Abstract
Indonesia is one of the most disaster-prone countries in the world and is exposed to a range of natural hazards that can hinder development outcomes, affecting its people and the economy. Disaster management is inseparable from the aspect of funding for small to large scale disasters and the availability of funding for the emergency response phase, transition phase, post-disaster (rehabilitation and reconstruction) phase, as well as mitigation phase. This paper aims to identify existing national disaster management, disaster financing capacity gaps including its challenges in Indonesia, possibilities of the funding sources, recommendations for disaster financing distribution and the management institutions. Breakthroughs are needed to ensure that disaster financing can be provided adequately to protect state finances, government, and community assets. The result reveals a significant dependency on the national state budget (APBN) for disaster management followed by the local government budget (APBD), grants, and loans. It is estimated that the government financial capacity on disasters is limited, around USD 214 million per year to cover national areas. This dependence and funding gap causes disaster management in Indonesia to be less effective, especially for the rehabilitation and reconstruction phase that needed significant costs. The Government of Indonesia has initiated new opportunities for disaster funding such as Disaster Pooling Fund and Disaster Risk Financing and Insurance as a modality in dealing with disasters. Moreover, it is essential to assess inter-governmental capacity in delivering and managing the fund.
