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Indonesia: 2011 North Sulawesi public expenditure analysis

Available in: Bahasa (Indonesian)

KEY FINDINGS FROM THE REPORT

March 26, 2012

  • Since decentralization began, North Sulawesi's regional GDP has doubled and per capita spending has increased nearly ten-fold. This growth has supported a decrease in poverty from 28% to 9% –  the lowest poverty rate in Eastern Indonesia – and thanks also to excellent literacy rates, North Sulawesi boasts Indonesia's second highest HDI.
  • However, North Sulawesi's growth and progress is not yet inclusive. Although unemployment has decreased from 13.7% in 2006 to 10.6% in 2009, it remains high compared to other provinces in Sulawesi and is above the national average. Access to clean water is lagging behind electricity supply and sanitation, and the transportation system requires enhancement to improve access for archipelagic districts in particular.
  • Investment in infrastructure is needed to improve productivity and stimulate growth, as well as balance out disparities among the districts. Although North Sulawesi is moving in the right direction on infrastructure spending, with allocations for infrastructure increasing four-fold in the past five years, this is becoming increasingly important given growth in the trade and services sector and as a way of improving the productivity of the agriculture sector.
  • Agriculture still employs the largest proportion of North Sulawesi's roughly one million strong labor force – 37% – but this has decreased from 47% in 2006. This decrease reflects a shift towards the trade, hospitality, services, transportation, and communications sectors. Employment in the mining and quarrying sector is increasing most rapidly but remains small compared to other sectors.
  • Although the allocation of public funds – or the spending mix – is improving overall, there remains room for improvement. Capital spending as a proportion of overall spending is increasing but expenditure on personnel still consumes the largest proportion of public spending. Sub-national governments need to work to improve the efficiency of spending on the bureaucracy in order to increase allocations for vital infrastructure and service delivery.
  • Similarly, allocations for the agriculture, fisheries and tourism sectors need to be increased as they currently remain below 5%, despite these sectors being the source of livelihood for most of the population, especially those living in rural areas.
  • At the provincial level, North Sulawesi has achieved unqualified audit reports for the past two years demonstrating its relatively good performance on public financial management. However, there is more work to be done on asset management, reporting and the regional regulatory framework as significant disparities remain among the districts in terms of public financial management capacity, especially planning and budgeting.
Download full report:

English (3.9mb)
2011 North Sulawesi public expenditure analysis : sub-national public financial management and development in Bumi Nyiur Melambai

Bahasa Indonesia (3.9mb)
Analisis keuangan publik provinsi Sulawesi Utara 2011 : pengelolaan keuangan daerah dan pembangunan di Bumi Nyiur Melambai

North Sulawesi Public Expenditure Analysis Highlights Achievements in Economic Performance, Financial Management and Service Delivery (press release)


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