Indonesia's public sector reforms and the role of an equalisation formula: Legitimation, authority or obfuscation?

Abstract

This paper looks at a resource allocation technique used in the public sector reforms of Indonesia, a developing country, which involves decentralisation of fiscal responsibilities. The decentralisation occurred to quell secessionist aspirations of resource‐rich regions. To enable all regions to participate in regional autonomy, an elaborate system of equalisation grants was introduced to compensate for regional inequities. These grants rest on notions of ‘Western rationalism’ which value the role of calculative apparatus to achieve a sense of objectivity. We demonstrate that the equalisation formula used to determine grants is calculated using a series of estimates, proxies and indices. Hence, the formula, which determines the resource allocation for a region, obfuscates several compounding subjectivities. In this way, the politically contentious resource allocations can be perceived as objective so that the outcomes can be afforded legitimacy and authority necessary to assuage regional disputes.

Citation

Kaidonis, M.A. and Moerman, L.C. (2003), "Indonesia's public sector reforms and the role of an equalisation formula: Legitimation, authority or obfuscation?", Asian Review of Accounting, Vol. 11 No. 2, pp. 19-30. https://doi.org/10.1108/eb060766