Making Central Government Funding More Responsive to Subnational 3 Geographic Challenges

For the first time, the 2027 General Allocation Fund (DAU) will reflect the circumstances of disadvantaged, border and outlying (3T) areas through a 3T Regional Index developed by Bappenas. This story booklet traces how it came about: why the DAU formula needed upgrading, how the Ministry of Finance’s Directorate of General Fund Transfers, supported by SKALA, brought together data from ministries and agencies with different mandates, and how the index was tested through modelling and a field visit to Nunukan, North Kalimantan. By combining data, modelling and field evidence, the index marks a crucial step toward central government funding that is more responsive and equitable for areas facing significant geographic challenges.