MINISTER OF FINANCE OF THE REPUBLIC OF INDONESIA

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1 REGULATION OF THE MINISTER OF FINANCE OF THE REPUBLIC OF INDONESIA NUMBER 93/PMK.07/2015 CONCERNING PROCEDURES FOR ALLOCATION, DISTRIBUTION, USE, MONITORING AND EVALUATION OF VILLAGE FUND BY THE GRACE OF THE GOD ALMIGHTY THE MINISTER OF FINANCE, Considering : that to implement the provisions of Article 14, Article 18, Article 23, and Article 28 of Government Regulation Number 60 of 2014 on Village Fund Originating from the State Budget as amended by Government Regulation Number 22 of 2015, it shall be necessary to stipulate Regulation of Minister of Finance on Procedures for the Allocation, Distribution, Use, Monitoring, and Evaluation of the Village fund; In the View of : Government Regulation Number 60 of 2014 on Village Fund Originating from the State Budget (State Gazette of the Republic of Indonesia of 2014 Number 168, Supplement to the State Gazette of the Republic of Indonesia Number 5558) as amended by Government Regulation Number 22 of 2015 (State Gazette of the Republic of Indonesia of 2015 Number 88, Supplement to the State Gazette of the Republic of Indonesia of Number 5694); PASSING A DECREE To Stipulate : REGULATION OF THE MINISTER OF FINANCE CONCERNING PROCEDURES FOR ALLOCATION, DISTRIBUTION, USE, MONITORING AND EVALUATION OF VILLAGE FUND. CHAPTER I Referred to herein as: GENERAL PROVISIONS Article 1 1. Village shall be Village and traditional Village or as referred to by other names, hereinafter

2 - 2 - referred to as Village, shall be the unity of a legal community that has borders authorized to regulate and administer government affairs, interests of the local community by community initiatives, right of origin, and/or traditional rights recognized and respected in the governance system of the Republic of Indonesia. 2. Village Fund shall be a fund sourced from the State Budget dedicated to a Village transferred through the Budget of a regency/city used to finance the governance, implementation of development, social development, and community empowerment. 3. Village Government shall be the Village Head or as referred to by other names helped by the Village apparatuses as part of administrators of the Village. 4. State Budget, hereinafter referred to as APBN shall be the annual financial planning of the state governance approved by the House of Representatives. 5. Local Government Budget hereinafter referred to as APBD shall be the financial planning of the regional government shall be discussed and agreed upon by the Regional Government and the Provincial Legislative Council, and specified by a regional regulation. 6. Village Budget hereinafter called Village APB shall be the Village Government annual financial planning. 7. State General Treasury Account hereinafter referred to as RKUN shall be an account for keeping state funds specified by the Minister as the State General Treasurer to accommodate all revenues and pay all state expenditures at the central bank. 8. Regional General Treasury Account hereinafter referred to as RKUD shall be an account for keeping a region s fund specified by the regent/mayor to accommodate all regional revenues and pay all expenses in a specified

3 - 3 - bank. 9. Village Cash Account hereinafter abbreviated RKD shall be an account to keep the money of the Village government used to keep all Village revenues and used to pay all expenses in a specified bank. 10. Village Fund Budget Deficit, hereinafter referred to as Village Fund SiLPA shall be the excess of actual revenues and expenditures of the Village Fund budget during the budget period. 11. Budget User hereinafter abbreviated as PA shall be the official holding authority for the use of budget of Ministry/Institution. 12. Budget User Proxy, hereinafter referred to as KPA, shall be an official who obtains power from the PA to carry out part of the authority and responsibility for the use of the budget at the State Ministry/Institution. 13. Budget Implementation Checklist hereinafter referred to as DIPA shall be the Budget Implementation Document used as a reference by the PA in carrying out government activities for the implementation of the State Budget. 14. Decision of Determination of the Village fund Detail hereinafter abbreviated SKPR DD shall be a decision that results in the expenditure of the budget which contains details of the total Village Fund of each regency/city in a budget year. 15. Village Fund Expenditure Plan shall be the work plan and budget that contains details of the funding requirements for the implementation of the transfer of Village Fund. 16. Village Fund Ceiling shall be the Village Fund budget that has been approved by the House of Representatives. 17. Construction Expensiveness Index hereinafter abbreviated as IKK shall be an index that reflects the geographical difficulty levels based on the level of cost of physical infrastructure in relative terms among the regions.

4 Village Geographic Difficulty Index hereinafter abbreviated Village IKG shall be a figure that reflects the difficulty level of a Village based on the variables of geographical availability of basic services, condition of infrastructure, transport, and communications. 19. Payment Request Letter hereinafter abbreviated as SPP, shall be a document issued by the KPA/PPK, which contains a bill payment requests to the state. 20. Payment Order hereinafter abbreviated as SPM shall be a document issued by the PA/KPA or other official designated to disburse funds from DIPA or other equivalent document. 21. Minister of Finance, hereinafter referred to as the Minister shall be the minister who holds government affairs in the field of public finance. CHAPTER II ALLOCATION Part One Village Fund Allocation for each Regency/City Article 2 (1) The Director General of Fiscal Balance shall prepare the Village Fund Expenditure Planning to be allocated as the Village Fund budget. (2) Based on the Village Fund budget referred to in paragraph (1), the Director General of Fiscal Balance shall calculate the Village Fund details of each regency/city. (3) The Village Fund detail of each regency/city shall be allocated equitably based on the: a. basic allocation; and

