Dion Bisara – A long wet season and regulatory bottlenecks at the provincial level were blamed for slow budget spending last year, the Finance Ministry said on Tuesday.
"Last year was marred with long wet seasons and natural disasters that halted many infrastructure projects," said Askolani, chief of the state budget center at the Finance Ministry's Fiscal Policy Office.
"Moreover, problems of land acquisition also contributed to the delay in some projects."
The government spent Rp 1,053.5 trillion ($117 billion) last year, only 93.5 percent of its Rp 1,126.1 trillion target.
Revenue from taxes exceeded its target. Total revenue reached Rp 1,014 trillion, or 2.2 percent higher than the target of Rp 992.4 trillion. That saw the country post a narrow budget deficit of 0.62 percent of GDP, or Rp 39.5 trilion. That was lower than the original target of 2.1 percent, or 133.7 trillion, as stated in the the 2010 revised budget.
Government officials pointed to land acqusition problems as hampering the nation's efforts to complete upgrades to infrastructure. The government has submitted a new draft bill that was expected to clear the House of Representatives last year but is now expected to pass in the first half of 2011.
Askolani also said officials at the provincial level were reluctant to spend the funds alloted to them for fear of being targeted by the Corruption Eradication Commission (KPK).
"Officials have been too cautious in the procurement process, making the goods and services budget fall short of its target," Askolani said on Tuesday.
The government promised to improve the procurement system and allow regional officials to have more flexibility in determining the size of projects. Under the current regulations, Askolani said, a tender is required for any procurement vaued at more than Rp 50 million.
Such mechanisms can complicate matters as often there is only one eligible bidder for the procurement. Starting this year, the government will increase the tender limit to Rp 100 million with the hope of giving officials more flexibility, he said.
Askolani noted that all revenue targets except income tax and value-added tax were met.
"According to the 2009 tax law, which became effective last year, taxpayers were allowed to postpone their payment if they objected to the amount until the matter was settled. This seems to have hurt our tax revenue," he said.
Non-oil and gas tax revenue, comprising income tax and value-added tax, reached Rp 590.1 trillion, or 97.4 percent of target. However, income from oil and gas taxes (Rp 58.8 trillion, 106.3 percent) and customs and excise (Rp 66.2 trillion, 111.6 percent) finished above their targets.