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Jakarta Post

Decentralization and fiscal accountability

  • Dwinanda Ardhi Swasono and Andi Yoga Trihartanto

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PREMIUM
Jakarta   /   Thu, April 25, 2019   /  10:03 am
Decentralization and fiscal accountability Finance Minister Sri Mulyani Indrawati (center), accompanied by the ministry’s taxation director general, Robert Pakpahan (right), treasury director general Marwanto Harjowiryono (second right), Fiscal Policy Agency head Suahasil Nazara (left) and budget director general Askolani, interacts with the press before a briefing on the 2018 state budget in Jakarta. (Antara/Aprillio Akbar)

Indonesia is experiencing a decentralization process through the Big Bang approach. Without the significant prior experience in decentralizing and only around two years of preparations after the Reform Era started in 1998, Indonesia successfully transformed from one of the most centralized countries in the world to one of the most decentralized ones. Regional autonomy and fiscal decentralization started in May 2001 after two laws were completed in June 1999, namely Law No. 22/1999 on regional governments (which was later amended twice in 2004 and 2014) and Law No. 25/1999 on fiscal balancing (amended in 2004). Decentralization in Indonesia embodies three aspects: politics, administration and fiscal. This article will focus more on fiscal decentralization. Indonesia’s fiscal decentralization was underpinned by three pillars: revenue assignments to regions, expenditure assignme...

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.