Governance, Transparency and Accountability : Study Chase Indonesia Revenue Sharing Mechanism

1. Background. Decentralization is a tool to achieve one purpose of the state, especially in order to provide better public services and creating public decision-making process more democratic. Decentralization can be realized with the devolution of authority to the levels of government under it. Indonesia’s fiscal decentralization policy initiated in early 2001 has provided a variety of both national and regional implications. At the regional level, this policy is an effort to empower local independence of the available resources. Policy of implementation of fiscal balance execute through budget allocations to areas including equalization funding. Accordingly, in addition intended to assist regional affairs and finance various governmental authorities that has been assigned, transferred or assigned to the regions, the allocation of equalization funds also aim to reduce the funding gap between central and local governments, as well as reduce the gap between local government funding. Balance Fund is also known a intergovernmental transfer system. The system in Indonesia comprises three basic types of scheme: Revenue sharing Fund (Dana Bagi Hasil/DBH), General Purpose grant (Dana Alokasi Umum/DAU), and Grant for Specific Purpose (Dana Alokasi Khusus/DAK). Even though fiscal decentralization has been implemented nearly ten years, Indonesia’s achievements continue to be clouded by widespread concerns about transparency, accountability and governance. This lack of accountability, transparency and governance leads to arbitrary and non-participatory decision-making, in efficient project execution and rampant financial corruption in public bodies.
2. Assessing Revenue sharing Mechanism This section addresses the role of revenue sharing mechanism from three different perspectives: a) Decentralization or Fiscal decentralization theory provides the basic criteria for analyzing revenue sharing mechanism in terms of transparency,

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