is that the researcher would like to investigate the impact of Original Local Government Revenue and Balanced Budget toward the Capital Expenditure of Palangka Raya City. The study was conducted in Palangka Raya City using a quantitative descriptive approach and multiple analysis for the data analysis. The results of the study indicates that part of Original Local Government Revenue does not have significant effect on Capital Expenditure. Meanwhile, part of the Balanced Budget has a significant effect on Capital Expenditure. Simultaneously, both of Original Local Government Revenue and Balanced Budget are able to influence local Capital Expenditure of the government of Palangka Raya City.
 Keywords: Original Local Government Revenue, Balanced Budget and Capital Expenditure

APAKAH FLYPAPER EFFECT TERJADI DI ACEH? STUDI MENGUKUR KEMANDIRIAN KEUANGAN DAERAH

The objective of this study is to analyse the phenomenon of flypaper effect in Aceh after the implementation of fiscal decentralization. Data used in the study were panel data covering all 23 district/municipalities in Aceh from 2011 to 2013. Pooled Least Square was utilized. The results of this study revealed that ownsource revenue, sharing revenue, special allocation funds, general allocation funds, and special autonomy funds are statistically significant variables and have a positive relation to regional spending. It was proven that flypaper effect has occured in Aceh as the coefficient of the own-source revenue variabel was smaller than that of sharing revenue variabel. This implied that Aceh has been dependent on the national government in term of regional financing. Based on descriptive analysis, provinces having dominant share of tertiary sector to their regional gross domestic products show fiscally independent. In order to achieve fiscal independence, the phenomenon of flypaper effect could be overcomed by shifting the economic structure from the primary and secondary to the tertiary sectors of the economy. In doing so, the contribution of own-source revenue to regional spending outweigh intergovernment transfer funds from national government.

ANALYSIS OF INTERGOVERNMENTAL TRANSFER AND INTERREGIONAL BASIC SERVICES INEQUALITY IN INDONESIA

In this globalization era, the problem of interregional basic service inequality still occurs, even though fiscal decentralization has been implemented in Indonesia since 2001. Intergovernmental transfer with three instruments, such as shared revenue, general purpose grant, and specific purpose grant aim to support the implementation of local government authority. The purpose of this study is to analyze basic services inequality between provinces in Indonesia since the implementation of fiscal decentralization, as well as recommended policies to reduce these basic service inequalities. This study used a quantitative approach. The data used in this study was secondary data obtained from several government agencies. The object of the research is the variation of interregional basic service inequality. This research was conducted in 32 provinces in Indonesia. Data is processed with SPSS and Microsoft Excel software. The result found that there are still basic services inequalities between provinces in Indonesia, including in education, in the health sector, basic infrastructure such as access to clean water, access to proper sanitation and the percentage of poverty levels. This study also found components of the intergovernmental transfer that affect the basic services inequality.

ANALISIS PENGARUH DANA ALOKASI UMUM (DAU), PAJAK DAERAH, DAN JUMLAH PENDUDUK TERHADAP PERTUMBUHAN EKONOMI DI PROVINSI NUSA TENGGARA BARAT TAHUN 2011-2017

This study aims to determine the effect of general allocation funds (DAU), local taxes, and population on economic growth in West Nusa Tenggara Province. Fiscal decentralization is one form of authority that local governments have since the enactment of Law no. 22 of 1999. The implementation of fiscal decentralization was only implemented in Indonesia on January 1, 2001 based on Law no. 25 of 1999 concerning the financial balance between the central government and local governments. The variables studied are general allocation funds, regional taxes, and total population, the type of data used is secondary data with the 2011-2017 period. By using panel data analysis method. The results of the analysis show that the influence between the General Allocation Fund and Total Population variables on Economic Growth is positive and significant, while the regional tax on economic growth is significant negative

Measuring the Impact of Fiscal Decentralization on Economic Growth and Income Inequality using the Heuristic Network

To achieve regional economic growth, the role of regional budgets is very important. In this regard, the utilization of regional economic and financial resources is an important factor in supporting the implementation of the fiscal decentralization system in the area. The implementation of fiscal decentralization in Indonesia is marked by the process of transferring financial resources to regions in significant amounts. In the last five years (2011-2015), the proportion of balancing funds to total regional income nationally reached an average of 73%. Despite the huge spike in decentralization policies, the implementation of fiscal decentralization in East Kalimantan Province, one of Indonesia's provinces, till now has not been able to bring about improving the welfare of local communities. In reality, there is still income inequality, although still relatively low in East Kalimantan Province. This study performs to measure the impact of fiscal decentralization on economic growth and income inequality in East Kalimantan – Indonesia. The hypothesis in this study is that fiscal decentralization negatively affects income inequality directly or indirectly through economic growth in East Kalimantan – Indonesia. The aim of this study is how to use the heuristic network to prove this hypothesis.

