Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009 Study on Infrastructure Special Allocation Funds, The Case of Roads in West Java Province Heru Purboyo HIDAYAT-PUTRO Arif NURHIDAYAT Assistant Professor Government Staff School of Architecture, Planning and Budget Directorate II, Policy Development Budget Directorate General, Institute of Technology Bandung Ministry of Finance Indonesia Jalan Ganesha 10 Bandung 40132 Jalan Wahidin Raya No.1 Jakarta Indonesia Indonesia Fax:+62-22-2501263 Fax:+62-213505617 E-mail: [email protected] E-mail: [email protected] Bambang ARDIANSYAH Research Assistant Research Center for Infrastructure and Regional Development Studies Institute of Technology Bandung Jalan Ganesha 10 Bandung 40132 Indonesia Fax:+62-22-2507070 E-mail: [email protected] Abstract: Special Allocation Funds (SAF) of infrastructure, a government budget policy, consists of two sectors, irrigation and roads. This research focused on road sector and to learn its implementation in West Java Province. We used the descriptive method using indicators, such as SAF allocation for regency/city, area of regency/city, and GDRP of regency/city. The study shows that SAF for Roads in West Java Province has not been distributed systematically and evenly. The SAF has not been adapted with the condition of inter-regional correlation which is connected by road network, so that the effectiveness of SAF uses in each region is different. Key Words: Infrastructure SAF, Road, Budget Effectiveness 1. INTRODUCTION The policy of State financial management in relation to regional autonomy which has been enacted since January 2001 as mandated by Laws number 22 and 25 of 1999 (later replaced by Law no. 32 of 2004 on Regional Government and Law No. 33 of 2004 on Fiscal Balance between the Central Government and the Regions), have brought about fundamental changes in fiscal management. Prior to the enactment of the laws mentioned above, regional financing was set by the central government through the national budget allocated to the regions, some in the form of subsidies (Autonomous Regional Subsidy or Regional Routine Fund), some others in the form of assistance (Presidential Instruction or Regional Development Fund). Subsidies were allocated for employee salaries/routine expenditure, whereas assistance was allocated to Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009 finance regional development. Both types of transfer were dominated by the intervention of the central government. Coinciding with the demands on regional autonomy that changed the system of governance from centralization to decentralization, transfer of funds from central government to the regions also changed and brought about Balance Fund in the Indonesian National Budget (APBN). The Balance fund consisting of Sharing Fund (DBH), General Allocation Fund (DAU) and Special Allocation Fund (DAK) is a source of regional revenue which is derived from the Indonesian Budget (APBN) which is an important aspect in the Fiscal Balance between central and regional government. This balance fund does not require a proposal from the regional government since there is a certain formula under the law on the amount of allocation a certain region will receive. Similarly, the distribution/disbursement of the fund is generally distributed directly to the region’s account. The allocation of the fund is totally up to the region. There is a large authority for the region to manage the fund. SAF is a fund originated from the national budget allocated to the regions with the purpose to funding special needs. SAF consists of Reforestation Fund that come from the reforestation fund which is set at 40% of the reforestation fund revenues distributed to the producing regions and Non Reforestation Fund that come from the national budget outside the reforestation fund revenue. One of the non-reforestation SAF financing mechanisms is in the field of infrastructure. Since Fiscal Year 2003, the beginning of the implementation of SAF, there are two types of infrastructure, i.e. road and irrigation. In Fiscal Year 2005, there was an additional type of infrastructure, i.e. clean water. West Java is one of the provinces that receive SAF each year. However, not all regency/city receive SAF routinely. In connection with this, this research aims to see the distribution of infrastructure SAF allocation and related to the area of the region and GDRP of each regency/city in West Java Province. If the mechanism of Infrastructure SAF implementation is conducted properly (by considering the significant increase in budget allocation and the number of regency/city each year), we can interpret that the implementation of infrastructure SAF program implementation has been in accordance with the expected goals. 