(Jakpost) Mandate Accordance Village Law [UU Desa], Stricter rule drafted for village funds usage

12/12/2018

The government will restrict the disbursement process of the direct cash transfer to villages as it seeks to strengthen the handling of the Rp 9.1 trillion-a-year spending program allocated in accordance to the 2014 Village Law.

The Village Law, which would take effect beginning next year, stipulates that villages across the country must receive at least 10 percent from regional transfer funds, which would hit Rp 638 trillion (US$51.2 billion) in the 2015 State Budget.

“The funds could not be utilized to finance events held by village heads,” Vice President Jusuf Kalla said recently. “The village heads could not just do anything they please with the funds — there will be direction on how to spend them.”

Lawmakers have argued that the funds for villages, set at Rp 9.1 trillion for next year, would be instrumental in increasing the welfare and living standards of around 73,000 villages in the archipelago.

But critics have said that the funds would be an unnecessary burden to the state budget, given the lack of budget planning capacity among regional administrations, as well as the absence of adequate supervision system to the money.

Given the lack of human resources among regional leaders, with previous evidence showing minimal budget disbursement rates in regional levels, the formulation of the Village Law was assumed to be politically motivated as it was passed in December 2013, just months before the general and presidential elections.

Data from the Home Ministry shows that only 22 percent of regional administrations are performing well while the remaining 78 percent are failing.

Last year, at least Rp 116 trillion of funds earmarked for regional transfer funds have been left idle and undisbursed, according to data from the Regional Autonomy Watch (KPPOD). The figure had increased from Rp 99 trillion a year earlier.

Finance Minister Bambang Brodjonegoro, an economics professor who specializes in regional development planning and fiscal decentralization, was also a noted critic to the Village Law, as he had frequently called for a better supervision system over the funds.

The government would support the implementation of the Village Law, but this must be done with good governance so that the funds would have the desired impact, such as spurring economic growth in villages, he said.

“We want the village funds to have a clear direction on where the money must be spent,” Bambang said recently, in response to Kalla’s statements.

“For instance, the funds could only be used for village-managed infrastructure projects, which must not be handled by external contractors but instead must be built with the participation of local villagers,” he explained.

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(Jakpost) Mandate Accordance Village Law [UU Desa], Stricter rule drafted for village funds usage