Desain Perubahan Dana Bagi Hasil (DBH) di UU HKPD (UU 1/2022)

Summary

The transcript discusses the impact of fiscal decentralization in Indonesia, focusing on the challenges and improvements brought about by the 2022 Law on Financial Relations between the Central Government and Regional Governments (HKPD). It highlights how the law aims to balance fiscal capabilities between regions, emphasizing the allocation of revenue-sharing funds (DBH) based on real performance, capacity building for local governments, and addressing externalities caused by natural resource exploitation. Additionally, it touches on improvements in the DBH structure, such as increased revenue for tobacco and property taxes, and explores the potential for increased fiscal capacity and public service quality in the long term.

Takeaways

• 😀 Fiscal decentralization has reduced financial disparities between regions but still faces challenges in optimizing regional budgets.
• 😀 The Law No. 1 of 2022 (UU HKPD) addresses these challenges, particularly in the management of revenue-sharing (DBH).
• 😀 DBH allocation is now based on the previous year’s revenue (T-1), providing greater certainty and precision in fund distribution.
• 😀 10% of DBH allocation will depend on the performance of the regions, encouraging local governments to improve planning and program execution.
• 😀 Local governments are encouraged to be more precise in budget preparation and program design due to the new law's requirements.
• 😀 The goal of the law is to improve the vertical fiscal balance between the central and regional governments, reducing inequalities.
• 😀 The new regulations help accommodate the needs of regions affected by externalities, such as resource extraction, by redistributing DBH funds.
• 😀 There is an increase in DBH allocations for sectors like tobacco (CHT) and property taxes (PBB), with tobacco increasing from 2% to 3%.
• 😀 The law also allows for potential new DBH types, such as the proposal for palm oil (sawit), to be considered after consultation with the DPR.
• 😀 The reforms aim to improve fiscal capacities at the regional level, which can lead to better public services and more productive spending.
• 😀 In the long term, the goal is to achieve a fairer distribution of wealth and improve overall public welfare across all regions in Indonesia.

Q & A

What impact has fiscal decentralization had on financial disparities between regions?

Fiscal decentralization has reduced financial disparities between regions by allowing local governments to have more control over their finances, although there are still challenges such as the need for improved spending structures and better utilization of financing.

What are the main issues that still need to be addressed in regional fiscal management?

The key issues include optimizing local spending structures, improving the local tax ratio, and expanding the use of financing, which are still areas in need of improvement.

What is the significance of the 2022 Law No. 1 on the relationship between central and regional governments?

The 2022 Law No. 1 is significant because it addresses fiscal decentralization challenges, particularly in managing revenue-sharing funds, and aims to improve the vertical balance between the central government and regions.

How does the new law improve the management of revenue-sharing funds (DBH)?

The new law improves the management of DBH by implementing an allocation based on the previous year's realization, ensuring more precise and predictable allocations, and linking regional performance to DBH distribution.

What role does regional government capacity play in the allocation of DBH?

The capacity of each regional government is crucial as the new system encourages local governments to be more precise in designing programs. This performance will affect their budget allocation in the following year.

How is the allocation of DBH funds determined under the new system?

Under the new system, 90% of the DBH allocation is based on a formula, while 10% is determined by the region's performance, which includes factors like supporting national revenue and environmental recovery efforts.

What are the environmental considerations in the new DBH allocation system?

The system includes environmental considerations by allocating DBH funds to regions involved in environmental recovery, such as areas impacted by the extraction of natural resources like oil and gas.

How does the new DBH regulation address the concerns of neighboring regions affected by natural resource extraction?

The new regulation addresses the concerns of neighboring regions that experience negative externalities from resource extraction by allocating DBH funds to them, even if they are not direct producers of the resources.

How have the percentages for DBH CHT (tobacco excise revenue) changed under the new law?

The DBH CHT allocation has increased from 2% to 3% under the new law, providing a larger share of tobacco excise revenue to the regions.

What potential impact could the addition of palm oil revenue-sharing (DBH Sawit) have on regional fiscal capacity?

The addition of palm oil revenue-sharing (DBH Sawit) has the potential to increase regional fiscal capacity, particularly for regions that were previously excluded from the DBH system, thereby supporting broader public service improvements.