The Virtue And Problems Of Indonesian Development Trust Funds

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Development trust funds emerged along with foreign aid itself. They emerged with the evolution of aid conditionality provided by international donors to the recipient countries. The Paris Declaration in 2005, signed by over a hundred donor agencies and recipient governments, attempted to change the nature of contemporary aid relationships by adopting ownership and harmonization as the key pillars of a new aid paradigm. The Paris Declaration changed the pattern of aid and the conditions attached to aid. Development trust funds are funds established using money from either foreign or domestic grants that legally set aside from the regular state budget. The funds will be used for the development purposes and managed by the national trustee institution. Development trust funds have only recently been permitted in Indonesia based on Presidential Regulation No. 80/2011 regarding the Establishment of Trust Fund (Perpres No. 80/2011). The enactment of Perpres No. 80/2011 was followed by the establishment of two national development trust funds in Indonesia: the Millennium Challenge Account-Indonesia (MCA-I) and the Indonesia Climate Change Trust Funds (ICCTF).


Using interviews with Development Trust Funds officers and case studies of the existing development trust funds, this article explores the problems with the Indonesian development trust funds as currently constituted. After providing introduction, this thesis discusses the historical background of the development trust fund, some precedents of development trust funds in several countries and development trust funds under international law. It also identify the key principles of the development trust funds which has been established around the world. Finally, this article evaluates the Indonesian development trust funds regulation as well as the implementation of the existing development trust funds.


This research concludes that the current trust fund regulation is missing from some substantial provisions regarding the legal status, and provisions related to good and accountable governance of Indonesian development trust funds. This work suggests the government of Indonesia should amend the current trust fund regulation in order to make the development trust fund operated more accountable, effective, and efficient.


Sumber:  Majalah SPIRIT, Kementerian PPN/Bappenas 


Penulis : Hendra Wahanu Prabandani, S.H., LL.M.