5 - 5 - b. allocation calculated by taking into account population, poverty, area, and level of Village difficulty geographic of each regency/city. Article 3 The detail of the Village fund of each regency/city based on the basic allocation as referred to in Article 2 paragraph (3) letter a shall be equal to 90% (ninety percent) of the Village Fund budget. Article 4 (1) The detail of the Village fund of each regency/city based on the allocation calculated by taking into account population, poverty, area, and level of Village geographic difficulty of each regency/city referred to in Article 2 paragraph (3) b shall be calculated by the weights as follows: a. 25% (twenty five percent) of the population of the Village; b. 35% (thirty five percent) for Village poverty rate; c. 10% (ten percent) for the area of the Village; and d. 30% (thirty percent) to the level of Village geographical difficulty of each regency/city. (2) The Village poverty rate and geographical difficulty levels referred to in paragraph (1) shall be respectively shown by the number of poor villages and IKK of the regency/city. (3) The calculation of details of the Village fund of each regency/city referred to in paragraph (1) is performed using the following formula: X = (0.25 x Y1) + (0.35 x Y2) + (0.10 x Y3) + (0.30 x Y4) Remarks: X = Village Fund of the regency/city calculated based on the population, poverty, area, and level of Village geographic difficulty of each

6 - 6 - regency/city Y1 = ratio of the total population of the Village of each regency/city to the total national population of the Village Y2 = ratio of the number of poor Village of each regency/city to the total national Village poor population Y3 = ratio of the area of the Village of each regency/city to the area of the national Village Y4 = ratio of IKK of regency/city to the total IKK of regency/city which have Village (4) The data of total Village population, Village poverty rate, Village area, and IKK of the regency/city referred to in paragraph (3) shall be derived from the authorized ministries and/or agencies that hold government affairs in the field of statistics. Article 5 (1) The data of total Village population, Village poverty rate, Village area, and IKK of the regency/city as referred to in Article 4 paragraph (4) shall be submitted by the competent ministries and/or agencies that hold government affairs in the field of statistics to the Minister of Finance c.q. the Director General of Fiscal Balance no longer than in August. (2) In the case the data referred to in paragraph (1) is late or not delivered, the calculation of the Village fund details of each regency/city shall use the data used in the calculation of the Village Fund details of each regency/city in the previous fiscal year.

7 - 7 - Article 6 (1) The results of the calculation of the Village fund detail of each regency/city as determined in Article 3 and Article 4 paragraph (3) shall be submitted by the Government to the House of Representatives during the First Level Discussion of Financial Note and Draft Law on State Budget for approval. (2) Based on the ceiling of the Village fund in the Law on State Budget and results of discussion of the Village Fund referred to in paragraph (1) shall be set out the Village Fund detail of each regency/city. (3) The detail of the Village fund of each regency/city referred to in paragraph. (2) shall be set out in a Presidential Decree on State Budget detail. Part Two Village Fund Allocation for each Village Article 7 (1) Based on the Village Fund detail of each regency/city as referred to in Article 6 paragraph (3), the regent/mayor calculate and define the Village Fund detail of each Village. (2) The Village Fund detail of each Village referred to in paragraph (1) shall be allocated equitably based on the: a. basic allocation; and b. allocation calculated by observing the total population, poverty, area, and level of geographical difficulty of each Village. Article 8

8 - 8 - The Village Fund detail of each Village based on the basic allocation as referred to in Article 7 paragraph (2) letter a shall be equal to 90% (ninety percent) of the Village Fund of each regency/city distributed equally for each Village. Article 9 (1) The Village Fund detail of each Village based on the allocation calculated by taking into account population, poverty, area, and level of geographical difficulty of each Village as referred to in Article 7 paragraph (2) b shall be calculated with the following weights: a. 25% (twenty five percent) of the population of the Village; b. 35% (thirty five percent) for Village poverty rate; c. 10% (ten percent) for the area of the Village; and d. 30% (thirty percent) for the level of Geographical difficulty of the Village. (2) The Village poverty rate and level of geographical difficulty of the Village referred to in paragraph (1) shall respectively be shown by the number of poor villages and Village IKG. (3) The calculation of the Village fund details of each Village referred to in paragraph (1) shall be performed using the following formula: W = (0.25 x Z1) + (0.35 x Z2) + (0.10 x Z3) + (0.30 x Z4) Description: W = Village Fund of each Village calculated based on population, poverty, area, and level of geographical difficulty of each Village Z1 = ratio of the total population of each Village to the total population of the regency/city Z2 = ratio of the number of poor population to the total poor population of the Village of the regency/city Z3 = ratio of the area of each Village of the regency/city concerned Z4 = ratio of IKG of each Village on the total IKG

9 - 9 - of the regency/city (4) The data of total population, poverty, and Village area as referred to in paragraph (1) shall be obtained from the authorized ministries and/or agencies that hold government affairs in the field of statistics. Article 10 (1) The Village IKG referred to in Article 9 paragraph (2) shall be prepared and set by the regent/mayor based on the data from the Institution that holds government affairs in the field of statistics. (2) The Village IKG referred to in paragraph (1) shall be determined by several factors, including: a. availability of basic services infrastructure; b. condition of the infrastructure; and c. accessibility/transport. (3) The preparation of Village IKG referred to in paragraph (1) may refer to the procedures for the preparation of the Village IKG as listed in Appendix I which shall be an integral part of this Ministerial Regulation. Article 11 (1) The procedure for the calculation and determination of the Village Fund detail of each Village shall be stipulated by a regulation of the regent/mayor. (2) The regulation of the regent/mayor referred to in paragraph (1), shall at least sets about the: a. method of calculating the Village Fund of each Village; b. determination of the Village Fund detail; c. mechanisms and distribution phase of the Village Fund; d. priority use of the Village Fund; e. preparation and submission of reports of realization of the Village Fund; and f. sanctions in the form of delivery delays and cuts of the Village Fund.

