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Regional Fiscal Disparity In North Maluku Province Chairullah Amin, Nurdin I. Muhammad
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Chairullah Amin , Nurdin I. Muhammad
Regional Fiscal Disparity In North Maluku Province
JEP-Volume 2 No.2, Juli 2013
REGIONAL FISCAL DISPARITY IN NORTH MALUKU PROVINCE
By :
Chairullah Amin SE,. M.Si and Nurdin I. Muhammad SE,.M.Si (Lecture Of Economics faculty, Khairun University, Ternate)
ABSTRACT
The research aime to analyse regional fiscal disparity in north Maluku
province. By using data of APBD in all districts of north Maluku since 2006-
2011, it will be able to conduct how fiscal disparity happened in North Maluku.
To achive the goal, the research is done explorative by using secondary
data of each districts and city 2006 – 2011, it then analysed by qualitatif
descriptive with approach using Williamson Index and Theil Index of several
variables in Regional Budget (APBD) such as original income (PAD), Sharing
Revenue (DBH), and Budget Alocation of investment Spending (DAU).
The result shows that since fiscal decentralization done, the fiscal gap
between district and city in North Maluku province is extremely high. It seen
from Williamson Index and Theil Index of PAD role, sharing revenue (DBH),
allocation of investment spending (DAU) and routine spending are too high.
So, it needed a good policy of regional development in which it can decrease
index of fiscal gap. Other side, local government should develop the resources
of original income (PAD) in order to increase the regional revenue.
Keyword : Fiscal Disparity, Indeks Williamson, Theil Index
Introduction
Disparity is a phenomena that happened in all countries in the word through
in underdeveloped, developed, and industrial country. So that the inequality is
an unseparated component in development activities as same as other
problems that it is not avoidable moreover in the early development stage, but
the bigger disparity must be prevented as soon as possible.
Since era of regional autonomy has been done, north Maluku province has
an experience of the highest disparity signal. As same as other regions in
Chairullah Amin SE,. M.Si and Nurdin I. Muhammad SE,.M.Si
Regional Fiscal Disparity In North Maluku Province
JEP-Volume 2 No.2, Juli 2013
172
Indonesia, the income inequality between residence and city in this province is
enough worried. There are some residence has good and fast in moving, but
the others are still bad. It can be seen by the income percapita, population,
investment, and disparity infrastructure quality (Amin, 2012).
Many study of income disparity between regional in Indonesia have been
done by some researchers. But for this one, we would like to discuss in fiscal
aspect focused to research region in north Maluku province. One of the
youngest provinces which has 12 year since separated in 1999 as same as
autonomy government era.
Problems
As one of the island provinces in Indonesia, North Maluku will face many
development challenges with its complexities as geographically almost of it’s
region is oceanic. It’s clear to influence the number of income or transfer fund
from central government that based on population account and wide regional
in which according to land not sea. The other side, it also has many of small
islands whereas distance among one island to others have to use very
unlimited sea transportations. This situation can effect to equality development
process between regions.
Specifically, the problems of the study will formulate into three questions (1)
How far the fiscal disparity happened in North Maluku Province ? (2) What
factors influences the inequality of fiscal ? (3) How the fiscal policy to reduce
the disparity ?
The study is done in order to know how fiscal disparity between residence
or city happened in North Maluku Province, to identified factors that caused
the inequality and what the best policy to prevent high level disparity.
Research Methodology
The study will be done in North Maluku Province of its all residences and
cities. The type of data used in this study is secondary data such as Local
Government Report of Finance, 2006-2011 that given by Finance Auditing
Agent of North Maluku (BPK).
To measure level of fiscal disparity will be analysed descriptively. Firstly
converted PDRB percapita, PAD, DBH, and DAU with amount of population by
Chairullah Amin SE,. M.Si and Nurdin I. Muhammad SE,.M.Si
Regional Fiscal Disparity In North Maluku Province
JEP-Volume 2 No.2, Juli 2013
173
using two measurement indicators, Williamson’s Coefficient of Variation (CVw)
and Theil Index.
