Shared Revenue and Regional Expansion: The Case of Bengkalis Regency

Handra, Hefrizal (2009) Shared Revenue and Regional Expansion: The Case of Bengkalis Regency. In: Regional Development, Energy and The Environment in Indonesia. Penerbit Universitas Sriwijaya, Palembang, Indonesia, pp. 23-44. ISBN 9795873393

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Abstract

The decentralization process which began in 2000 shortly after the enactment of Law 22/1999 has induced regional expansion. There are many incentives identified for regional expansion. This paper reveals that Indonesia’s shared revenue system is one of them among other financial incentives The argument is mainly based on a case study in Bengkalis Regency. It is one of the richest-oil region in Indonesia. Since the central government revenue from oil exploitation began to be shared to regions in 2001, Bengkalis received substantial amount of revenue. It was expanded into four autonomous regions in 2000. Currently there is an initiative to expand the region into three regencies. Although the interest of local elites is suggested as the main factor for the expansion proposal, the current shared revenue formula was proved to be an important incentive. Using the data in 2007, a simulation shows that the total amount of shared revenue received by those three candidates of new regencies is much higher than the total amount received by one Bengkalis.

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