10 (3) The Regent/Mayor shall convey the Regulation of the regent/mayor referred to in paragraph (1) be accompanied by the softcopy of the Village Fund of every Village to the Minister attn. the Director General of Fiscal Balance, with copies to the Minister of Home Affairs, the Minister of Rural Development of Underdeveloped Regions and Transmigration, the governor, and the head of Village. (4) The procedure for calculating the Village Fund for each Village as referred to in paragraph (2) letter a and work for the calculation of the Village fund of each Village referred to in paragraph (3) shall be done in accordance with guidelines and examples of calculation as listed in Appendix II, which shall be inseparable parts of this Ministerial Regulation. CHAPTER III DISTRIBUTION Part One Budget User Proxy Article 12 (1) In the framework of the distribution of the Village Fund, the Minister as the PA of the State General Treasury shall stipulate the Director of Balance Fund as the Village Fund KPA. (2) The duties and authority of the Village Fund KPA referred to in paragraph (1) shall be implemented in accordance with the provisions of legislations. Part Two Budget Implementation Document Article 13 (1) The Village Fund KPA shall prepare the Village Fund DIPA based on the Village Fund detail of each regency/city as referred to in Article 6 paragraph (3). (2) The Village Fund KPA shall submit the Village

11 Fund DIPA referred to in paragraph (1) to the Directorate General of Budget for ratification. (3) The preparation, submission and approval of the Village Fund DIPA referred to in paragraph (1) and paragraph (2) shall be implemented in accordance with the provisions of legislations. Article 14 (1) Based on the Village Fund DIPA which has been approved as referred to in Article 13 paragraph (3), the Village Fund KPA shall issue the SKPR DD. (2) The SKPR DD referred to in paragraph (1) shall be used as the basis for the channeling of the Village Fund. (3) Based on the DD SKPR referred to in paragraph (2), the SPP shall be issued. (4) The SPP referred to in paragraph (3) shall be the basis for the issuance of the SPM. (5) The issuance of the SPP, SPM, and other budget documents needed for the distribution of the Village Fund carried out by the competent authority in accordance with the provisions of legislations. Part Three Mechanism and Phase of Distribution Article 15 (1) The Village Fund Distribution shall be done by transfer from the RKUN to the RKUD to be transferred from the RKUD to the RKD. (2) The Village Fund Distribution referred to in paragraph (1) shall be done in stages in the current fiscal year under the following conditions: a. Phase I, in April amounted to 40% (forty percent); b. Phase II, in August amounted to 40% (forty percent); and c. Phase III, in October by 20% (twenty percent).

12 (3) The Village Fund Distribution from the RKUN to the RKUD for each phase as referred to in paragraph (2) shall be done no later than the second week of the month. (4) The Village Fund Distribution from the RKUN to the RKD for each phase as referred to in paragraph (2) shall be conducted no later than seven (7) working days of receipt in the RKUD. Part Four Village Fund Disbursement from the RKUN to the RKUD Article 16 (1) The Village Fund Disbursement from the RKUN to the RKUD shall be implemented by the Village Fund KPA. (2) The Village Fund Disbursement from the RKUN to the RKUD phase I shall be after the regent/mayor has submitted the: a. regional regulation concerning the Local Government Budget in the current fiscal year; and b. regulation of the regent/mayor concerning procedures for the division and determination of details of the Village fund of each Village, to the Minister attn. Director General of Fiscal Balance. (3) In the event that the regional regulations concerning the Local Government Budget referred to in paragraph (2) letter a is not set, the distribution of the Village Fund shall be conducted after the determination of the regulation of the regent/mayor on Local Government Budget. (4) The Regent/Mayor shall convey the regional regulation and regulation of regent/mayor referred to in paragraph (2) no later than the fourth week of March.

13 Article 17 (1) The Village Fund KPA shall conduct the administration, accounting, and financial reporting for the distribution the Village Fund from the RKUN to the RKUD. (2) The administration, accounting and financial reporting as referred to in paragraph (1) shall be implemented in accordance with the provisions of legislations. Part Five Village Fund Disbursement from the RKUD to the RKD Article 18 (1) The Village Fund Disbursement from the RKUD to the RKD shall be conducted by regent/mayor. (2) The Village Fund Disbursement from the RKUD to the RKD phase I shall be after the Village head has submitted the Village regulation concerning Village APB to the regent/mayor. (3) The Village Head shall convey the Village regulation referred to in paragraph (2) to the regent/mayor no later than March. Article 19 (1) The Village Fund Disbursement from the RKUD to the RKD shall be conducted in accordance with the provisions of the legislation. (2) In the event there is a remote Village that has not been reached by the banking services, the regent/mayor can regulate further the withdrawal of the Village Fund from the RKD through a regulation of the regent/mayor. Article 20 (1) The Regent/mayor shall submit report of realization of the disbursement and the consolidation of the use of the Village fund each

