Transcript Document 7633688

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
Jakarta, April 2009
1
Spending for Development in Papua:
Key Messages
Main message

Papua’s key challenge is not to generate additional resources but to use the existing
resources wisely.
Poverty and the economy

Papua and West Papua (or Papua Barat) are provinces of extremes, with high poverty,
relatively high GDP, the lowest population density and the highest fiscal resources in
Indonesia.

Since 2002, poverty declined from 46 percent to 37 percent. However, Papua and West
Papua remain Indonesia’s poorest regions.

The district of Teluk Bintuni, where the new Tangguh plan is located, is lagging in most social
and economic indicators, with the exception of regional GDP and child immunization.
Revenues, expenditures and fiscal projections

Since 2000, Papua’s revenues have increased fivefold (in real terms). Since 2002, when
special autonomy started, revenues have increased 2.5 times (in real terms).


Spending on government administration has traditionally dominated Papua’s expenditures.
However, since 2006, infrastructure spending has increased substantially and overtaken
government administration.
After modest increases in the next 5 years, Papua’s overall revenues are expected to double
by 2020 but only partly due to revenues from Tangguh LNG. However, the province of Papua
Barat will substantially increase its revenues due to Tangguh.
2
1
A note on the use of the term “Papua”

Papua refers to both Papua province and Papua
Barat province.

Papua province refers to the Province of Papua after
splitting with Papua Barat.

