Save local elections and save natural resources—this was the theme of a recent discussion held by Publish What You Pay (PWYP) Indonesia, a civil society coalition advocating for transparency and accountability in energy and natural resource (NR) governance. The discussion took place shortly before the quiet period of the 2024 simultaneous regional elections.
This theme underscores the message that regional elections are not merely about political victories or contests for power. They also ensure that natural resources are managed appropriately—for the greatest benefit of the people, as mandated by the Constitution.
Article 33, paragraph 3 of the 1945 Constitution states, “The land, the waters, and the natural wealth contained therein shall be controlled by the state and used for the greatest prosperity of the people.”
In this context, regional governments play a critical role as integral parts of the central government in ensuring that natural resources truly serve the public’s interests.
However, communities often raise criticism, particularly in resource-rich regions. These criticisms highlight that while their natural wealth is exploited, it does not significantly contribute to local development or welfare.
The benefits of resource exploitation are often perceived to be concentrated in Jakarta (central government), neglecting development in the regions. Consequently, the central government is frequently blamed when resource-rich areas are continuously exploited without positive impacts on local development and welfare.
This critique, however, needs to be completed. The lack of positive impacts from resource exploitation is not solely the responsibility of the central government but also of regional governments.
Regional governments act as the frontline in ensuring that the benefits of natural resources positively impact local development and improve community welfare.
The quality of regional leadership undoubtedly shapes the realization of development and societal welfare through natural resources.
This highlights the critical role of regional leaders in ensuring that natural resources are utilized in line with the mandate of Article 33, paragraph 3 of the Constitution. Under Indonesia’s financial system, the revenues from natural resources are returned to the regions. Income from the natural resources sector is collected by the central government and distributed to regional governments through a revenue-sharing mechanism.
In simple terms, all revenues from the natural resources sector are incorporated into the state budget (APBN), managed by the central government. From the state budget, funds are allocated to regional governments as Revenue Sharing Funds (DBH), as stipulated in Law No. 1 of 2022 on Financial Relations Between the Central and Regional Governments (HKPD).
DBH is allocated based on realizing the state revenues shared from the previous year to provide revenue certainty for the regions. Additionally, the allocation of DBH considers the region’s performance in strengthening state revenues and mitigating environmental impacts from exploitation activities.
According to the law, DBH from natural resources is divided into categories: forestry, minerals and coal, oil and gas, geothermal energy, and fisheries. The distribution of DBH from the central government to regional governments follows the proportions outlined in Articles 115 to 123 of the HKPD Law.
These funds are transferred to regional governments and become part of their revenue within the Regional Revenue and Expenditure Budget (APBD). In essence, regional governments are responsible for managing funds derived from natural resources.
The Commitment of Regional Leaders
A regional leader’s commitment to prioritizing the people’s interests in managing funds from natural resources is crucial. Such a commitment is necessary for the mandate of Article 33, paragraph 3 of the 1945 Constitution to be valid. Regions would fail to develop, lack infrastructure, and experience no improvement in welfare, while natural resources continue to be exploited, leading to environmental degradation and a decline in quality of life.
Failure to manage revenue from natural resources—such as DBH funds—results in resource exploitation that does not significantly contribute to local development and welfare. The key actor who can determine the success or failure of resource revenue management is the regional leader.
Citing research from PWYP Indonesia’s website, Hania Rahma—a scholar of natural resource issues and academic at the University of Indonesia—examined the phenomenon of the natural resource curse (NRC) in regional development in Indonesia. Her research concluded that revenue from mining does not guarantee sustainable and extensive development. Furthermore, regions engaged in natural resource extraction are vulnerable to experiencing the NRC phenomenon.
The Natural Resource Curse
The term natural resource curse refers to regions or countries rich in natural resources that do not necessarily become wealthy. According to Wikipedia, the natural resource curse is also called the paradox of plenty. Countries and regions abundant in natural resources, particularly non-renewable ones like minerals and fuels, tend to experience slower economic growth and worse development outcomes than resource-scarce regions.
In Hania Rahma’s study, one of the strongest variables influencing these outcomes is the integrity of regional leaders. A leader’s integrity also significantly affects environmental quality. A leader’s stance on reclamation and royalties strongly influences whether a region succumbs to the natural resource curse.
The Role of Regional Leaders in Natural Resource Management
The points above represent just one aspect of a regional leader’s role in ensuring that natural resources are managed and utilized for the greatest prosperity of the people, as mandated by the Constitution in Article 33, paragraph 3.
During the 2024 simultaneous regional elections, it is crucial to elect leaders with integrity who prioritize the public interest, uphold the constitutional mandate, and ensure that natural resources are used for the maximum benefit of the people.
Yes, safeguarding regional elections also means protecting natural resources for the people. Regional elections that produce integrity-minded leaders will steer regions away from the natural resource curse.
Source: Kompas