2. METHODOLOGY 2.1 Study Approach The method used in this research is descriptive method. According to Whitney (1960) in Nazir (1988:63), descriptive method is a fact finding with an accurate interpretation of the collected data. The study approach which is in line with the objective of the research is monitoring approach, i.e. a study approach commonly used to providing information about cause and effect of a policy (Dunn, W.N., 1994). This monitoring produces information on the description of the real activities that have been conducted. Data needed in this research is secondary data available at the regency/city that received the Infrastructure SAF. Those data had been collected from several years of observations, with the aim to producing a more valid and optimal analysis. Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009 Analytical method used in this research is policy result monitoring method, i.e. a method of monitoring the outcome and impact of a program or activity, because the data which is being analyzed is the result (output and outcome) of a program or an evaluated activity. Some important issues that will be discussed are: 1. Distribution pattern of regencies/cities that receive the SAF associated with road network and the amount of SAF allocation. 2. Coefficients based on the correlation between areas of regency/city with the amount of SAF allocation. 3. Allocation effectiveness if the allocation is associated with the GDP of each regency/city. 2.2 Data Collection Method Data used in this study is secondary data, i.e.: • Non- Reforestation SAF data, especially Road Infrastructure SAF of 2003-2007. • Areas of regencies and cities. • GDRP of regencies and cities of 2003-2007. The data was collected from various sources, i.e., the SAF data from the Department of Finance (Directorate General of Budget and Directorate General of Fiscal Balance), irrigation and road data from the Central Bureau of Statistics (BPS) and the Department of Public Works. 3. THE RESULT OF INFRASTRUCTURE SAF IMPLEMENTATION 3.1 The Pattern of Regional Distribution based on SAF Allocation 3.1.1 The Pattern of Regional Distribution based on SAF Allocation in West Java Province The increase in the length of good condition roads is the objective of road infrastructure SAF allocation. Effective and efficient use of road infrastructure SAF allocation will have an impact on the increase in the length of good condition roads in the regency/city which received the SAF. Observations of the development of the length of good condition roads were conducted in the period of 5 years (2003 to 2007.) Observations were divided into 2 time periods, i.e. between 2003 and 2005 and between 2006 and 2007. This was done because SAF allocation was not distributed routinely in each regency/city in West Java Province in the year 2003 – 2005, whereas in the year 2006 - 2007 the SAF was distributed routinely to each regency/city. To get a visual description of the SAF allocation, the data presented can be seen in the figures below. Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009 Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009 The figures show that SAF allocation between 2003 and 2005 tended to be given to central and eastern regions of West Java, whereas between 2006 and 2007, SAF allocation was given to all regency/city in West Java Province. The amount of SAF allocation to each regency/city in West Java Province can be seen in the table below. Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009 Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009 Table 1 The Amount of SAF Allocation for Regency/City in West Java in 2003-2007 SAF Road Infrastructure Allocation (Rp. No Regency/City Million) Total 2003 2004 2005 2006 2007 1 Bekasi Regency 0.00 0.00 0.00 5,750 1,770 7,520 2 Karawang Regency 0.00 0.00 0.00 4,970 1,944 6,914 3 Subang Regency 1,800 2,260 0.00 5,160 8,140 17,360 4 Indramayu Regency 2,500 3,680 2,820 5,210 1,950 16,160 5 Cirebon Regency 0.00 0.00 0.00 7,930 1,921 9,851 6 Cirebon City 1,500 1,700 1,700 3,780 5,598 14,278 7 Bekasi City 0.00 2,000 4,000 1,240 1,508 8,748 8 Bogor Regency 0.00 0.00 0.00 4,890 1,997 6,887 9 Purwakarta Regency 2,900 1,750 0.00 8,945 4,741 18,336 10 Cimahi City 1,000 2,520 1,440 4,790 2,780 12,530 11 Bandung City 0.00 6,500 0.00 4,620 1,728 12,848 12 Sumedang Regency 2,500 2,410 2,180 9,270 5,288 21,648 13 Majalengka Regency 1,400 2,850 2,250 7,490 5,705 19,695 14 Kuningan Regency 1,800 2,120 2,010 9,060 8,930 23,920 15 Bandung Regency 0.00 0.00 1,000 1,750 1,936 4,686 16 Garut Regency 0.00 1,500 2,240 5,510 7,994 17,244