Socio-economic conditions of local people in most oil-bearing communities in developing countries remain fundamentally
deplorable, without good roads, health facilities, schools and teachers, jobs, access to legal services, good nutrition and other basic facilities that make for good living. Niger Delta in Nigeria where over $300 billion in revenue has been generated from over 50 years of oil exploration and production is a good example.
In the case of Indonesia, after decades of centralization we committed to embark political as well as fiscal decentralization. For fiscal the decentralization, central government transfers decentralization funds in terms of general allocation funds (block grants), specific allocation funds (specific grants) and revenue sharing funds. In general, central government collect most of revenues, including tax and taxon revenues from natural resources exploitation.
In respect to your question, revenue sharing funds channels back revenues from natural resource exploitation to local government where the resources are located. The resources include forestry, fishery, mining, oil, gas, and geothermal. The proportion of sharing depends on type of resource, e.g. for oil is 15.5% of revenues go to producer province/district.
Great answer Akhmad. That's a great move by Indonesia. Decentralization is always helpful especially during allocation of resources and revenues.
Do you know how they came up with the 15.5% allocation of revenue from oil resource to producer district?
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