Analysis of fiscal decentralization impact on community welfare in Jambi Province

The fiscal decentralization policy has made local governments have the authority to generate income and manage regional finance independently for public services and public welfare. This study aims to: 1) Analyze the degree of fiscal decentralization in Jambi Province; 2) Analyzing community welfare proxied from the human development index in Jambi Province; 3) Analyzing the impact of fiscal decentralization on the welfare of the community in Jambi Province. This study using panel data, a combination of time series data in 2010-2016 and cross section 11 districts/cities in Jambi Province. The method of data analysis is descriptive analysis and panel data regression analysis approach, namely the fixed effect model (FEM). Hypothesis testing uses the F test statistic and the statistical t test. The results showed that: 1) The degree of fiscal decentralization, namely the ratio of district own source revenue (PAD) to total regional income (TPD) in each district/city in Jambi Province was relatively relatively low, whereas for Jambi Province it was in good category; 2) Community welfare as illustrated by the human development index in each district/city including Jambi Province is still in the moderate category, except Jambi City (76.14) and Sungai Penuh City (73.35) are categorized as high; 3) Fiscal decentralization has a positive and significant impact on improving community welfare. it means that the better the implementation of fiscal decentralization, the higher the level of community welfare.

PUBLIC SATISFACTION INDEX (IKM) SURVEY AT DEPARTMENT OF INVESTMENT AND ONE STOP INTEGRATED SERVICE (DPMPTSP) IN SUBANG REGENCY

In accordance with the mandate of the law, changes in the system of governance in the region have changed from a centralized model to decentralization. This is characterized by the devolution of most government affairs to the region including the implementation of fiscal decentralization directed to finance the administration of government affairs. Law Number 25 Year 2009 concerning Public Service and Regulation of the Minister for Empowerment of State Apparaturs and Bureaucracy Reform Number 16 Year 2014 on Guidelines for the Survey of the Public Satisfaction Index on Public Service Implementation recommends that every service provider conduct a Public Satisfaction Index (IKM) survey periodically. This research uses deductive quantitative method. Primary data is obtained through direct survey and interview. The data were obtained using questionnaires with closed questions. Types of sample are purposive sampling counted 240 people. The purpose of the survey of IKM on public service units is intended to get opinion of the public regarding the quality of public services in Department of Investment and One Stop Integrated Service (DPMPTSP), Subang Regency. The IKM survey is conducted on four service units, namely Building Permit (IMB), Business License (SIUP), Company Registration Certificate (TDP) and Industrial Registration Certificate (TDI). Measurement of IKM survey of public services using PERMENPANRB Number 16 Year 2014 which consists of 9 aspects: 1) Requirements; 2) Procedures; 3) Time of service; 4) Costs / Tariffs; 5) Product Specifications Type of Service; 6) Executing Competencies; 7) Executive Conduct; 8) Service Notice; and 9) Complaint Handling, Suggestions and Feedback. IKM from four types of public services in Subang Regency DPMPTSP of 3.20 or if converted by 79.89. The results of the IKM are in the category of Quality of Service Performance B (Good).

Critically Examining The Arrangements of Fiscal Decentralization in Indonesia

As an implication of the implementation of decentralization in Indonesia, the authority to manage income and spending autonomously by local governments in Indonesia is undeniable. However, the power should be managed and used proportionally. The central government should not lose its control of the local governments, while the local governments maintain the authority to manage its area. This paper examines the proportions of the fiscal authority given by the central government to the local governments in Indonesia. In short, this research finds that in general, the framework of fiscal decentralization in Indonesia is going well. Some research also offers positive findings of fiscal decentralization in Indonesia. However, there are also some serious problems resulting from the implementation of fiscal decentralization in Indonesia, such as vertical fiscal imbalance and corruption. These problems need to be reduced by issuing technical and specific regulations and by ensuring that those regulations are both monitored and implemented.

The Effect of Capital Expenditure on Local Revenue: Study In East Java Indonesia

In the decentralization era, local independence is the logic consequence of the implementation of fiscal decentralization. Further, fiscal decentralization has potentially to increase economic efficiency of the local government if compared with the central government. This research analyzed the effect of capital expenditure through Regional Gross Domestic Product (RGDP) on Local Revenue. The sample in this study was 38 districts/ cities in East Java province in Indonesia using path analysis. The results showed some findings, first, capital expenditures which divided into productive capital expenditures and less productive capital expenditures has affect on regional gross domestic product. Second, regional gross domestic product has affects on the forming components of local revenue. Furthermore, less productive capital expenditures and productive capital expenditures have indirect effect on local revenue through regional gross domestic product.