14 year to the Minister cq the Director General of Fiscal Balance, with copies to the Minister of Home Affairs, the Minister of Rural Development of Underdeveloped Regions and Transmigration, and the governor. (2) The report on the realization of the disbursement and consolidation of the use of the Village fund referred to in paragraph (1) shall be done no later than the fourth week of March of the next fiscal year. (3) The report on the realization of disbursement and consolidation of the use of the Village fund referred to in paragraph (1) a shall be the requirement for distributing the Village funds from the RKUN to the Phase I RKUD in the next fiscal year. (4) The report on realization of the disbursement and the consolidation of the use of the Village fund referred to in paragraph (1) shall be prepared in accordance with the format set forth in Appendix III which shall be an integral part of this Ministerial Regulation. CHAPTER IV USE Article 21 (1) The Village Fund shall be used to finance Village governance, development, community empowerment, and community purposes. (2) The Village Fund referred to in paragraph (1) shall be prioritized to finance the development and empowerment. (3) The use of the Village fund referred to in paragraph (2) shall be implemented in accordance with the priority use of the Village Fund established by the Minister of Rural Development of Underdeveloped Regions and Transmigration. (4) The priority for the use of the Village Fund referred to in paragraph (3) shall be equipped with the general guidelines for the

15 implementation of the use of the Village Fund. Article 22 The implementation of activities financed from the Village Fund shall be based on the Village Fund general use guidelines referred to in Article 21 paragraph (4) and the technical guidelines issued by the regent/mayor. Article 23 (1) The Village Fund can be used to finance activities not included in the priority use of the Village Fund referred to in Article 21 paragraph (3) upon approval by the regent/mayor. (2) The approval of the regent/mayor referred to in paragraph (1) shall be provided at the time of evaluation of draft Village regulation concerning Village APB. (3) In giving the approval referred to in paragraph (1), the regent/mayor shall ensure the allocation of the Village Fund shall be for prioritized activity has been met and/or development activities and community development has been met. Article 24 (1) The Village head shall be responsible for the use of the Village fund. (2) The Government and regional governments can provide guidance on the use of the Village fund. (3) The procedure for assistance referred to in paragraph (2) shall be implemented in accordance with the guidelines established by the Minister of the Village, Development of Underdeveloped Regions and Transmigration. Article 25 (1) The Village head shall submit report on the realization of the Village Fund to the regent/mayor every semester. (2) The report on the realization of the Village Fund referred to in paragraph (1) shall be conducted

16 under the following provisions: a. first semester, no later than the fourth week of July of the current budget year; and b. second semester, no later than the fourth week of January of the next fiscal year. (3) The Regent/mayor can facilitate the acceleration for the submission of the report of the realization of the Village fund by the Village heads. (4) The report of realization of the Village Fund of the first semester shall be the requirements of the Village Fund disbursement from the RKUD to the RKD of phase II of the current budget year. (5) The report on realization of the Village Fund of the second semester shall be the requirements for the disbursement of the Village Fund from the RKUD to the RKD of phase I in the next fiscal year. (6) The report on realization of the Village Fund shall be prepared in accordance with the format set forth in Appendix IV which shall be an integral part of this Ministerial Regulation. CHAPTER V MONITORING AND EVALUATION Part One Monitoring Article 26 (1) The Minister attn. the Director General of Fiscal Balance together with the Minister of Home Affairs and the Minister for Rural Development of Underdeveloped Regions, and Transmigration to monitor the allocation, disbursement, and use of the Village Fund. (2) The monitoring as referred to in paragraph shall be carried out on the: a. adoption of regulation of the regent/mayor on the procedures for the division and determination of the Village Fund for each Village; b. Village Fund disbursement from the RKUD

17 to the RKD; and c. report of realization of the disbursement and consolidation of use of the Village fund. Article 27 (1) The monitoring of the determination of the regulation of the regent/mayor on the procedures for the division and determination of the Village Fund referred to in Article 26 paragraph (2) shall be executed in order to avoid delays in the determination of the regulation of the regent/mayor. (2) In the event of delay in the adoption of regulation of the regent/mayor as intended in paragraph (1), the Minister attn. the Director General of Fiscal Balance shall request the regent/mayor to accelerate the determination of the regulation of the regent/mayor. (3) The Minister attn. the Director General of Fiscal Balance can facilitate the acceleration of the determination of the regulation of the regent/mayor on the procedures for the division and determination of the Village Fund for each Village. Article 28 (1) The monitoring of the disbursement of the Village Fund from the RKUD to the RKD as referred to in Article 26 paragraph (2) b shall be made to ensure that the disbursement has been carried out in accordance with the provisions of legislations. (2) The Minister attn. the Director General of Fiscal Balance can request reports of realization of disbursement of the Village Fund from the RKUD to the RKD to the regent/mayor. (3) In the event that based on the result of monitoring there are disbursements of the Village Fund from the RKUD to the RKD that are not in accordance with the provisions of legislations, the Minister attn. the Director General of Fiscal Balance shall give warning to the regent/mayor.

