STUDY ON REGIONAL FINANCIAL INDEPENDENCE OF REGENCY/CITY IN RIAU ISLAND PROVINCE

In Indonesia, regional autonomy has been implemented since the law Number 22 of 1999 on Reginal Government and the law Number 25 of 1999 on Financial Balancing between Central and Regional Government. As one of the elements in regional autonomy, fiscal decentralization is aimed to transfer the fi...

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Bibliographic Details
Main Author: Dwita, Sukma
Format: Theses
Language:Indonesia
Online Access:https://digilib.itb.ac.id/gdl/view/47180
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Institution: Institut Teknologi Bandung
Language: Indonesia
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Summary:In Indonesia, regional autonomy has been implemented since the law Number 22 of 1999 on Reginal Government and the law Number 25 of 1999 on Financial Balancing between Central and Regional Government. As one of the elements in regional autonomy, fiscal decentralization is aimed to transfer the fiscal responsibility regarding public expenditure and income establishment and collection from the central government to the provincial or regional government (Iqbal, 2013). The fiscal decentralization primarily is aimed to present confidence in the region. According to Saragih (2016), as a new autonomous area, the regional government was not able and could not support financially the administration and development sector in its area. Therefore, this study was attempted to analyze the regional financial independence of the province/city in Riau Island Province. This study used a qualitative approach using analysis method of panel data econometrics. The regional financial independence was suggested by the ratio of regional financial independence. The variables used were composed of GRDP, GAF, SAF, and Capital Expenditure. The research variables used were the data of the 2012-2016 period. Generally, the results showed that the regional financial independence of regency/city in Riau Island Province was considered to be not independent yet. It could be seen from the variables affecting the regional financial independence such as GRDP, SAF, and HDI variables. This study also reveals that high regional economy can improve the regional revenue, so that in the long term, it will create regional financial independence.