SOAS Research Online

Abstract

Indonesia has embarked on an ambitious decentralisation programme which is aimed at empowering regional parliaments and giving them far more autonomy in formulating budgets and implementing expenditures. Beginning in the calendar (and fiscal) year 2001, the central government replaced many of the existing grants from the centre to the regions with a ‘general allocation grant’; in addition, those regions with substantial mining and forestry sectors received a share of the revenues accruing from exploitation of these resources. The author explores the background to these reforms by examining the regional grants system which developed through the Soeharto era, and the criticisms which this system attracted. The impact of the new system on both rich and poor regions is also discussed.