18 (4) The non-compliance for the disbursement of the Village fund referred to in paragraph (3), can be in the forms of: a. delay in disbursement; and/or b. improper disbursement. (5) The Village Fund that is distributed late and/or improperly disbursed as referred to in paragraph (4) shall be distributed from the RKUD to the RKD by the regent/mayor no later than 30 (thirty) working days after receiving a warning from the Minister attn. the Director General of Fiscal Balance Article 29 (1) The monitoring of the submission of the report on the realization of disbursement and consolidation of the use of the Village Fund referred to in Article 26 paragraph (2) c shall be done to avoid delay in the disbursement of the Village Fund. (2) In the event that the regent/mayor is late to submit and/or does not submit the report referred to in paragraph (1), the Minister attn. the Director General of Fiscal Balance can ask the regent/mayor to accelerate the submission of report. (3) The Minister attn. the Director General of Fiscal Balance can facilitate the acceleration of delivery of the report on the realization of disbursement and consolidation of the use of the Village fund. Part Two Evaluation Article 30 (1) The Minister attn. the Director General of Fiscal Balance shall evaluate the allocation, disbursement, and use of the Village Fund. (2) The evaluation as referred to in paragraph (1) shall apply to the: a. details of the calculation of the disbursement

19 of the Village Fund of each Village by the regency/city; and b. realization of the Village fund. Article 31 (1) The evaluation of the calculation for the distribution of detail of the Village Fund for each Village by the regency/city referred to in Article 30 paragraph (2) letter a shall be made to ensure the disbursement of the Village Fund for each Village shall be carried out in accordance with the provisions of legislations. (2) In the event of discrepancy in the calculation for the distribution of detail of Village Fund for each Village by the regency/city, the Minister attn. the Director General of Fiscal Balance shall request the regent/mayor shall make changes to the regulation of the regent/mayor on the procedures for the disbursement and determination of the details of the Village Fund for each Village. (3) The amendment to regulation of the regent/mayor as referred to in paragraph (2) shall be submitted to the Minister attn. the Director General of Fiscal Balance. (4) The amendment to the regulation of the regent/mayor as referred to in paragraph (3) shall be the requirements for the next phase of disbursement of the Village Fund. Article 32 (1) The evaluation of the realization of Village Fund referred to in Article 30 paragraph (2) letter b shall be based on the report of realization of the use of Village Fund. (2) In the event that the realization of the Village fund is very low, the Minister attn. the Director General of Fiscal Balance may request confirmation and clarification to the regent/mayor. Part Three

20 Monitoring and Evaluation of the Village Fund SiLPA Article 33 The regent/mayor shall carry out monitoring and evaluation of the Village Fund SiLPA. Article 34 (1) In the event that in the monitoring and evaluation of the Village Fund SiLPA referred to in Article 33 is found Village Fund SiLPA of more than 30% (thirty percent), the regent/mayor: a. shall ask for clarification from the Village head on the Village Fund SiLPA; and/or b. shall ask the regional supervisory authorities to audit the functional area. (2) The Village Fund SiLPA of more than 30% (thirty percent) referred to in paragraph (1) shall be calculated from the Village Fund received by the Village for the current year. (3) The Village Fund SiLPA shall be budgeted back and used in accordance with its allocation in the next financial year. CHAPTER VI SANCTION Part One Delayed Disbursement Article 35 (1) The Village Fund KPA may delay the disbursement of the General Allocation Fund and/or Profit Sharing Fund of the regency/city in terms the regent/mayor does not distribute the Village Fund delayed to be disbursed and/or improperly disbursement referred to in Article 28 paragraph (5). (2) The Village Fund KPA shall delay the disbursement of the Village Fund in the event that the regent/mayor does not make

21 amendments to the regulation of the regent/mayor on the procedures for the disbursement and determination of the details of the Village Fund for each Village as a result of mismatch in the division calculation of details of the Village Fund for each Village referred to in Article 31 paragraph (2). Article 36 (1) The regent/mayor shall delay the disbursement of the Village Fund, in the events of: a. The Village head does not submit the Village regulation on the Village APB as referred to in Article 18 paragraph (2) and the report of the realization of the Village Fund reports of the second half as referred to in Article 25 paragraph (2); b. There is Village Fund SiLPA for more than 30% (thirty percent) at the end of the previous fiscal year; and/or c. There are proposals from the functional area regulatory authorities. (2) The delayed Disbursement of the Village Fund referred to in paragraph (1) shall be executed after the Village head has delivered the Village regulation concerning Village APB and realization of the Village Fund for the second semester to the regent/mayor. (3) The delayed disbursement of the Village Fund referred to in paragraph (1) letter b shall be made to the disbursement of the Village Fund for the first semester of the current budget year in the amount equals to the Village Fund SiLPA of the previous fiscal year. (4) In the event that the Village Fund SiLPA is greater than the total Village fund which will be distributed for the first phase, then the disbursement of the Village Fund for the First Phase shall not be done. (5) The delayed disbursement of the Village Fund referred to in paragraph (3) shall be performed

