Spending for Development in Papua .


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Spending for Improvement in Papua . Social, Monetary and Financial Patterns. Presentation for the Tangguh Free Consultative Board (TIAP) World Bank Destitution Lessening and Financial Administration, Jakarta, April 2009. Spending for Advancement in Papua: Key Messages. Principle message
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Spending for Development in Papua Social, Economic and Fiscal Trends Presentation for the Tangguh Independent Advisory Panel (TIAP) World Bank Poverty Reduction and Economic Management, Jakarta, April 2009

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Spending for Development in Papua: Key Messages Main message Papua\'s key test is not to create extra assets but rather to utilize the current assets shrewdly. Neediness and the economy Papua and West Papua (or Papua Barat ) are regions of extremes, with high destitution, generally high GDP, the least populace thickness and the most elevated financial assets in Indonesia. Since 2002, destitution declined from 46 percent to 37 percent. Notwithstanding, Papua and West Papua remain Indonesia\'s poorest locales. The area of Teluk Bintuni, where the new Tangguh plan is found, is slacking in most social and monetary pointers, except for territorial GDP and tyke vaccination. Incomes, consumptions and financial projections Since 2000, Papua\'s incomes have expanded fivefold (in genuine terms). Since 2002, when uncommon self-rule began, incomes have expanded 2.5 circumstances (in genuine terms). Spending on government organization has customarily ruled Papua\'s consumptions. In any case, since 2006, foundation spending has expanded considerably and overwhelmed government organization. After unobtrusive increments in the following 5 years, Papua\'s general incomes are relied upon to twofold by 2020 yet just mostly because of incomes from Tangguh LNG. Nonetheless, the territory of Papua Barat will significantly build its incomes because of Tangguh. 1

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A note on the utilization of the expression "Papua" Papua alludes to both Papua area and Papua Barat region. Papua area alludes to the Province of Papua in the wake of part with Papua Barat. Papua Barat alludes to the Province of Papua Barat ( West Papua) , which was built up in 2004. 2

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Poverty and the Economy

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Since 2002, neediness declined from 46 percent to 37 percent however Papua remains Indonesia\'s poorest area Source: Central Bureau Statistic (BPS) Source: Central Bureau of Statistics (BPS), different productions. 3

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Papua\'s local GDP is high; Papua territory is even half higher than the national normal, principally because of mining Source: Central Bureau of Statistics (BPS) 4

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However, barring mining, both regions are beneath the national normal, and Papua Barat is wealthier than Papua Source: Central Bureau of Statistics (BPS) 5

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Mining overwhelms the economy of Papua region … Note: * Government organization for the most part comprises of pay rates. Open venture, including for organization (e.g. autos workplaces) is a piece of the other monetary classes. Barring mining, the share of center government organization would raise to over 15% of GDP, one of the most astounding in Indonesia. ** Includes parts, for example, producing, money related administrations, power, gas, and water supply. Source: Central Bureau of Statistics (BPS ) 6

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… while Papua Barat\'s economy is considerably more differentiated Note: * Government organization principally comprises of pay rates. Open speculation, including for organization (e.g. autos workplaces) is a piece of the other monetary classifications. Barring mining, oil, gas and related assembling the share of center government organization would raise to 11% of GDP, likewise one of the most noteworthy in Indonesia. ** Includes segments, for example, budgetary administrations, and power, gas, and water supply. Source: Central Bureau of Statistics (BPS) 7

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The locale of Teluk Bintuni is slacking in most social and monetary markers, except for provincial GDP and tyke inoculation. Source: Central Bureau of Statistics (BPS) and Ministry of Health Source: Susenas, BPS and Ministry of Health measurements. 8

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Revenues, Expenditures and Fiscal Projections

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In 2002, Papua\'s income per capita was the second most elevated in Indonesia … Note: Consolidated information (region + locale) per capita. Source: Regional Information Financial System (SIKD) Ministry of Finance and BPS. 9

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… and by 2009, Papua and the new Papua Barat territory have turned into Indonesia\'s monetarily wealthiest regions… Note: Consolidated information (region + areas) per capita. Source: Regional Information Financial System (SIKD) Ministry of Finance and BPS. 10

