The Specific Allocation Fund (DAK): Mechanism and Uses

Syaikhu Usman, M. Sulton Mawardi, Adri Poesoro, Asep Suryahadi, Charles Sampford
JEL codes: 
ISBN 978-979-3872-53-7

This study aims to analyze the management of the Specific Allocation Fund (DAK). The three largest DAK-recipient sectors are the focus of the study: education, health, and roads infrastructure. The study sample areas are four districts. This paper was compiled based on the results of in-depth interviews and focus group discussions with various stakeholders as well as analysis of DAK policy and secondary data.
The main objective of DAK is to reduce interregional inequalities in public services. We came across policies in dire need of national uniformity but that still allow variation on some aspects. Conversely, we found some enforced national uniformity in policies that should have provided rooms for variations to accommodate regional specific conditions. In practice, regional governments have become passive recipients of DAK grants. The attitudes of regional government towards the DAK allocation process indicate a general feeling that the central government is not transparent. Furthermore, it is evident that coordination and communication surrounding DAK management between agencies are still limited.
Based on the above findings, we recommend a new paradigm where the central government is suggested to decentralize the authority for the allocation, coordination, and monitoring of district/city use of DAK to provincial governments.