Regions need guidelines for DAU funds

Regions need guidelines for DAU funds

The Jakarta Post, Jakarta

Administrations in the provinces and regencies need to be
equipped with guidelines to follow so they know how to use the
central government's General Allocation Funds (DAU) in an
effective manner, according to an expert.

Ahmad Syakhroza of the University of Indonesia said on Tuesday
that many local governments had used the funds mostly on routine
expenditures such as salaries, thus neglecting infrastructure
development or other economic and social programs.

"Such a huge amount of money is not effective if it is only
used for routine expenditures," said Ahmad, who is also a
consultant for a number of regional governments.

He said that the guidelines, preferably designed by the
central government, would be useful for new governments and
lawmakers in the outer regions.

The local administrations are expected to get more DAU funds
starting in 2008, as the recently endorsed Intergovernmental
Fiscal Balance Law, calls for the DAU portion to be increased to
26 percent of the annual state budget's domestic revenue, up from
25 percent currently. For 2004, the DAU has been earmarked at Rp
88.1 trillion.

The central government provides the funds to help regional
governments finance a greater portion of their own fiscal needs
following the implementation for the Autonomy Law in 1999. The
central government also provides Special Allocation Funds (DAK)
to help finance social and economic development programs in the
regions.

Ahmad said despite the availability of the DAK funds, the
regional government must also commit part of the DAU funds for
development programs to help accelerate economic growth in their
respective areas.

Many provinces and regencies in the country, particularly
outside of Java, have lagged behind in terms of overall
development.

"After all, the essence of a government is to ensure welfare
for its people," Ahmad said.