The Regional Autonomy Laws and The Otsus Fund

The Regional Autonomy Laws and The Otsus Fund
The Regional Autonomy Laws

The fall of Soeharto in 1998 ended the long practice of centralized governance, especially for the political power in Indonesia. And 1999 was the momentum for the awakening of decentralization and regional autonomy laws.

Under those laws, two tiers of the regional government, namely province (provinsi) and regency (kabupaten) gain the authority to create or even issue their local laws, regulation, and policies.

It is also true with Papua. The people witness the growing formation of new provinces, regencies, districts (kecamatan/distrik), and villages (kelurahan/desa) along with numerous laws. Before the birth of Law No.21/2001 on special autonomy status, the central government passed several regional autonomy laws put into place in Papua.


Law No. 45 of 1999

The Regional Autonomy Laws and
Autonomy Laws

This law initially stipulated the split of Papua (at that time was Irian Jaya) into three provinces of Irian Jaya province, Central Irian Jaya, and West Irian Jaya. It also consisted of the formation of new regencies (Paniai, Mimika, and Puncak Jaya) and an autonomous city (Sorong).

The central government issued Law No. 5 of 2000 as the amendment of the Law No. 45/1999. Also, there were 15 new regencies after the enactment of Law No. 26/2002. Some of those regencies are Sorong Selatan, Raja Ampat, Boven Digoel, Asmat, Teluk Bintuni, Waropen, and Kaimana.

It was until 2003 or particularly during the Megawati presidency, Papua accomplished the completion process for province expansion. Due to some objections and even riots in Timika, the central Irian Jaya remained part of Papua province to date.

The Presidential Instruction No. 1 of 2003 further specified the acceleration for the implementation of the aforementioned Law No. 45/1999.


Law No. 21 of 2001

The Regional Autonomy Laws
Regional Autonomy Laws

The fetus of this legislation can be dated back to the MPR Decree (TAP MPR) No. IV of 2000 concerning the policy recommendation in implementing regional autonomy, more particularly the special autonomy for Papua.

The background reasons might be the effort to give more attention to this easternmost province in Indonesia and to resolve the growing conflicts regarding Papua political identity.

The legislation grants Papua the authority to make their own decision making within all sectors with five exceptions regarding international affairs, defense, monetary and fiscal policy, religion, and justice.

Some general provisions include the administrative divisions from provinces (the executive body) to villages; the role of Papua House of People’s Representatives (DPRP) as the legislative body and Papua People’s Assembly (MRP); the making of further Special Regional Regulation (Perdasus) and Provincial Special Regulation (Perdasi); and more.


This special autonomy law also outlines further provisions concerning regional finance and economy, education, and health. It also mentions adat, adat law and adat rights (ulayat), culture, human rights, and religion. Furthermore, it covers the provision regarding social, environmental, and sustainable development along with supervision and dispute settlement.

Regarding the finance provision, it stipulates that Papua to receive revenues from taxes and natural resource sectors, among others are from Land and Building Tax (90%), from general mining, forestry, and fishery sectors (80%), and oil and natural gas sectors (70% valid for 25 years, 50% thereafter).


The regional government needs to allocate at least 30% of the revenues from mining sectors (petroleum and natural gas) to education, and at least 15% to the health sector and nutritional status improvements.


This law went through several revisions. Government Regulation No 1 of 2008 confirmed the legal basis for the implementation of special autonomy in West Papua province. The Papua Government Law in 2013 aimed for strengthening the Papuan identify and self-esteem, to speed up the development in Papua, and to look more at political and social issues through reconciliation.


The Otsus Fund

The Regional Autonomy Laws
Otsus Fund

The Special Autonomy Law specifies that until 2021 the central government will allocate special autonomy fund (the otsus fund) to Papua. This financial allotment amounts to 2% of the total General-Purpose Fund (Dana Alokasi Umum).


In 2002, Papua received the initial otsus fund of Rp 1 trillion. The total amount of the otsus fund from 2002 to date is Rp 126.99 trillion, where Papua and West Papua received Rp 93.05 trillion and Rp 33.94 trillion, respectively.


Approaching its expiration in 2021, the House of Representatives has established the revision of Law No. 21/2001 on the Special Autonomy in Papua and put it in the priority of the 2020 National Legislation Program (Prolegnas).


For the next Otsus Fund, the central government agreed to allocate Rp 8.4 trillion in the State Budget (APBN) for the 2020 fiscal year. Papua and West Papua will receive Rp 5.86 trillion and Rp 2.51 trillion, respectively. There is also an additional budget allocation for the infrastructure sector of Rp 4.6 trillion, Rp 2.8 trillion for Papua province and Rp 1.8 trillion for West Papua province.


Reflecting on the previous otsus fund, the implementation and results have not been the optimal ones. Therefore, the central government expects that the new law and otsus fund will have a more integrated system and primarily aimed for education, health, and infrastructure sectors.