22 until the second phase disbursement of the Village Fund. (6) In the event that the delay in the disbursement of the Village Fund referred to in paragraph (1) lasts until the end of the current budget year, the regent/mayor shall report the delay to the Minister attn. the Director General of Fiscal Balance. (7) The Regent/Mayor shall budget again the Village Fund whose disbursement is delayed referred to in paragraph (6) to be taken into account in the disbursement of the next budget year. Part Two Reduction of the Village Fund Disbursement Article 37 (1) The regent/mayor shall withhold the disbursement of the Village Fund in the event that after the sanction on the delayed disbursement of the Village Fund referred to in Article 36 paragraph (3), there is still Village Fund SiLPA of more than 30% (thirty percent) in the current budget year. (2) The reduction of the distribution of the Village Fund referred to in paragraph (1) shall be conducted on the disbursement of the Village Fund of the next fiscal year. (3) The Regent/Mayor shall report the reduction of the disbursement of the Village Fund referred to in paragraph (1) to the Minister attn. the Director General of Fiscal Balance. Article 38 The Village Fund KPA shall withhold the disbursement of the Village Fund in the events there are: a. report of delayed disbursement of the Village Fund from the regent/mayor referred to in Article 36 paragraph (6); and/or

23 b. report of deduction of the disbursement of the Village Fund from the regent/mayor referred to in Article 37 paragraph (3). CHAPTER VII TRANSITIONAL PROVISIONS Article 39 For the Fiscal Year 2015, the Village IKG in the Village Fund details of the calculation formula of each Village by the regent/mayor as referred to in Article 9 paragraph (3) may use the Village IKG as listed in Appendix V, which shall be an integral part of this Ministerial Regulation. CHAPTER VIII CLOSING PROVISIONS Article 40 This Ministerial Regulation shall come into force as of the date of promulgation. For public cognizance, this Ministerial Regulation shall be promulgated in the State Gazette of the Republic of Indonesia. Enacted in Jakarta on 4 May 2015 THE MINISTER OF FINANCE OF THE REPUBLIC OF INDONESIA Signed BAMBANG P. S. BRODJONEGORO Promulgated in Jakarta On 5 May 2015 THE MINISTER OF LAW AND HUMAN RIGHTS. Sgd

24 YASONNA H. LAOLY STATE GAZETTE OF 2015 OF NUMBER 684 Given as a duplicate THE HEAD OF GENERAL AFFAIRS BUREAU Represented by THE HEAD OF ADMINISTRATION DEPARTMENT OF THE MINISTRY Signed and stamped GIARTO NIP

25 APPENDIX I TO REGULATION OF THE MINISTER OF FINANCE NUMBER 93/PMK.07/2015 CONCERNING PROCEDURES FOR ALLOCATION, DISTRIBUTION, USE, MONITORING AND EVALUATION OF VILLAGE FUND MINISTER OF FINANCE PROCEDURES FOR THE PREPARATION OF VILLAGE GEOGRAPHICAL DIFFICULTY INDEX I. INTRODUCTION Village geographical difficulty level shall be represented by the Geographic Difficulty Index (IKG) with the value ranging from Higher index value indicates higher level of geographical difficulty. Village with limited basic service facilities, low quality infrastructure, and difficult transportation access will have an index that is relatively higher than other villages. The IKG use in the calculation of the Village Fund details for every Village is intended to meet the principles of justice and equity as mandated by Law Number 6 of 2014 concerning Village. With reference to Government Regulation concerning Amendment to Government Regulation Number 60 of 2014 concerning the Village Fund Sourced from the State Budget, the 2014 IKG shall be based on three factors, namely: 1. Availability of Basic Services, which includes the basic services related to education and health. 2. Conditions of Infrastructure, which includes infrastructure related to economic activities and the availability of facilities energy. 3. Accessibility/Transportation, which includes the accessibility of roads and transportation facilities. The distance to the facilities not available in the Village is measured from Village head office to the nearby facility in another Village. Education facilities, health facilities, and economic facilities used to develop the IKG shall be weighed relatively to the total population of the Village. II. PHASE OF PREPARATION OF GEOGRAPHICAL DIFFICULTY INDEX The data sources to prepare the IKG is obtained from the Village (Podes) held in April In general, the IKG is organized into three phases: 1. Selection and Establishment of IKG Composing Variable In principle, villages having facilities will have a variable score that is shall be relatively low (close to 0). Similarly, village accessibility (low distance, shorter travel time, and low cost) also has low scores variables. In contrast, villages with no facilities or with relatively far access to the nearby facilities will have a

26 relatively higher score (close to 5). The determination of the categories shall be based on the disbursement of the data (average or median) nationally so that it can be compared among villages throughout Indonesia. a. Basic Service Availability Factors The basic services availability factors consist of the availability/access to education and health facilities. There are 12 variables used to measure the availability of basic services, namely: 1) Availability of and access to TK/RA/BA 2) Availability of and access to SD/MI/equivalent 3) Availability of and access to SMP/MTS/equivalent 4) Availability of and access to SMA/MA/SMK/equivalent 5) Availability of and ease of access to hospital 6) Availability of and ease of access to maternity hospital 7) Availability of and ease of access to public health center 8) Availability of and ease of access to clinic/dispensary 9) Availability of and ease of access to doctor's office 10) Availability of and ease of access to midwife practice 11) Availability of and ease of access to village health post or polyclinics 12) Availability of and access to pharmacies b. Infrastructure condition factors The infrastructure condition factors consist of economic facilities (group of shops, markets, restaurants, cafes/tavern food, hotel, inn, bank), type of fuel for cooking and presence of agents/sellers of LPG/kerosene, number of electricity users family and availability of village main street lighting. There are eight variables used to measure the infrastructure condition factor, namely: 1) Availability of and access to group of shops 2) Availability of and access to markets 3) Access to restaurant, or shop/diner 4) Access to hotel, accommodation or lodging 5) Access to bank 6) Access to electricity 7) Access to street lighting 8) Access to fuel c. Accessibility/Transport Factors Accessibility/transport factors consist of the type and quality of roads, road accessibility, existence and operation of public transport, as well as transportation from the village