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… which is mostly because of extra exchanges through the exceptional self-rule subsidize, which just Papua, Papua Barat and Aceh are getting [1] The incomes will be apportioned to the commonplace government, delivering areas, and different locale inside the territory. [2] DAU: General allotment stores [3] Starting from 2009, the Papua and West Papua regions got 70% and 30%, separately, of the Otsus reserves for the entire Papua Island. [4] West Papua was set up in late 2003. Be that as it may, until 2008, the Otsus stores for all areas in the territory were overseen by the Papua commonplace government, and the West Papua common government did not get any Otsus reserves. 11

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Transfers to Papua expanded altogether in 2006. From that point forward, they stayed stable for Papua area yet keep on increasing for Papua Barat\'s because of higher Special Autonomy assignments Papua Barat Source: SIKD and Balancing Fund Allocation (Ministry of Finance). Note: - Consolidated information (territory + areas) for Papua and Papua Barat, in steady 2007=100. In 2006, shared expense information just for money impose. - Since 2009, the focal government "shares the weight" of vitality and manure sponsorships with sub-national governments. Around 26% of the evaluated sponsorships will be deducted from the DAU-pool of sub-national governments. 12

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Spending in Papua keeps on being overwhelmed by regions which give roughly 75% of uses since 2006 Note : 2004-2006: Realization, 2007: Realization (Central) and Plan (others), 2008: Unaudited Realization (Central) and Estimation (others), 2009: Estimation Source : DG Budget, Regional Finance Information System (SIKD), Min of Finance. Note: Consolidated information (territory + regions) for Papua and Papua Barat in consistent 2007=100. The focal government spending does exclude line services spending through their delegate workplaces in the locales. Source: SIKD, Ministry of Finance, areas spending information. 13

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Since 2005, framework spending expanded considerably and turned into Papua\'s principle consumption; government organization stays high in second place Note : - Consolidated information (area + locale) for Papua and Papua Barat territory in steady 2007=100. - * Plan spending information. Source : SIKD, Ministry of Finance and territories\' spending information. 14

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Assumptions for future income projections, especially consi-dering extra incomes from Tangguh LNG (see next two slides) General income projection: Central government development projections: 4.7% (2009), 5.6% (2010), 6.3% (2011), 6.40% (2012), 6.7% (2013), 7.0% (2014), 7.0% (2015), 7.0% (2016), 7.0% (2017), 7.0% (2018) Revenue/GDP (for US$ 40 for each barrel, at other oil costs proportionately higher): 15.9% (2010), 15.7% (2011), 16.0% (2012), 16.6% (2013), 16.8% (2014), 16.9% (2015), 16.7% (2016), 16.6% (2017), 16.3% (2018) Ratio of Papua DAU to aggregate national DAU: 5% Ratio of exceptional independence store to aggregate national DAU: 2%. Proportion of Papua income sharing to aggregate national income sharing: 4.4% Ratio of Papua DAK to aggregate national DAK: 8.4% Revenue projection from Tangguh LNG: Annual creation: bit by bit increment from 2.6 in 2010 to 7.6 million ton in 2015. Venture cost in addition to intrigue: USD 9.6 billion. Proportion of speculation credit and cost recuperation to gross income: 80%. Proportion of cost recuperation to gross income: 30%. Temporary worker share of value to be part: 71% (preceding assessment). Viable duty rate: 44%. Local assessment: 13.6%. Income sharing to focal government: 30%. Income sharing to Papua: 70%. Note: For more points of interest on the connection between oil costs and the Indonesian spending plan and additionally income imparting to the districts see Agustina et al "Dark gap or dark Gold? The effect of oil and gas costs on Indonesia\'s Public Finances, Policy Research Working Paper (4718), World Bank. 15

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Based on these suppositions, Papua\'s incomes are relied upon to twofold by 2018, despite the fact that incomes from Tangguh would just include another 8-12% (Rp 3-5 trillion) in additional incomes Note: Consolidated information (area + regions) for Papua and Papua Barat, in consistent cost 2007=100. Source: MoF and WB staff estimation. 16

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However, for Papua Barat the expansion will be huge on the grounds that it would cause the majority of Tangguh\'s shared income: By 2018, at US$40 per barrel, incomes would increment by very nearly 30% contrasted with the standard; at US$80 per barrel, incomes would increment by over half Note: Consolidated information (territory + regions) for region and areas in Papua Barat, in steady cost 2007=100. Source: SIKD/MOF and WB staff estimation. 17

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Wolfgang Fengler (wfengler@worldbank.org) Dian Agustina (cagustina@worldbank.org) Adrianus Hendrawan (ahendrawan@worldbank.org) For data please contact the Public Finance and Regional Development group of the World Bank in Indonesia:

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