Intergovernmental Transfer and Local Own-Source Revenue on Capital Expenditure

During the reform era, regional autonomy has been implemented to develop each regency/city effectively and effi-ciently. The central government has delegated authority and given intergovernmental transfers to local governments to regulate and determine the priorities of their regional development. Unfortunately, the effectiveness of the trans-fer by increasing capital expenditure allocation often becomes controversial. In the recent 5 years, the percentage of capital expenditure realization is lower than that of the capital expenditure. In 2018, the average percentage of regional personnel expenditure in Indonesia was around 35.6%, while the capital expenditure was only 19.4% (DJPK, 2018). In 2022, the situation was getting worse because the personnel expenditure was allocated 62.5%, while the capital expenditure was only 15.8% (DJPK, 2022). Although the Minister of Home Affairs Regulation Number 27 of 2013 has stated that each region should allocate its capital expenditure at least 30% from the APBD, but in reality there are still many regions that haven’t complied with this rule. In Riau, until 2021 there have been no regencies/cities that can fulfill the regulation. The purpose of this paper is to analyze the impact of General Alloca-tion Fund (DAU), Special Allocation Fund (DAK), Revenue Sharing Fund (DBH) and Local Own-Source Revenue (PAD) on capital expenditure in regencies/cities of Riau in the period of 2018-2021. The analytical method applys multiple regression analysis based on Pooled Least Square model. The result reveals that capital expenditure is sig-nificantly and positively affected by DAK and PAD. Meanwhile, DBH and DAU have insignificant effect on capital expenditure of Riau in 2018-2021

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Publication Details

Journal
Eqien Jurnal Ekonomi dan Bisnis
Published
2024-09-14
DOI
https://doi.org/10.34308/eqien.v13i03.1782
Primary Topic
Fiscal Policy and Economic Growth
Type
article
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article

Intergovernmental Transfer and Local Own-Source Revenue on Capital Expenditure

Risqi Noor Hidayati Putri, Finka Yolanda Simangunsong, Mutiara Labiba, Susilo Susilo
Eqien Jurnal Ekonomi dan Bisnis
Fiscal Policy and Economic Growth
article

Intergovernmental Transfer and Local Own-Source Revenue on Capital Expenditure

Risqi Noor Hidayati Putri, Finka Yolanda Simangunsong, Mutiara Labiba, Susilo Susilo
article en

Abstract

During the reform era, regional autonomy has been implemented to develop each regency/city effectively and effi-ciently. The central government has delegated authority and given intergovernmental transfers to local governments to regulate and determine the priorities of their regional development. Unfortunately, the effectiveness of the trans-fer by increasing capital expenditure allocation often becomes controversial. In the recent 5 years, the percentage of capital expenditure realization is lower than that of the capital expenditure. In 2018, the average percentage of regional personnel expenditure in Indonesia was around 35.6%, while the capital expenditure was only 19.4% (DJPK, 2018). In 2022, the situation was getting worse because the personnel expenditure was allocated 62.5%, while the capital expenditure was only 15.8% (DJPK, 2022). Although the Minister of Home Affairs Regulation Number 27 of 2013 has stated that each region should allocate its capital expenditure at least 30% from the APBD, but in reality there are still many regions that haven’t complied with this rule. In Riau, until 2021 there have been no regencies/cities that can fulfill the regulation. The purpose of this paper is to analyze the impact of General Alloca-tion Fund (DAU), Special Allocation Fund (DAK), Revenue Sharing Fund (DBH) and Local Own-Source Revenue (PAD) on capital expenditure in regencies/cities of Riau in the period of 2018-2021. The analytical method applys multiple regression analysis based on Pooled Least Square model. The result reveals that capital expenditure is sig-nificantly and positively affected by DAK and PAD. Meanwhile, DBH and DAU have insignificant effect on capital expenditure of Riau in 2018-2021

Eqien Jurnal Ekonomi dan BisnisVol. 13(03)
University of Brawijaya (ID), Universitas Negeri Surabaya (ID)
Partnerships for the goals
Openalex Percentile: Top 81%
Fiscal Policy and Economic Growth
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