Provinces demand bigger share of revenue
JAKARTA (JP): The governments of provinces richly endowed with natural resources have demanded bigger cuts of the revenues generated by their natural wealth, saying the present revenue- sharing is iniquitous and in favor of the central government in Jakarta.
The governors of Aceh, Irian Jaya and Riau provinces have stated this demand in documents addressed to a special committee of the House of Representatives which is currently deliberating a bill on fiscal balances between provincial and district administrations and the central government.
"We are asking for 80 percent of the income tax, dividends and royalties paid by the companies which tap the natural resources such as mines, fisheries and forests in Aceh," Governor Syamsuddin Mahmud said.
Syamsuddin cited several highly profitable resource extraction companies based in his province, including gas producer PT Arun LNG and American Mobil Oil,
Irian Jaya Governor Freddy Numberi proposed that 70 percent of the revenues generated by the natural resources in the province should be given to the local administrations (provincial and district) and the remaining 30 percent to the central government.
"The provincial governor will then determine the income shares for regencies and cities," Freddy said in a letter to the committee.
Riau Governor Saleh Djasit said the bill on the intergovernmental fiscal balances should clearly stipulate a revenue-sharing formula between the central government and local administrations.
"The formula should give at least a 50 percent or maximum 90 percent share to local administrations," Saleh argued.
The three provinces have so far been the most vocal in demanding a bigger share of the revenues derived from their natural resources.
Their disappointment over the unjust revenue sharing, kept in check during the repressive rule of former president Soeharto, has been so deep that an increasing number of people in the provinces have been demanding either a federal state or even independence from Indonesia.
The autocratic Soeharto's resignation in May 1998 has triggered mounting calls for fair distribution of incomes to provincial governments.
Opposition groups in Riau, where Indonesian largest oil producer, PT Caltex Pacific Indonesia operates, have set up the latest chorus of freedom-seeking with a plan to establish a Free Riau state.
"Especially for revenues from oil and gas, the provincial government's cut should be 50 percent at minimum," Saleh added.
He expressed concerns that the absence of clear stipulations in the bill regarding revenue-sharing formula would again give the central government a blank cheque to do whatever it likes with revenues from provinces.
"We are worried that if this formula is not stated outright in the legislation but left to the central government to determine through regulations, the present gross injustice will remain," Saleh said.
Saleh said provincial administrations had so far been dependent mostly on grants from the central government because their taxation powers were severely restricted while almost all income from local natural resources was transferred directly to Jakarta.
"Almost all major sources of income have been managed directly by the central government. Only small and insignificant tax sources have been entrusted to provincial governments," he added.
The House is deliberating two related bills regarding regional administrations, one designed to give greater autonomy to local administrations and the other governing intergovernmental fiscal balances.
However, the bill on intergovernmental fiscal balances stipulates only general principles on revenue-sharing and empowers the central government to determine the technical details. (das)