The formula for measuring the CVw is as follow :
n
CVw 1 √(YiY )2 Pi
Y I = 1 P
Where : Y = the average per capita income (output), PAD, DBH and DAU of the whole regency Yi = the per capita income (output), PAD, DBH, and DAU in regency i Pi = the population of regency i P = the population of province The formula for Theil Index is as follow :
n yi / Y
Td = yij log
i=1 Y ni / N Where : Y = the average per capita income, PAD, DBH and DAU of the whole regency Yi = the per capita income, PAD, DBH, and DAU in regency i ni = the population of regency i N = the population of province
Results And Discussion
Economy Profile Of North Maluku Province
Until today, the measurement of development performance of region or
country is still based on its economy growth. Whereas, in fact there is other
suitable assessment to measure successfully development is degree of
people wealth seen from its equality dimension. The development that
pursued high level growth will produce any inequality of people wealth
particularly between rich and poor man and inter-regional disparity.
High degree of economy growth of north Maluku province would hopefully
be a good starting for toward devlopment. The figure that can be seen as
follow.
Chairullah Amin SE,. M.Si and Nurdin I. Muhammad SE,.M.Si
Regional Fiscal Disparity In North Maluku Province
JEP-Volume 2 No.2, Juli 2013
174
Figure 1. Percentage of Economy Growth of North Maluku Province Year 2005-2011 (%)
Source : BPS (processed)
Concept of good economy growth must be followed by success in others
aspects such as reducing of poverty degree, unemployment, and regional
economic disparity. In figure 2 as follow show the percentage of poverty and
unemployment that happened in north Maluku.
Figure 2. Percentage of Poverty and Unemployment Degree Of North Maluku Province Year 2005-2011 (%)
Source : BPS Malut (processed)
According to the picture from 2005 to 2011, the poverty degree was
decreasing from 12,68% in 2005 to 11,28% in 2008 and 9,18% in 2011. It is
same with unemployment level also decreasing from 8,88% in 2005 to 6,48%
in 2008 and 5,55% in 2011. This achievement show that economy growth can
effect positively to reduce number of poverty and jobless in north Maluku
province.
But if we see from data of number of poor per cities and residences show
more conspicuous disparity tendency. The number of poor man inter-regional
and others is still high. It can be seen in figure 3 as follow.
Chairullah Amin SE,. M.Si and Nurdin I. Muhammad SE,.M.Si
Regional Fiscal Disparity In North Maluku Province
JEP-Volume 2 No.2, Juli 2013
175
Figure 3. Percentage of Poor of City and Residence in North Maluku, 2010
Source : BPS Malut (2011)
In 2010, central Halmahera is regency which has highest percentage of
poverty that approximately to 25%, then east Halmahera 19%, West
Halmahera 13%, Morotai 11%, south Halmahera 10%, sula 9%, North
Halmahera 8% and Tidore 7%. While Ternate is city which has number of low
poverty as 5%.
The financial Local Government of Regency and City In North Maluku
1. Role of Local Expenditure to Regional Economy
One of purposes implemented fiscal decentralization concept is how
financial local government can directly contribute to regional economy that in
this case it will be able to stimulate the increasing of regional capital output in
PDRB. That indicator can be seen by know the ratio of government
expenditure to PDRB of each regency.
Table 1. Ratio of Local Government Expenditure to PDRB of Disctrict /city North Maluku Province 2006-2011 (%)
Dictrict/City Ratio of Local Government Expenditure to PDRB
2006 2007 2008 2009 2010 2011
West Halmahera 99 167 176 158 90 94
South Halmahera 70 85 103 85 86 111
Central Halmahera 109 52 185 168 41 45
East Halmahera 137 52 190 229 88 86
North Halmahera 68 82 125 111 44 50
Sula 105 124 137 134 38 41
Ternate 63 76 83 85 168 186
Tidore 100 127 141 135 117 128
Morotai - - - -
Average 94 121 143 138 84 93 Source : BPS Malut (Processed)
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Based on ratio accounted above, it can be commented generally the
contribution of spending local government is very high. Until 2011, ratio rate of
local expenditure achieved 94% in 2006 and then up to 138% in 2008 and
93% in 2011. The high of expenditure local show that the highly magnitude of
role of allocation of local government expenses to local revenue in making of
PDRB. It can be confirmed that the role of government consumption highly
affect to the economy growth of regency or city in north Maluku compared to
the foreign direct investment.