Papua Barat refers to the Province of Papua Barat
(West Papua), which was established in 2004.
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2
Poverty and the Economy
4
Since 2002, poverty declined from 46 percent to 37
percent but Papua remains Indonesia’s poorest region
50
46.0
44.4
40
Poverty rate (%)
41.5
41.8
40.8
37.0
38.7
38.7
40.8
41.3
39.3
35.0
30
19.1
20
18.4
10
18.2
17.4
16.7
16.7
17.8
16.6
15.4
2002
2003
2004
2005
2006
2007
2008
0
2000
2001
Papua
Papua Barat
Source:
Central
(BPS)
Source:
CentralBureau
BureauStatistic
of Statistics
(BPS), various publications.
5
3
National
Maluku Utara
NTT
Maluku
Gorontalo
Sulawesi Barat
NTB
Lampung
Bengkulu
Sulawesi Tenggara
Sulawesi Selatan
Sulawesi Tengah
Yogyakarta
Jawa Tengah
Kalimantan Barat
Jambi
Sulawesi Utara
Kalimantan Selatan
Banten
Bali
Sumatra Barat
Jawa Barat
Kalimantan Tengah
Sumatra Utara
Jawa Timur
Papua Barat
Sumatra Selatan
National
Bangka Belitung
Aceh
Papua
Kepulauan Riau
Riau
DKI Jakarta
Kalimantan Timur
Regional GDP per capita (Rp million)
Papua’s regional GDP is high; Papua province is even 50%
higher than the national average, mainly due to mining
80
70
60
50
40
30
20
10
0
Source: Central Bureau of Statistics (BPS)
6
4
Maluku Utara
NTT
Maluku
Gorontalo
NTB
Sulawesi Barat
Lampung
Bengkulu
Sulawesi Selatan
Sulawesi Tenggara
Papua
Jawa Tengah
Jambi
Sulawesi Tengah
Kalimantan Selatan
Yogyakarta
Sumatra Selatan
Kalimantan Barat
Papua Barat
Sulawesi Utara
Banten
Bali
Aceh
Sumatra Barat
Jawa Barat
Bangka Belitung
Kalimantan Tengah
National
Sumatra Utara
Jawa Timur
Kalimantan Timur
Riau
Kepulauan Riau
DKI Jakarta
Regional GDP excluding mining (Rp million)
However, excluding mining, both provinces are below the
national average, and Papua Barat is richer than Papua
60
50
40
30
20
10
0
Source: Central Bureau of Statistics (BPS)
7
5
Mining dominates the economy of Papua province …
Government
administration*, 5%
Transportation and
communication, 4%
Others**, 3%
Agriculture, 11%
Trade, restaurant, and
hotel, 4%
Construction, 4%
Mining, oil, and gas,
69%
Note:
* Government administration mainly consists of salaries. Public investment, including for administration (e.g. cars offices) is part of the
other economic categories. Excluding mining, the share of core government administration would raise to above 15% of GDP, one of
the highest in Indonesia.
** Includes sectors such as manufacturing, financial services, electricity, gas, and water supply.
Source: Central Bureau of Statistics (BPS)
8
6
…while Papua Barat’s economy is much more diversified
Government
administration*, 8%
Others**, 2%
Transportation and
communication, 7%
Agriculture, 27%
Trade, restaurant,
and hotel, 10%
Construction, 8%
Mining, oil, and gas,
17%
Manufacturing
( related to o il and gas ),
19%
Note:
* Government administration mainly consists of salaries. Public investment, including for administration (e.g. cars offices) is part of the
other economic categories. Excluding mining, oil, gas and related manufacturing the share of core government administration would raise
to 11% of GDP, also one of the highest in Indonesia.
** Includes sectors such as financial services, and electricity, gas, and water supply.
Source: Central Bureau of Statistics (BPS)
9
7
The district of Teluk Bintuni is lagging in most social
and economic indicators, with the exception of
regional GDP and child immunization.
Teluk Bintuni
Value
Rank in Papua
(out of 29)
Rank in Papua Barat
(out of 9)
60.1
21
8
50,766
20
6
Gross Regional Domestic Product per capita
(BPS) 2006
10,504,400
8
3
Net Enrollment Rate for Primary % (Susenas)
2007
86.7
21
8
Net Enrollment Rate for Junior % (Susenas)
2007
47.2
14
5
Net Enrollment Rate for Senior % (Susenas)
2007
23.8
20
7
Children<5 yrs with immunization % (MoH
Survey) 2008
48.4
6
2
Household with access to safe water % (MoH
Survey) 2008
20.8
19
9
16
7
Human Development Index (BPS) 2006
Population (BPS) 2006
Household with access to electricity %
47.6
(Susenas)
2007Central Bureau of Statistics (BPS) and Ministry
Source:
of Health
Source: Susenas, BPS and Ministry of Health statistics.
10
8
Revenues, Expenditures
and Fiscal Projections
11
In 2002, Papua’s revenue per capita was the
second highest in Indonesia …
3.5
3.0
Rp Million
2.5
2.0
1.5
1.0
0.5
Own Source Revenue per capita (2002)
Shared Tax Revenue per capita (2002)
Special Autonom y Fund (Ots us ) per capita (2002)
9
Kalimantan Timur
Papua
Riau
Maluku Utara
DKI Jakarta
Maluku
Bali
Kalimantan Tengah
Jambi
Bangka Belitung
Kalimantan Selatan
General Allocation Fund (DAU) per capita (2002)
Shared Natural Res ource Revenue per capita (2002)
Note: Consolidated data (province + districts) per capita.
Source: Regional Information Financial System (SIKD) Ministry of Finance and BPS.
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Gorontalo
NAD
Sulawesi Utara
Sulawesi Tenggara
NTT
Sumatra Barat
Sulawesi Tengah
Sulawesi Selatan
Kalimantan Barat
Bengkulu
Sumatra Selatan
NTB
Sumatra Utara
Yogyakarta
Lampung
Jawa Timur
Jawa Tengah
Banten
Jawa Barat
0.0
…and by 2009, Papua and the new Papua Barat province
have become Indonesia’s fiscally richest provinces…
10
9
8
Rp Million
7
6
5
4
3
2
1
Ow n Source Revenue per capita (2006)
Shared Tax Revenue per capita (2006)
Note: Consolidated data (province + districts) per capita.
Source: Regional Information Financial System (SIKD) Ministry of Finance and BPS.
10
Papua
Papua Barat
Kepulauan Riau
Aceh
Kalimantan Timur
Maluku Utara
Riau
Kalimantan Tengah
General Allocation Fund (DAU) per capita (2009)
Shared Natural Resource Revenue per capita (2006)
Special Autonomy Fund (Otsus) per capita (2009)
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Gorontalo
Sulawesi Tenggara
Bangka Belitung
Maluku
Sulawesi Barat
Bengkulu
Sulawesi Utara
Kalimantan Selatan
Jambi
Sulawesi Tengah
NTT
Kalimantan Barat
Sumatra Barat
Yogyakarta
Sumatra Selatan
Sulawesi Selatan
Bali
DKI Jakarta
NTB
Sumatra Utara
Jawa Timur
Jawa Tengah
Lampung
Jawa Barat
Banten
0
… which is partly due to additional transfers through
the special autonomy fund, which only Papua, Papua