27 office to the district office and regent/mayor office. There are eight variables used to measure the accessibility/transport factors, namely: 1) Traffic and road quality 2) Accessibility of streets 3) Availability of public transport 4) Operation of public transport 5) Length of time per kilometer towards the district office 6) Cost per kilometer towards the district office 7) Length of time per kilometer to the office of regent/mayor 8) Cost per kilometer to the office of regent/mayor 2. Determination of Weighing Factors for IKG Composing Variables The IKG shall be a weighted composite index of 28 variables in substance and together describes the geographical difficulty level of a Village. Each variable must have contribution to the IKG. The extent of contribution of each variable describes the influence of the variable on the factors and the IKG. The extent of contribution of each variable shall not be set to the same value or based on a subjective assessment, but shall be calculated based on the disbursement of data using statistical techniques. The contribution of each variable shall be the statistics that tend to be different between variables. To obtain the contribution of each variable, we will use the methods of principal component analysis. Furthermore, the value of the contribution of each variable shall be used for weighting each variable to generate IKG value. The following table shall be the amount of weight for each variable used to compile the IKG. Table 1. Weight of Each IKG Composing Variable No. Variable code Factor, 'Weight 1. K K K K K K1208 Availability of K

28 K1205 Basic Services K K K K K K K K Infrastructure 17. K2201 Condition K K K K K K3103 Accessibility / K3104 Transportation K K K K Calculation of IKG The IKG value is obtained from the weighed sum of each variable with each variable composing IKG. The summed value shall be the score of each variable that has been weighed/multiplied by the weight of each variable. The IKG calculation of each village shall be as follows. IKG = (V1 x B1 + V2 x B2 + V3 x B3 + V28 x B28) x 20 Remarks:

29 IKG = Geographic Difficulty Index Value of each Village (0-100) V1 = Score of the 1 st Variable (availability and access to TK/RA/BA) V2 = Score of the 2 nd variable (availability and access to SD/MI/equivalent) V3 = Score of the 3 rd variable (availability and access to SMP/MTS/equivalent) V28 = Score of the 28 th variable (Access to fuel) B1 = The first variable weight B2 = The second variable weight B3 = The third variable weight B28 = The 28 th variable weight III. Simple Illustration of IKG Calculation To understand how the IKG calculation, below is the simple illustration for the calculation of IKG for Sample Village: 1. Calculate the variables using the formula as referred to in the chapter of preparation of development of indicators for each factor. From this process, will be obtained the value/score of 28 variables composing the IKG. 2. The score is then multiplied by the appropriate weight for each variable. 3. IKG shall be the sum of the result of multiplication between the score and weigh of each variable. The IKG calculation process can be summarized into the following table: Table2. Simple illustration on IKG Calculation (Example) No. Variable Variable Variable weight Result of Column (3) x column (4) score (1) (2) ( 3 ) (4) ( 5 ) 1. K K K K K K K K K K K K K

30 K K K K K K K K K K K K K K K Total Then Geographic Difficulty Index Value of the Example Village is x 20 = THE MINISTER OF FINANCE OF THE REPUBLIC OF INDONESIA Signed BAMBANG P.S. BRODJONEGORO Given as a duplicate THE HEAD OF GENERAL AFFAIRS BUREAU Represented by THE HEAD OF ADMINISTRATION DEPARTMENT OF THE MINISTRY Signed and stamped GIARTO NIP

31 APPENDIX II TO REGULATION OF THE MINISTER OF FINANCE NUMBER 93/PMK.07/2015 CONCERNING PROCEDURES FOR ALLOCATION, DISTRIBUTION, USE, MONITORING AND EVALUATION OF VILLAGE FUND MINISTER OF FINANCE GUIDELINES AND EXAMPLES OF CALCULATION OF VILLAGE FUNDS OF EACH VILLAGE I. GROUND FOR CALCULATION In calculating the Village Fund for each Village, the Regency/City Government shall refer to the following provisions: 1. Provisions related to funding sources, model calculations, variables and weights used in the calculation of Village Fund for each village shall be implemented in accordance with the provisions of Article 7, Article 8, and Article 9 of this Ministerial Regulation, namely: a. Village Fund sources used in the calculation of the Village Fund for each Village coming from the Village Fund details of each regency/city as stipulated in Presidential Regulation on APBN/APBN-P details. b. The Village Fund of each Village shall be calculated based on the: 1) Basic Allocation, which shall be the allocation divided evenly to each Village by 90% (ninety percent) of the Village Fund of each regency/city; and 2) allocation calculated by taking into account population, poverty, area, and level of geographic difficulty of each Village (hereinafter "Formula Part"), with the following weights: a) 25% (twenty five percent) for the total population; b) 35% (thirty five percent) for the number of poor population; c) 10% (ten percent) for the area; and d) 30% (thirty percent) for the level of geographical difficulties. 2. The relevant provisions formulas/formulations used in the calculation as stipulated in Article 9 of this Regulation, namely: Village Fund for each Village = (Village fund of the regency/city - Basic Allocation) x [(25% x the ratio of total population of each Village to the total population of Village of the regency/city in question) + (35% x ratio of the number of poor population of the Village to the total poor population of each Village of the regency/city in question) + (10% x the ratio of the area of the Village each area of the Village of the regency/city in question) + (30% x IKG ratio of each Village to the total IKG of the villages of the regency/city)]. II. PROCEDURES FOR CALCULATION