The magnitude of the ratio also show that all regions are viewed still high
defendence from central government fund in order to stimulate their economy
growths. It can be seen from the increasing of allocation of fund from central
governemnet such as DBH, DAU and DAK.
1. Local Original Income
Local revenue is one of the most simple parameter to measure the
independence of a region looked from financial aspect or fund. The effort
therefore for increasing of “PAD” must be a priority programme in local
governments in order to augment the income sources to finance the
developing.
But the question then is whether PAD can improve the performance of the
economic development and welfare of the community. It can be seen from the
ratio of PAD to the total of local income of regency or city in north Maluku as
follow.
Table 2. Ratio of “PAD” to Total Income of Regency or city in North Maluku Province
Regency/City Ratio “PAD” to Total Income (%)
Average 2006 2007 2008 2009 2010 2011
West Halmahera 1.62 1.63 0.99 1.16 1.23 1.25 1.31
South Halmahera 5.65 5.95 8.81 5 2.6 5.48 5.58
Central Halmahera 2.2 2.79 3.55 2.95 2.55 1.97 2.67
East Halmahera 10.41 1.08 6.11 7.77 9.04 12.8 7.87
North Halmahera 2.17 3.93 4.72 3.66 15 19.8 8.21
Sula Islands 0.61 1.92 9.11 2.44 2.19 1.26 2.92
Ternate 5.72 5.36 5.73 5.04 4.67 5.94 5.41
TIDORE 2.17 2.54 2.68 2.75 1.77 1.96 2.31
Average 3.82 3.15 5.21 3.85 4.88 6.32
Source : BPK Malut (Prosecced)
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According to average, the highest ratio of PAD to local income of city and
regency is 5,32% in 2011. If seen by regency, looked that Ternate, east
Halmahera, south Halmahera, and east Halmahera are regency of which
“PAD” ratio is up to 5 percent. Whether Tidore, west Halmahera, central
Halmahera and Sula are regency that has ratio of PAD under 5 percent.
This condition illustrates that in general the original local revenue or “PAD”
of area districts or cities in North Maluku province is still very small
contribution to the total amount of local income in order to finance further
development activities are expected to affect the performance of regional
economic growth.
Table 3. “PAD” Percapita of District/City in North Maluku Province 2006-2011 (IDR)
District / City PAD Percapita
2006 2007 2008 2009 2010 2011
West Halmahera 44,383.98 53,055.88 36,558.06 41,700.64 40,785.56 48,815.01
South Halmahera 99,062.69 148,735.53 222,919.91 112,954.68 58,996.89 158,544.47
Central Halmahera 139,587.87 227,948.54 293,384.30 248,372.01 195,065.69 182,780.25
East Halmahera 442,000.60 63,831.14 385,747.63 452,563.39 519,310.63 866,070.28
North Halmahera 42,548.78 102,798.68 128,547.39 96,482.20 341,046.47 640,984.11
Sula Islands 14,256.72 51,992.05 307,089.82 77,686.36 61,636.40 43,732.63
Ternate 102,223.07 108,499.48 132,143.68 128,241.78 115,468.05 164,672.69
TIDORE 62,896.60 89,847.32 97,359.67 102,796.27 76,921.32 100,053.09
Source : BPK Malut (Processed)
If viewed from the PAD per capita, it appears that during the observation
period that the per capita rate of PAD district or city tends to fluctuate in line
with revenue’s changes of local’s PAD receipt. It describes that local income
from PAD side viewed still unstable. For south Halmahera, the PAD per capita
in 2008 up to IDR 222,919.91 then down to IDR 158,544.47 in 2011. North
Halmahera while increasing of revenue per capita is high enough that in 2008
amounted to IDR 128,547.39 then rise to IDR 640,984.11 in 2011.