Barat and Aceh are receiving
Oil and Gas Revenue
Shares[1]
Special Autonomy
allocation (Dana Otsus)
2001-2008
70%
2% of total DAU[2]
from 2009
70%
1.4% of total DAU[3]
2004-2008
70%
0[4]
from 2009
70%
0.6% of total DAU
pre 2008
70%
0
from 2008
70%
2% of total DAU
Oil: 15%, Gas: 30%
0
Province
Papua
Papua Barat
Other provinces
Aceh
Rest of Indonesia
[1] The revenues will be allocated to the provincial government, producing districts, and other districts within the province.
[2] DAU: General allocation funds
[3] Starting from 2009, the Papua and West Papua provinces got 70% and 30%, respectively, of the Otsus funds for the whole Papua Island.
[4] West Papua was established in late 2003. However, until 2008, the Otsus funds for all districts in the province were managed by the
Papua provincial government, and the West Papua provincial government did not get any Otsus funds.
14
11
Transfers to Papua increased significantly in 2006. Since then,
they remained stable for Papua province but continue to increase
for Papua Barat’s due to higher Special Autonomy allocations
Papua
Papua Barat
7
14
6
12
5
Rp Trillion
Rp Trillion
16
10
8
6
4
3
2
4
2
1
0
0
2003
2004
2005
DAU
Special autonomy funds
Total transfer
2006
2007*
2008*
2009**
2004
Revenue sharing
DAK
Without burden sharing policy
2005
DAU
Special autonomy funds
Total transfer
2006
2007*
2008*
Revenue sharing
DAK
Without burden sharing policy
Source: SIKD and Balancing Fund Allocation (Ministry of Finance).
Note: - Consolidated data (province + districts) for Papua and Papua Barat, in constant 2007=100. In 2006, shared tax data only for income tax.
- Since 2009, the central government “shares the burden” of energy and fertilizer subsidies with sub-national governments. Approximately
26% of the estimated subsidies will be deducted from the DAU-pool of sub-national governments.
15
12
2009**
Spending in Papua continues to be dominated by districts
which provide approximately 75% of expenditures since 2006
18
16
14
Rp Trillion
12
10
8
6
4
2
0
2004
2005
2006
2007*
2008**
2009***
Note : 2004-2006: Realization, 2007: Realization (Central) and Plan (others), 2008: Unaudited Realization
(Central) and Estimation (others), 2009: Estimation
Central
Province Districts
Source
: DG Budget,
Information
(SIKD),
Min of
Finance.
Note: Consolidated
dataRegional
(province +Finance
districts) for
Papua and System
Papua Barat
in constant
2007=100.
The central government spending
does not include line ministries spending through their representative offices in the regions.
Source: SIKD, Ministry of Finance, provinces budget data.
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13
Since 2005, infrastructure spending increased substantially
and became Papua’s main expenditure; government
administration remains high in second place
12
10
Rp trillion
8
6
4
2
0
2002
2003
2004
2005
General Government Administration
Public Health
Housing, Labor, and Social Af f airs
Industry, Trade, and Mining
2006
Inf rastructure
Education and Culture
Agriculture, Forestry, Plantation, Fishery, and Cooperatives
Note : - Consolidated data (province + districts) for Papua and Papua Barat province in constant 2007=100.
- * Plan budget data.
Source : SIKD, Ministry of Finance and provinces’ budget data.
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2007*
14
Assumptions for future revenue projections, particularly considering additional revenues from Tangguh LNG (see next two slides)
General revenue projection:
• Central government growth 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 per barrel, for other oil prices 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 total national DAU: 5%
• Ratio of special autonomy fund to total national DAU: 2%.
• Ratio of Papua revenue sharing to total national revenue sharing: 4.4%
• Ratio of Papua DAK to total national DAK: 8.4%
Revenue projection from Tangguh LNG:
• Annual production: gradually increase from 2.6 in 2010 to 7.6 million ton in 2015.
• Investment cost plus interest: USD 9.6 billion.
• Ratio of investment credit and cost recovery to gross revenue: 80%.
• Ratio of cost recovery to gross revenue: 30%.
• Contractor share of equity to be split: 71% (before tax).
• Effective tax rate: 44%.
• Regional tax: 13.6%.
• Revenue sharing to central government: 30%.
• Revenue sharing to Papua: 70%.
Note: For more details on the relationship between oil prices and the Indonesian budget as well as revenue sharing with the regions see Agustina et al
“Black hole or black Gold? The impact of oil and gas prices on Indonesia’s Public Finances, Policy Research Working Paper (4718), World Bank.
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15
Based on these assumptions, Papua’s revenues are expected
to double by 2018, even though revenues from Tangguh would
only add another 8-12% (Rp 3-5 trillion) in extra revenues
45
End of Tangguh
investm ent recovery
40
35
30
Rp trillion
Start of subsidy "burden sharing"
Substantial increase in transfer
across Indonesia
25
20
Start of Papua
Special Autonom y funding
15
Beginning of decentralization
10
5
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
40
60
80
Note: Consolidated data (province + districts) for Papua and Papua Barat, in constant price 2007=100.
Source: MoF and WB staff estimation.
19
16
40 (No Tangguh)
However, for Papua Barat the increase will be significant
because it would incur all of Tangguh’s shared revenue:
By 2018, at US$40 per barrel, revenues would increase by almost 30% compared
to the baseline; at US$80 per barrel, revenues would increase by more than 50%
18
16
14
Rp trillion
12
10
8
6
4
2
0
2004
2005
2006
40
2007
2008
2009
2010
2011
60
2012
80
2013
2014
2015
40 (No Tangguh)
Note: Consolidated data (province + districts) for province and districts in Papua Barat, in constant price 2007=100.
Source: SIKD/MOF and WB staff estimation.
20
17
2016
2017
2018
For information please contact the Public
Finance and Regional Development team
of the World Bank in Indonesia:
Wolfgang Fengler ([email protected])
Dian Agustina ([email protected])
Adrianus Hendrawan ([email protected])