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How Should Revenues From Natural Resources Be Shared?



Few policy analysts or politicians believe that there should be no natural resource revenue sharing. The question is, “how large a share?” The objective in this paper is to evaluate the system of sharing natural resource revenue in Indonesia against the criteria that are most often discussed in international forums. The paper has three parts. First, we examine the importance of the issue and try and place the practice in Indonesia in some comparative perspective. Second, we argue the case for and against decentralization of revenues raised from natural resources and consider the constraints to such a decentralization policy. Third, we examine the reform options in terms of the specific fiscal instruments that might be used. This research is exploratory and does not delve into the detail of the complicated system of mineral taxation and of the present system of natural resource revenue sharing in Indonesia.

Suggested Citation

  • Roy Bahl & Bayar Tumennasan, 2002. "How Should Revenues From Natural Resources Be Shared?," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0214, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  • Handle: RePEc:ays:ispwps:paper0214

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    References listed on IDEAS

    1. Ugo Fasano-Filho, 2000. "Review of the Experience with Oil Stabilization and Savings Funds in Selected Countries," IMF Working Papers 00/112, International Monetary Fund.
    2. Herbst, Jeffrey, 2001. "The Politics of Revenue Sharing in Resource-Dependent States," WIDER Working Paper Series 043, World Institute for Development Economic Research (UNU-WIDER).
    3. Corden, W M, 1984. "Booming Sector and Dutch Disease Economics: Survey and Consolidation," Oxford Economic Papers, Oxford University Press, vol. 36(3), pages 359-380, November.
    4. Heeks, Richard, 1998. "Small Enterprise Development and the 'Dutch Disease' in a Small Economy: The Case of Brunei," General Discussion Papers 30563, University of Manchester, Institute for Development Policy and Management (IDPM).
    5. Freinkman, Lev & Yossifov, Plamen, 1999. "Decentralization in regional fiscal systems in Russia - trends and links to economic performance," Policy Research Working Paper Series 2100, The World Bank.
    6. Anwar Shah, 1997. "Federalism Reform Imperatives, Restructuring Principles and Lessons for Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 36(4), pages 499-536.
    7. Bosquet, Benoit, 2002. "The role of natural resources in fundamental tax reform in the Russian Federation," Policy Research Working Paper Series 2807, The World Bank.
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    Cited by:

    1. Jorge Martinez-Vazquez & Cristian Sepúlveda, 2007. "The Municipal Transfer System in Nicaragua:Evaluation and Proposals for Reform," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0708, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    2. Dionisio Nombora, 2014. "Sharing Natural Resource Revenues with Affected Communities : Policy Options for Mozambique," World Bank Other Operational Studies 20264, The World Bank.
    3. Jorge Martínez-Vázquez, 2008. "Revenue Assignments in the Practice of Fiscal Decentralization," Chapters,in: Fiscal Federalism and Political Decentralization, chapter 2 Edward Elgar Publishing.
    4. M A B Siddique & Heru Wibowo & Yanrui Wu, 2014. "Fiscal Decentralisation and Inequality in Indonesia: 1999-2008," Economics Discussion / Working Papers 14-22, The University of Western Australia, Department of Economics.
    5. Roy Bahl & Musharraf Cyan, 2009. "Local Government Taxation in Pakistan," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0909, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    6. Hofman, Bert & Kadjatmiko & Kaiser, Kai & Suharnoko Sjahrir, Bambang, 2006. "Evaluating fiscal equalization in Indonesia," Policy Research Working Paper Series 3911, The World Bank.
    7. World Bank, 2003. "Decentralizing Indonesia : A Regional Public Expenditure Review Overview Report," World Bank Other Operational Studies 14632, The World Bank.

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    Indonesia; revenue sharing;

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