The Study of Economic Interchange in Indonesia : The case of East Kalimantan Province

The East Kalimantan province in Indonesia has anequally formidable challenges remain for East Kalimantan province. The most important issues is the disparity among various sectors of the economy. A kind of "technological dualism" has emerged in the province, comprising a capital-intensive modern sector in oil, gas, wood products, and some construction activities, alongside a traditional labour-intensive sector engaged in agriculture, petty trade, and other activities. The linkage between these sectors are still weak, even to the point that the modern sector frequently employs labour from outside the province, although there does appear to be a shift of labour in the province out of agriculture to better paid employment in the construction, mining, and manufacturing industries. The Profit Sharing Fund decreed by Law No 25/1999 states that the division of income between the Central and provincial governments is to address vertical fiscal imbalances between the Central and provincial governments which needs to be evaluated and economic interchange model needs to be modified.