32 In order for the calculation of Village Fund of each Village can be orderly, transparent and the results can be accounted for, it requires the operational steps as follows: 1. PREPARATION PHASE At this phase, the activities carried out include the preparation of documents and related data as well as files of calculation excel worksheets. Details of activities at the preparation phase: a. Collection of documents, data and information necessary in the calculation process, namely: 1) Document of details of the Village Fund of each regency/city (Village Fund ceiling of regency/city) as stipulated in Presidential Regulation concerning the details of APBN/APBN- P. 2) Documents containing information on the total population of the villagers, Village poverty rate, total area of the Village, and level of geographical difficulty index data represented in the form of geographical difficulties. b. Preparation of worksheet in the form of an excel file. c. Setting up of the storage folder of documents, data and related information as well as printing of the worksheet and Excel files calculation results. d. The Worksheet of calculation of the Village Fund of each Village is prepared with the following format:

33 33 Worksheet of calculation of Village Fund of Each Village REGENCY/CITY... (a) BUDGET YEAR 20XX (b) No. Village name Basic Allocation Total population Allocation by Formula Total Population Total Poor population Total Area IKG Total population Ratio Weight Total poor population Ratio of total people Weight Total Area Total Area Resin Weight Geographic Rank of Difficulty Index Geographic Weight Difficulty Index (1) (2) (3) (4) ( 5 ) (6) (7) (8) (9) 401 (11) (12) (13) (14) (15) (16) = (6) r (6) r (12)+ (15) (17) (18)=(3)+(17) I District 1 Village A 150,000, ,0800 2,00% 40 7,08% 2;48% 8 10,46% 1,05% 95,50 0,167 5,00% 0,105 10,523, Village B 150,000, ,1600 4,00% 80 14,16% 4,96% 14 18,30% 1,83% 96,30 0,168 5,04% 0,158 15,827, Village C 150,000, ,1200 3,00% 70 12,39% 4,34% 10 13,07% 1,31% 94,20 0,164 4,93% 0,136 13,575, II Village H 1 Village D 150,000, ,1200 3,00% 75 13,27% 4,65% 9,5 12,42% 1,24% 98,51 0,172 5,16% 0,140 14,045, Village E 150,000, ,3200 8,00% ,86% 11,15% 20 26,14% 2,61% 97,25 0,170 5,09% 0,269 26,856, Village F 150,000, ,2000 5,00% ,24% 7,43% 15 19,61% 1,96% 91,25 0,159 4,78% 0,192 19,171, Total Weight Allocation by formula Village fund ceiling by Village Total , , , ,10 573,01 1 0, ,000,000,000 Example Weight Village Fund Ceiling of Regency (c) JP (g) 25% X Basic Allocation Ceiling (90%) (d) JPM (h) 35% Formula Part Ceiling (10%) (e) LW (I) 10% Total Village (f) 6 IKG (j) 30%

34 34 Domicile, DD/MM/YYYY Authorized officer/person in charge (1) Village fund calculating officer (m) Name NIP Name NIP

35 2. IMPLEMENTATION PHASE MINISTER OF FINANCE At this phase, the activities carried out include the input of the relevant data and calculation of allocations. Use the sample calculations as contained in the appendices to the guidelines as the guidelines for the implementation of the calculation. Details of activities at the implementation phase: a. Input the relevant data in the line and column of the worksheet in the following order: 1) Name of regency/city in line (a). 2) Fiscal Year in line (b) 3) Village Fund Ceiling of the Regency/City in line (c) 4) Number of Village in line (f) 5) Weight of Total Population of the Village of 25% in line (g) 6) Weight of Village poverty rate by 35% in line (h) 7) Weight of Village area by 10% in line (i) 8) Weight of Geographical difficulty Index 30% in line (j) 9) Serial number in column (1); 10) Name of Regency in column (2); 11) Name of the Village in column (2), after the name of the Regency; 12) Total Population of the Village in column (4); 13) Total Poor population of the Village in column (7); 14) Area of the Village in column (10); 15) Geographic Difficulty Index in column (13). b. Calculation of the Village Fund of each Village in the lines and columns of the worksheet in the following order: 1) Calculate the allocation divider variable as follows: a) Basic Allocation ceiling in line (d) using the formula as follows: Basic Allocation Ceiling = 90% x Village Fund Ceiling of the Regency/City b) Formula Part Ceiling in line (e), using the formula: Formula Part Ceiling = 10% x Village Fund Ceiling of the Regency/City 2) Calculate the basic allocation part of the Village Fund of each Village (Basic Allocation) in column (3), using the formula: Basic Allocation = Basic Allocation Ceiling Total Villages in the Regency/City 3) Calculate the formula allocation part of the Village Fund of each Village in the following order:

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