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Update Indonesia Volume V No. 03 July 2010 (English)

According to the budgetting principle that is guaranteed by Law No. 33 on Financial Balance between the Central and Local Governments, there are two specific components of the fund transfer mechanism to the regions. The first one is the General  Allocation Fund (DAU), and the second one is the Special Allocation Fund (DAK). The components are examined to eliminate all the probalities and the mechanisms to have new regional fund transfer mechanism. the regional transfer fund has always significantly increased year by year. In 2000, this fund stood at a level of Rp 31.2 trillion. The amount grows every year, and it is planned to amount to Rp 322.4 trillion in 2010.

The increase in the regional transfer fund does not stop the regions to demand for additional funds. Thus various ways have been applied to have the increase in the fund. One of the ways is political direction. A concrete example of political transaction is the proposal by Golkar to have aspiration funds in the amount of Rp 15 billion in each electoral region, or Rp 1 billion in each village.
Responding to the proposal, there are two conflicting sides. One side consists of political parties that refuse the proposal , because they believe that the fund will be used by Golkar to garner voters in the 2014 elections. The other side comprises local leaders and government officials who support the proposal.

This edition of the Indonesian Update raises a main theme on the aspiration funds: political parties, the people, or the government’s interest? This edition of the Indonesian Update also discusses several important themes from some fields. On the economy and finance, it talks about the restriction on foreign funds in SBI and the meetings of the finance ministers and central bank governore of the G-20. On Politics, it raises themes on the refusal to the aspiration funds and the parlementary threshold and the simplification of the parliament. On social affairs, it talks about the Bill on Domestic Workers and a series of LPG blasts.

Update Indonesia Volume V No. 03 July 2010 (English)

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