The table above also shows that the East Halmahera is the district with the
highest per capita rate of PAD compared with other districts, namely in 2011
amounted to IDR 866,070.28. While west Halmahera is the district which has
lowest per capita revenue in north Maluku.
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Regional Fiscal Disparity In North Maluku Province
JEP-Volume 2 No.2, Juli 2013
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2. Sharing Fund and General Allocation Fund
Fiscal decentralization policies have consequences on the size
dependence of the central area in need of development finance in the region.
Since decentralization, until recently financial transfers from the central
government is the main source of financing of the district or city. Fiscal
dependence on the center showed that the region has not been able to
finance its own development needs.
This is also reflected in all district or city in North Maluku province. The
widely dependence can be seen from year to year that the number of
receiving financial assistance from the center in the form of revenue sharing,
the General Allocation, and the Special Allocation Fund are still very large.
Table 4. Ratio of Sharing Funds to Total Income of District or City, 2006-
2011
District / City Ratio of DBH to Total Income (%)
2006 2007 2008 2009 2010 2011
West Halmahera 9,45 14,5 11,4 9,9 9,1 8,9
South Halmahera 6,7 21,8 12,0 10,3 16,3 10,6
Central Halmahera 1,31 17,4 14,9 11,7 13,6 10,7
East Halmahera 10,5 12,2 21,5 17,8 19,5 18,2
North Halmahera 6,2 19,6 14,7 13,5 14,1 8,0
Sula Islands 11,6 12,0 8,9 11,1 10,7 8,9
Ternate 14,8 15,4 11,2 10,3 12,3 9,6
TIDORE 10,5 13,5 11,8 10,1 10,1 8,1
Average 21,0 15,8 13,3 11,8 13,2 10,4
Source : BPK Malut (Processed) Table 5. Ratio of DAU to Total Income of District,City 2006-2011 (%)
District / City Rasto of DAU to Total Income
2006 2007 2008 2009 2010 2011
West Halmahera 68,4 61,3 61,4 61,0 70,6 65,5
South Halmahera 75,3 57,9 62,0 68,3 68,2 61,8
Central Halmahera 65,6 59,4 60,0 60,4 68,0 63,0
East Halmahera 61,6 50,8 47,7 47,4 49,8 48,1
North Halmahera 3,8 62,0 66,4 47,1 79,1 38,8
Sula Islands 70,9 68,2 60,3 56,4 63,4 63,1
Ternate 69,0 71,2 61,0 57,1 61,3 59,5
TIDORE 13,8 68,6 68,4 66,7 67,4 66,8
Average 53,5 62,4 60,9 58,0 65,9 58,3
Source : BPK Malut (Processed)
Chairullah Amin SE,. M.Si and Nurdin I. Muhammad SE,.M.Si
Regional Fiscal Disparity In North Maluku Province
JEP-Volume 2 No.2, Juli 2013
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From the table, the ratio of DBH to total revenue ratio indicates the score of
ratio is still very small. This condition illustrates that the management of
natural resources in the city district of North Maluku province is still not
optimally in order to increase the local revenue from tax sector. It can be seen
that east Halmahera has highest ratio compared with others districts. It also
similarly viewed from DBH and DAU per capita, it appears from year to year
due to an increase in the level of acceptance of the revenue-sharing and block
grants from the center. It can be seen in the table 6 and 7 as follow.
