The General Allocation Fund (DAU) aims to finance basic services to regional communities, because DAU is a central transfer to autonomous regions whose use is determined by the regions themselves. The existence of this DAU is to create equal distribution of regional financial capacity, so that regions that are less capable in terms of financing their affairs will receive a relatively large DAU allocation.
There are several principles to be considered so that DAU is effective and in accordance with its objectives, including: (1) fulfilling legal norms in Law no. 25/1999, (2) clarity of the relationship between regional needs and potential, (3) the amount of DAU must be at least the same as the amount of SDO and Presidential Instruction assistance, (4) the DAU formula must be easy to understand and logical, (5) the formula is based on variables whose data is available and accurate.
This article contains how to determine the DAU formula, whether used for each district/city, province or the total calculation for the district/city as well as for the province. The advantages of these formula calculation methods include: a) in accordance with the principles adopted in central-regional financial balancing, b) using data that is relatively easy to obtain, c) not using a complicated statistical approach, d) allocation of DAU for each region is greater than the SDO and Presidential Instruction received by the region.
Jakarta, August 25, 2003
Robert A. Simanjuntak
