Provinces demand bigger share of revenue

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)