Table 6. DBH Per capita of District / City 2006-2011 (IDR)
District / City
DBH Per capita of District or City
2006 2007 2008 2009 2010 2011 West Halmahera
2,583,796.06 472,797.95 418,865.79 354,910.67 302,651.74 346,527.80
South Halmahera
117,316.90 545,712.41 303,121.68 231,918.68 369,782.25 306,258.36
Central Halmahera
830,574.01 1,419,011.78 1,230,578.10 984,986.19 1,041,185.37 989,792.25
East Halmahera
447,268.72 721,084.04 1,357,748.35 1,037,942.53 1,121,483.28 1,227,563.46
North Halmahera
122,188.55 512,601.66 400,029.79 354,852.63 320,402.54 259,157.18
Sula Islands 272,958.48 323,796.06 300,227.43 354,824.13 300,565.23 308,169.75
Ternate 264,638.45 311,034.46 257,774.38 262,078.45 303,747.46 267,114.75
TIDORE 303,285.06 479,584.82 430,085.89 378,254.53 435,009.99 409,939.40
Source : BPS Malut (Processed) Tabel 7. DAU Per Capita, District/City 2006-2011 (IDR)
District / City
DAU Per Capita of District / City
2006 2007 2008 2009 2010 2011 West Halmahera 1,868,982.32
2,000,040.49
2,256,389.09 2,188,963.82
2,337,638.09 2,557,666.17
South Halmahera 1,319,214.68
1,447,158.89
1,570,526.17 1,541,482.12
1,544,461.27 1,786,254.51
Central Halmahera
4,156,959.22
4,846,833.22
4,958,645.21 5,093,899.98
5,202,335.70 5,830,950.87
East Halmahera
2,613,932.49
3,000,081.83
3,013,952.79 2,758,384.68
2,861,871.55 3,240,313.35
North Halmahera 74,683.90
1,624,240.11
1,809,847.23 1,240,190.77
1,793,744.51 1,250,872.60
Sula Islands 1,660,295.51
1,843,511.31
2,031,446.42 1,794,506.18
1,783,537.08 2,179,608.89
Ternate 1,234,437.91
1,440,124.28
1,406,238.55 1,452,361.79
1,514,686.56 1,650,303.68
TIDORE 399,707.26
2,430,940.28
2,482,850.07 2,490,021.76
2,914,032.15 3,397,488.43
Source : BPS Malut (Processed)
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It appears from the above table shows that the Central Halmahera district
having the largest per-capita rate of DAU of IDR 5,830,950.87 in 2011 and the
lowest is North Halmahera regency of IDR 74,683.90 in 2006.
DAU dominant role in the total revenue receipts of the district or city in
North Maluku province can be seen in Figure 4 below. It seems clearly that the
financing of development in local government is still very large dependence on
funding from the central government. Portion of role PAD in ability to finance
their development activities is very small.
Figure 4. Ratio of PAD, DBH dan DAU Average toTotal Income of District,
City in North Maluku Province 2006 -2011
Source : BPK Malut (processed)
The Finding Research
When implemented, fiscal decentralization has not yet successfully to
create a local fund where it could be self-sufficient to finance its development.
It is viewed from level of the central portion of the funding ratio of DAU to
earnings ratio compared with PAD whose numbers are still very small. As well
as level of DBH ratio of tax revenue is still small as part of local revenue
sources.
Although the funding of the center is still a major source of financing
development activities in local, but it is expected to have an impact on income
distribution in all districts or cities based on the potential owned superior so it
can make a good effect on improving the welfare of the people especially the
poor. The issue is whether the allocation of funds from the center has a large
positive impact on income distribution among districts or municipalities in the
province of North Maluku.
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The Disparity Income Among Districts and Cities in North Maluku Province
Value of income inequality among districts / cities can be seen in Table 8.
Presented in the table with an index of income inequality by GDP indicators pe
capita based on constant prices.
Table 8. Index of Income Disparity in North Maluku Province 2000-2011
Year PDRB Per capita
Williamson Theil Index
2000 0.858 0.80
2001 0.858 0.788
2002 0.857 0.956
2003 0.857 1.024
2004 0.857 1.022
2005 0.857 1.016
2006 0.857 1.022
2007 0.857 1.021
2008 0.840 1.045
2009 0.842 1.041
2010 0.842 1.059
2011 0.841 1.059 Source : BPS Prov.Malut (Processed)
When viewed in the aggregate, index of income inequality of North Maluku
province using visible Williamson index decreased from 0.858 in 2000 to 0.841
in 2011. However, if viewed from the Theil index, the level of inequality is likely
to rise even 0.80 in 2000 to 1,059 in 2011. This suggests that the level of
income inequality among districts / municipalities in the province of North
Maluku is still very high.
