Potential impacts of Indonesia's fiscal decentralisation reform on urban and regional development: Towards a new pattern of spatial disparity

Abstract

Indonesia has now entered a new phase of decentralisation. Two basic elements in the new policy are wider regional autonomy and fiscal decentralisation. The latter is essentially expenditure-based in character, rather than revenue-based, within which a different approach to intergovernmental transfers between local and central government is emerging. The new general allocation fund and revenue-sharing system may have reduced vertical fiscal disparities, but it has tended to increase intercity and interregional disparities.