Monday, 28 July 2008

Government to re-evaluate regional funding

The central government may next year cease general allocation funds (DAU) to regions enjoying hefty windfall profits from the soaring prices of natural resources, The Jakarta Post reported. Finance Minister Sri Mulyani Indrawati said the central government was seeking to allocate more funds to regions with limited or no natural resources. The proposal is slated to be submitted to the House of Representatives during the upcoming 2009 state budget discussion. "We will ask for the House's approval on this soon," she said.
DAUs account for an average of more than 50% of a province's or regency's annual revenues. Should the House approve the proposal, profiting regions could establish autonomous administrations while underdeveloped regions would receive more funds. Wealthy Riau and East Kalimantan provinces, for example, may no longer receive any DAUs, the Finance Ministry's Director General of Fiscal Balance Mardiasmo said. With abundant gas, gold, rubber and palm oil resources, Riau province is one of the richest in Indonesia, while East Kalimantan is endowed with coal, gold and oil and gas. For this year, the central government has allocated Rp179.50 trillion for DAUs, up from Rp164.78 trillion last year.

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