The high rates of inequality were allegedly caused more due to
geographical factors consisting of small islands and most of the territory is
ocean. Moreover the distribution of community settlement is unequal. They are
more likely to choose living in small islands and on the coast. In addition, the
economic infrastructure facilities is still very minimal. It certainly greatly affect
the smooth acces to distribution and marketing of local economy products so
that it can increase the amout of local revenue.
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Figure 5. Index of Williamson and Theil of Province of north Maluku
2000-2011
Source : BPS Malut (Processed)
It also allows that the use of Theil index can view the income inequality at
the size of each district or city. Appears in table 9 below shows the variation of
Theil inequality index of each district or city in North Maluku province from
year 2000 to 2011.
Table 9. Theil Index of Each District or City in North Maluku Province
District/City Theil Indeks
Average
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
West Halmahera
0.46 0.46 0.59 0.64 0.63 0.61 0.61 0.6 0.66 0.65 0.66 0.65 0.601
Central Halmahera
2.41 2.4 2.67 2.81 2.83 2.79 2.77 2.72 2.95 2.92 2.96 2.97 2.76
North Halmahera
0.64 0.62 0.8 0.85 0.82 0.78 0.77 0.76 0.57 0.56 0.58 0.58 0.69
East Halmahera 1.09 1.06 1.22 1.28 1.26 1.24 1.24 1.28 1.39 1.38 1.38 1.38 1.26
South Halmahera
0.34 0.33 0.49 0.55 0.55 0.54 0.56 0.56 0.63 0.63 0.64 1.63 0.62
Ternate 0.50 0.48 0.63 0.7 0.69 1.69 0.70 0.71 0.8 0.81 0.83 0.85 0.78
Tidore 0.59 0.58 0.73 0.79 0.8 0.89 0.91 0.92 1.02 1.02 1.04 1.03 0.86
Sula 0.34 0.34 0.49 0.54 0.56 0.56 0.57 0.58 0.65 0.65 0.67 0.67 0.55
Morotai
0.7 0.71 0.72 0.72 0.71
Source : BPS Malut (Processed)
It appears that the district of Central Halmahera and East Halmahera is the
regency that has the greatest level of inequality that is an average of 2.76 and
1.26. It is quite ironic considering the condition of natural resources owned by
the two districts are very rich compared to other districts where there are some
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nickel mining company that has been making production activities along
several decades. This condition is exacerbated by land transport access is still
limited, and also the connecting road to get
to the two districts in the state were severely damaged. Road infrastructure
was destroyed caused both of districts are very isolated. Thus since 2011 the
local government of each district has worked hard to build the land
infrastructure so that it could be enter and exit smoothly and then the
circulation of the economy can be developed.
For Ternate, Theil inequality index is likely to increase in 2000 of 0.50 rose
to 0.70 in 2006 and again to 0.85 in 2011. Increased levels of inequality in the
city of Ternate in the expected dynamics caused by the rapid development of
the city with the largest growth center in the province of North Maluku so the
current can’t be unstoppable urbanization. By sector, the city of Ternate just
rely on trade, the hotel and the service sector as a source of local revenue
income due to the small total area thus to the development of other sectors
such as agriculture and industry are also limited.
The Unequality of “PAD”
PAD is revenue derived from sources within its own territory is levied by
local regulations in accordance with the laws applicable. These sources
include local taxes, retribution, and local state-owned company results, and
the results of other separated areas management and other PAD legitimate.
In measuring inequality’s PAD used two approaches Williamson and Theil
index with “PAD” as a measure of the income of each district. The results of
these measurements indicate that the numbers of inequality tend to decrease.
The reductions in inequality illustrates an increase in the number of revenue
receipts from each district although it is still small change.
