The Governments Capital Expenditure: A View from Central Government and Local Government in Indonesia

Author(s)

Mas Nur Mukmin , Indra Cahya Kusuma , Farizka Susandra ,

Download Full PDF Pages: 18-23 | Views: 689 | Downloads: 190 | DOI: 10.5281/zenodo.4260665

Volume 9 - October 2020 (10)

Abstract

The Government’s main role is to serve the public and ensure the fulfilment of social needs. Public facilities are essential to support the national prosperity and development. Capital expenditure becomes one of the financial instruments that can be allocated to build infrastructures as the part of public service. The research aim to figure out the performance of central and local government in spending the income to public investment. The study conducts ten years analysis to financial report of local government in West Java Province-Indonesia. There are 30 data sample from Bogor, Depok and Bekasi City, that proceeded into statistical analysis using multiple regressions. The result shows that both central and local government have optimize their income capacity especially in dedicated funds and budget surplus toward capital expenditure. The regression remains a significant influence from independent variable to dependent variable. The research contributes to the completion of previous study in the government investment especially the relation of central and local government.

Keywords

Government Investment Feasibility, Public Infrastructure, Regional Development

References

        i. O’Brien P, Pike A. ‘Deal or no deal?’Governing urban infrastructure funding and financing in the UK City Deals. Urban Studies. 2019;56(7):1448–76.

      ii. Marbler P, Shan L. Chinese Investments in Infrastructure Worldwide. Institut De Relations Interationales Et Strategiques (IRIS), Asia Focus. 2017;36.

    iii. Angelstam P, Barnes G, Elbakidze M, Marais C, Marsh A, Polonsky S, et al. Collaborative learning to unlock investments for functional ecological infrastructure: Bridging barriers in social-ecological systems in South Africa. Ecosystem Services. 2017;27:291–304.

     iv. Liu C, Moldogaziev TT, Mikesell JL. Corruption and state and local government debt expansion. Public Administration Review. 2017;77(5):681–90.

       v. Rochmatullah MR, Hartanto R, Arifin A. Determinating The Value of Capital Expenditure Allocation in Indonesia Local Government. Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan. 2016;17(2):152–66.

     vi. Dziekański P. Diversification synthetic indicator for evaluating the financial capacity of local government. The case of polish voivodeships. Acta universitatis agriculturae et silviculturae mendelianae brunensis. 2017;65(2):611–9.

   vii. Xu J-H, Yi B-W, Fan Y. Economic viability and regulation effects of infrastructure investments for inter-regional electricity transmission and trade in China. Energy Economics. 2020;91:104890.

 viii. Siciliano G, Urban F. Equity-based natural resource allocation for infrastructure development: evidence from large hydropower dams in Africa and Asia. Ecological Economics. 2017;134:130–9.

     ix. De Jesus IM. Financing infrastructure investments in local government units–a case study of the rural commune of Lidzbark Warmiński. Ekonomia i Środowisko. 2017;(2 [61]).

       x. Ghozali I, Khoirunurrofik. Fiscal decentralisation and capital expenditure composition of regional government in Indonesia. International Journal of Trade and Global Markets. 2020;13(1):81–8.

     xi. Xinyu G, Yejun W. Fiscal Investments and Urban Manufacturing Industry Agglomeration: Analysis and Evidence from the Perspective of New Economic Geography. Nankai Economic Studies. 2019;(1):4.

   xii. Higgins A, McFallan S, Marinoni O, McKeown A, Bruce C, Chilcott C, et al. Informing transport infrastructure investments using TraNSIT: A case study for Australian agriculture and forestry. Computers and Electronics in Agriculture. 2018;154:187–203.

 xiii. Sorensen A. Institutions and urban space: Land, infrastructure, and governance in the production of urban property. Planning Theory & Practice. 2018;19(1):21–38.

 xiv. Piszczek M. Targeted grants allocated from the state budget as a source of financing local government investments. Prace Naukowe Uniwersytetu Ekonomicznego we Wrocławiu. 2019;63(10):74–85.

   xv. Gwizdała JP. The cohesion fund’s role in financing local-government investments in road infrastructure. In EDP Sciences; 2018. p. 01014.

 xvi. Banaszewska M. The determinants of local public investments in Poland. Equilibrium Quarterly Journal of Economics and Economic Policy. 2018;13(1):105–21.

xvii. Triyanto D, Wahyudi ST, Ananda CF. The Effect of Capital Expenditure on Local Own-Source Revenue: Study In East Java Indonesia. Jurnal Ekonomi Kuantitatif Terapan. 2017;10(2):137–44.

xviii. Malau EI. The Effect of Local Government Revenue (LGR), Balance Fund, Capital Expenditure and Fiscal Stress on The Financial Performance of Regional Government in The District/City of Sumatera Utara Province. International Journal of Public Budgeting, Accounting and Finance. 2019;2(2):1–15.

 xix. Chen Z, He Z, Liu C. The financing of local government in China: Stimulus loan wanes and shadow banking waxes. Journal of Financial Economics. 2020;

   xx. Slijepčević S. The impact of the economic crisis and obstacles to investments at local level. Transylvanian Review of Administrative Sciences. 2018;14(55):62–79.

 xxi. Hommann K, Lall SV. Three Pillars on the Road toward Livable and Productive Cities: Working Land Markets, Effective Urban Planning, and Financing for Public Investments. In 2019.

xxii. Muda I, Naibaho R. Variables influencing allocation of capital expenditure in Indonesia. In 2018. p. 1755–1315.

Cite this Article: