Unequal Exchange: How Borneo Fuels the State but Gets Left Behind

Sand mining on the Kapuas River in West Kalimantan. Photo: DRC Archives.

Researchers:

Cornelis
Masri Sareb Putra

 

I. INTRODUCTION

1.1 Background

The island of Borneo (Kalimantan) is one of Indonesia’s richest regions in terms of natural resources. Covering a total area of approximately 743,330 square kilometers, Borneo is the third-largest island in the world. 

About 73% of this landmass, roughly 544,150 square kilometers, lies within Indonesian territory, known as Kalimantan. Its contribution to national revenue comes predominantly from key sectors such as mining (coal, oil, and gas), forestry, and palm oil plantations. However, there exists a glaring disparity between the wealth extracted and the funds returned to the region. 

This imbalance raises questions of fiscal justice and highlights the uneven development between Borneo and other islands such as Java and Sumatra.

Read Ethnic Conflict in Borneo: The Perspective of Irving Louis Horowitz

1.2 Research Questions

• To what extent does Borneo contribute to Indonesia's national revenue?

• What portion of this revenue is returned to the region in the form of government funding?

• What are the socio-economic impacts of this fiscal disparity on local development?

1.3 Objectives

• To analyze Borneo’s fiscal contribution to the national budget (APBN).

• To examine the allocation of central government funds back to the producing regions.

• To formulate policy recommendations to address structural fiscal imbalances.

Read The Role of Forests for Dayak Communities Around Kayan Mentarang National Park

II. LITERATURE REVIEW

2.1 Fiscal Inequality Theory

Fiscal inequality refers to the disproportionate distribution of national income relative to regional contribution. It is closely tied to the principles of fiscal justice and decentralization, where producing regions should ideally benefit more directly from their contributions.

2.2 Previous Studies

According to Kompas Research and Development (2022), per capita development spending in Borneo is significantly lower than in Java. INDEF (2021) also reported that only 20–30% of the revenue generated in Borneo returns in the form of General Allocation Funds (DAU), Special Allocation Funds (DAK), and Revenue Sharing Funds (DBH), despite the region contributing nearly all of the extracted resource value to the central budget.

Read Preserving Peat Forests and Indigenous Wisdom: The Case of Hutan Adat Tawang Panyai

III. RESEARCH METHODOLOGY

3.1 Type of Research

This is a descriptive-qualitative study supported by quantitative analysis of verified secondary data sourced from government institutions such as the Ministry of Finance, Ministry of Energy and Mineral Resources (ESDM), and the Central Bureau of Statistics (BPS).

3.2 Data Collection Methods

• Review of government reports and official financial documents.

• Data from the Directorate General of Budget and Fiscal Balance.

• Analysis of media sources and statements from regional leaders.

3.3 Data Analysis Technique

A comparative analysis is employed to measure the discrepancy between regional contributions and returned funds. Data are presented in tables and narrative forms to clearly illustrate the structural imbalance.

IV. RESULTS AND DISCUSSION

4.1 Borneo’s Contribution to National Revenue

According to the Ministry of Energy and Mineral Resources (2023), Indonesia’s total coal production reached 775.2 million tons, with East Kalimantan contributing over 45%. Non-tax state revenues (PNBP) from East Kalimantan's resource sector alone amounted to Rp2.72 trillion as of October 2024, excluding contributions from Central, South, and West Kalimantan.

4.2 Disparity in Funds Returned to the Region

INDEF (2021) found that only 20–30% of resource-derived revenue is returned to the region through DAU, DAK, and DBH. The remaining 70–80% is absorbed by the central government. In Kutai Timur Regency, for example, the total regional income was Rp3.12 trillion in 2021, but only Rp706 billion was allocated to capital expenditure.

4.3 Illustrating the Imbalance

Aspect	Data/Information	Remarks
Borneo’s Contribution to APBN	Rp50 trillion (East Kalimantan – 2021)	PNBP from coal, oil & gas, and forestry (MoF, 2022)
Funds Returned to Region	Only 20–30%	In the form of DAU, DAK, DBH (INDEF, 2021)
Funds Absorbed by Central Gov.	70–80%	Utilized mostly for development in Java and other islands
Per Capita Development Spending	Lower than in Java	Kompas Research & Development, 2022
National Coal Production Share	45% from East Kalimantan	ESDM, 2023
Impact	Poor infrastructure, structural poverty, demands for federalism	Kompas, 2022

4.4 Implications of Fiscal Imbalance

In a 2022 national forum, the Deputy Governor of North Kalimantan, Dr. Yansen TP, declared that Borneo has become “the republic’s cash cow,” contributing heavily to the national budget without receiving fair returns. East Kalimantan’s GDP per capita reached Rp215 million in 2023—among the highest in Indonesia—but this figure masks severe gaps in infrastructure, education, and basic public services. The fiscal injustice has fueled growing discontent and calls for a more decentralized and equitable fiscal system.

Read The Dayak of Borneo: Guardians of the Rainforest or Scapegoats of Deforestation?

V. CONCLUSIONS AND RECOMMENDATIONS

5.1 Conclusion

This research affirms that while Borneo significantly contributes to Indonesia’s state revenue, it receives a disproportionately small share of the fiscal returns. This structural fiscal inequality hampers regional development and perpetuates socio-economic disparities between Borneo and other major islands.

5.2 Recommendations

1. Revise the formula for Revenue Sharing Funds to better reflect actual resource contributions.

2. Increase the allocation of General and Special Purpose Grants to producing regions.

3. Improve transparency in national budget usage to ensure regions can track their contributions and benefits.

4. Strengthen regional fiscal autonomy through decentralization to foster fairer development outcomes.

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