Thursday, December 11, 2008

Dana Alokasi Umum (General Allocation Grant)

Description
General Alocation Grant (GAG) is a one of central government transfer to local government which source from APBN. GAG alocated to reduce horizontal imbalance and donate for local necessities.

GAG is a block grant alocation. It means, local government can use GAG for donate project base on priority and improve public service for implementing local government autonomy

Base Legal
Law number 33 year 2004 “Perimbangan Keuangan antara Pemerintah Pusat dan Pemerintahan Daerah” and Government Regulation number 55 year 2005 “Dana Perimbangan”

GAG Alocation
GAG alocated to local government (province, municiple, and city)
GAG budget state minimal 26% of PDN Netto on APBN.
Proportion of GAG for province and municipal/city base on quantity of autority

Phase of GAG Formulation
1. Academic Phase
The first, Independent team from some chosen university gives input concerning calculation of GAG and concept to arrange implementation of GAG policy base on Law number 33 year 2004 and consider to characteristic autonomy in Indonesia
2. Administrative Phase
Ministry of Finance arrange coordination and verification row data for GAG formalation with BPS, Minister of Home Affair, Bakosurtanal, Ministry of Civil Servant and BKN.
3. Political Phase
Government make simulation and calculation formula of GAG, base on GAG basic data cross check. Government with DPR-RI discusses and chose the best simulation of GAG formula
4. Allocation Phase
Final result of agreement of GAG calculation between DPR (Panitia Kerja Transfer ke Daerah) and government (Ministry of Finance as a leader team) is specified with President Regulation

GAG Formulation
GAG, allocated based on fiscal gap principle which represents difference between region fiscal need to region fiscal capacities and basic alocation which represent salary of local civil servant.

GAG = Basic Allocation + Fiscal Gap

Basic Allocation = Salary of Local Civil Servant
Fiscal Gap = Fiscal Capasity – Fiscal Needs

GAG Variable :
Fiscal Needs Variabel :
1. Population
2. Area
3. Human Development Index
4. Construction Index
5. Domestic Regional Product



Fiscal Capasity Variabel :
1. Own Resources
2. Revenue Sharring Fund (Tax and Natural Resourcees)

GAG Calculation Methode
Total wage of Civil Servant count for a year base on salary realization report on previous year (t-1). Salary realization include basic salary and allowance stipulated in the applicable salary regulation

Fiscal Gap
Fiscal Gap of each local government : Fiscal Needs minus by Fiscal Capasity.
Fiscal Gap Allocation of each local government derives from percentage of Fiscal Gap of each local government (Fiscal Gap of each local government devide total Fiscal Gap national) multiplication with Fiscal Gap National allocation.

Fiscal Needs
KbF = TBR (á1IP +á2 IW + á3 IPM +á4 IKK +á5 IPDRB/kap)

Exp:
TBR= Total Average of Local Government Expenditure
IP = Population
IW = Area
IPM = Human Development Index
IKK = Construction Index
PDRB = Domestic Regional Product
.á = constanta index

Fiscal Capasity
KpF = PAD + DBH Pajak + DBH SDA

Exp:
PAD = Own Resourcees
DBH Pajak = Tax Revenue Sharring
DBH SDA = Natural Revenue Sharring

Point of Views