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Figure 6. Index of PAD Disparity in North Maluku Province 2006-2011
Source : BPK Malut (Processed)
The inequality decreased of PAD is expected to affect the reduction of
income inequality that can impact positively on the level of income equality
among districts or cities of North Maluku province. The efforts to increase the
revenue of which is developing a lead commodity owned by the district that
must consider the quality aspects that have high competitiveness in the global
trade market.
Based on the master plan program of MP3I, North Maluku province into the
corridor VI with industrial development policy priorities namely the fishing and
the nickel mining industry. Both of these industries are expected to contribute
greatly to the level of state revenues. The territory remaining districts or cities
were able to get feedback from DBH greater than tax revenue paid to the
state.
The Disparity of “DBH” and “DAU”
Fiscal decentralization is not yet capable of making areas can be self-
sufficient in financing its construction. The original purpose of the
implementation of the fiscal decentralization system reduce fiscal disparities
among regions has not yet showed satisfactory results. Almost all provinces
and districts of the city in Indonesia experienced a high level of fiscal
imbalance. It is also happened in north Maluku province
If seen from the calculation Williamson and Theil index, DBH and DAU
inequality shows a very large number.
Chairullah Amin SE,. M.Si and Nurdin I. Muhammad SE,.M.Si
Regional Fiscal Disparity In North Maluku Province
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Figure 7. Index of DBH Disparity in North Maluku Province 2006-2011
Source : BPK Malut (Processed)
Figure 8. Index of DAU Disparity in north Maluku 2006-2011
Source : BPK Malut (Processed)
Of the two images above, both DBH and DAU inequality index tend to
decline in the aggregate. This decline is also caused in line with declining
revenues of DBH and DAU received from the central government. This means
that the reduction in funding from central sources will have positive impact on
reduction of fiscal imbalances between districts or cities. However, the
decreased number of DAU and also DBH whether it can decrease the level of
income inequality. In fact, the purpose of fiscal incentives from central
government in the form of large DBH and DAU is expected to impact positively
on equitable development.
In the case of North Maluku when seen from Figure 9 below shows that the
decline in inequality index of PAD, DBH and DAU that was able to make the
reduction of income inequality index of GDP. So it can be concluded that high
Chairullah Amin SE,. M.Si and Nurdin I. Muhammad SE,.M.Si
Regional Fiscal Disparity In North Maluku Province
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PAD and also decreased DAU can contribute to decline the income disparity
among regions in north Maluku province.
Figure 9. Index of PDRB, PAD, DBH and DAU Disparity of north Maluku
Province 2006-2011
Source : BPK, BPS Malut (Processed)
Conclusions
Based on study results, there are several conclusions that can be noted.
Fiscal decentralization has not successful in reducing the income gap between
the district and city in North Maluku province. The degree of inequality using
the Theil index and Williamson showed a very high score. In addition, fiscal
imbalances between districts or cities are also showing same phenomenon.
The PAD, DBH and DAU inequality index of each district show significant
disparity. The high fiscal imbalance due to several factors, including the level
of acceptance of the PAD of district or city is still very small. That means that
the local government is not maximized in managing its natural resources.
Besides, the local government is also not maximized the potential of
developing a commodity owned so that it can contribute to the improvement of
local revenue from the tax sector. This is reflected in the ratio of the number of
DBH of districts or cities are still small.
Other factors, the increased demand for funds from the center in the form
of a large DAU also apparently failed to give a positive influence on the
distribution of income among regency. An increasingly large of DAU is not
able to solve the problems of income inequality, although the aggregate value
of the index has declined trend.
Chairullah Amin SE,. M.Si and Nurdin I. Muhammad SE,.M.Si
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Policy Recommendations
The high index of income imbalances and fiscal should immediately look for
appropriate policy formulation so that the objectives of implementation of fiscal
decentralization can be achieved. Optimization of revenue sources in order to
increase the amount of local tax revenue should be on more increasing. In
addition, the role of BUMD owned by local governmet should be more
improving in order to develop the superior sectors in particularly base
commodities that export oriented, so that local income could be increasing and
finally it have an impact on equal income distribution between districts.
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