Low Locally Generated Incomes say Papua expansion needs evaluation, not more expansion

Abepura Mall is a contributor to local revenue in Jayapura City. - Jubi/Jean Bisay

Jayapura, Jubi – Data shows that the expansion of a region is highly dependent on the increase in Locally Generated Income (PAD), whose main components are regional taxes and levies.

PAD is used to finance the implementation of regional autonomy, therefore, there has to be a constant improvement in PAD. However, almost 60 percent of the regions in Papua are unable to meet their PAD target and should return to the parent regency.

“How do we achieve the welfare target if these regions are not able to increase their own locally generated incomes?” former Head of Social and Cultural Affairs of the Papua Regional Development Agency (Bappeda) John Bokorsjom told Jubi last week in Jayapura.

He said that despite the presence of many new regencies in Papua Province, not all regencies were able to increase their PAD. “In fact, they still depend on the regional and state budget (APBD and APBN). This will affect regional development and hinder the achievement of equal distribution of welfare,” he said.

“There must be an evaluation of the regional expansion to see if they are worth it or the governance should be returned to the parent regency,” he said.

Boekorsjom, who is also a lecturer at the Institute of Domestic Government Science, said that the Ministry of Home Affairs after conducting a moratorium on the regional expansion had yet to provide an evaluation and a green design for the next division of provinces, cities, and regencies in Indonesia.

Former Minister of Home Affairs Tjahjo Kumolo said increasing PAD is the goal of a regional expansion. “What’s the point of expanding if you can’t increase your PAD and only rely on the state budget?” said Tjahjo, as quoted by Republika.

Former Minister of Home Affairs Tjahjo Kumolo said increasing PAD is the goal of a regional expansion. “What’s the point of expanding if you can’t increase your PAD and only rely on the state budget?” said Tjahjo, as quoted by Republika.

But in reality, he mentioned that according to the previous experience, 60 percent of new autonomous regions failed to increase their locally generated incomes, which had also turned the government more selective in granting regional expansion.

Locally Generated Income of Jayapura City

Based on data from the Jayapura City Bappeda for the last two years or since the pandemic, in 2020 the PAD target was Rp 250 billion, but it had refocused to Rp 130 billion based on changes in the regional budget. This target was met with a surplus of Rp 20.5 billion. Meanwhile, in 2021, the PAD of Jayapura City was Rp 215 billion, which also experienced a surplus or exceeded the target. In 2022, PAD was targeted at Rp 243 billion.

In the Analysis of Locally Generated Income (PAD) in Jayapura City by Luigi Laurens Derosario Berwulo from the Department of Development Economics, Faculty of Economics and Business, Sam Ratulangie University, the PAD in Jayapura City from 2009 to 2014 continued to increase. However, Luigi said, this did not promise independence because regional income from the state budget allocation was still very large.

Luigi and his research team concluded that despite the improving economy of Jayapura City, in aggregate, Jayapura City’s PAD was still very small and had not been able to support its own household budget, and Jayapura City was still dependent on budget allocations from the central government.

Regional Financial Independence

Researcher Gunardi Ridwan of the Indonesian Forum for Budget Transparency (FITRA) in a study entitled Papua Local Budget Analysis (LBA) 2020 published on February 25, 2021, said that the provinces of Papua and West Papua were considered to have not been financially independent. The two provinces still have a high degree of dependence on the central government through regional transfer funds.

“Regional financial independence is seen from how big the ability of Locally Generated Income is is to fund regional expenditures,” Gunardi Ridwan explained.

The Papua LBA 2020 was a qualitative study conducted in eight regions, namely Papua Province, West Papua Province, Jayapura Regency, Merauke Regency, Fakfak Regency, Tambrauw Regency, Sorong Regency, and Raja Ampat Regency.

During 2016 to 2019, Papua’s PAD has never reached 10 percent of the total regional budget (APBD). The details are as follows: Rp 1.098 trillion or 8.8 percent of the total APBD of Rp 12.438 trillion in 2016; Rp 1.308 trillion or 9.4 percent of the total APDB of Rp 13.968 trillion in 2017; Rp 1.009 trillion or 7.4 percent of the total APBD of Rp 13.548 trillion in 2018; and Rp 938 billion or 6.7 percent of the total APBD of Rp 13.978 trillion.

“West Papua, meanwhile, is not much different. In 2016 the PAD was 5.1 percent of the APBD, in 2017 5.9 percent, in 2018 5.8 percent, and fell again to 5.2 percent in 2019,” Gunardi said.

In addition to regional financial independence, another indicator of regional financial health is fiscal space. In Papua and West Papua, the fiscal space is still below 50 percent of total regional income, or in the medium category. (*)

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