Fiscal Decentralization: Reformulation of the General Allocation Funds (GAF) Policy for Archipelagic Provinces in Indonesia Bismar Arianto 1 , Oksep Adhayanto 2 , Winata Wira 3 , Nurhasanah Nurhasanah 4 , Sekar Nur Wulandari 5 , Zulkarnaen Adijaya 6 , Pery Rehendra Sucipta 7 {bismar@umrah.ac.id 1 , adhayantooksep@umrah.ac.id 2 , winatawira@umrah.ac.id 3 , nurhasanah@umrah.ac.id 4 , wulandari.sekar09@gmail.com 5 , adijayazul@gmail.com 6 , peryrehsucipta@umrah.ac.id 7 } Department Government Science, Universitas Maritim Raja Ali Haji, Indonesia 1 Department of Law, Universitas Maritim Raja Ali Haji, Indonesia 2,7 Department of Management. Universitas Maritim Raja Ali Haji, Indonesia 3,4 Senior Researcher at Planning, Research and Development Board (BARENLITBANG) of the Kepulauan Riau, Indonesia 5,6 Abstract. After the 1998 reform, the fiscal decentralization adopted in Indonesia did not benefit the archipelagic regions. It is evident through the General Allocation Fund (GAF) policy, which employs the width, size of the mainland, and population as leading indicators. As a result, provincial archipelagos with little continent tend to be underfunded in terms of development funds. This study proposes a revised GAF scheme for equitable budget distribution in Indonesia's archipelago regions. It generates two models that capture archipelagic provincial regions' features in the GAF formula: first, the addition of the Distance between provincial capital to district capital in the form of coefficient variance index of Distance for the GAF formulation. Second, an additional percentage of the GAF baseline ceiling for the archipelagic provinces special fund, a particular scheme proposed by eight provincial archipelagos to the central government. Through these two schemes, we demonstrate that the development fund policy allotted to archipelagic regions, covering eight provinces and eighty-five districts/municipalities, will improve substantially more than in the past. Keywords: Fiscal decentralization; reformulation; archipelagic regions 1 Introduction The government administration process is generally carried out in two patterns: centralization and decentralization. These two patterns are not two opposites and can be separated just like that, but both are patterns that are integrated into a system of government. The administration of the Indonesian government uses both of these patterns. Decentralization has been implemented since the Old Order regime, but it has not gone well. In 1965 the Old Order regime fell and was replaced by the New Order regime. In this regime, the administration of government is centralized. In 1998 the New Order regime also failed, and Indonesia entered an era of reform. In the reform era, there was a fundamental change in the administration of the SHIMBA 2022, September 18-20, Tanjung Pinang, Indonesia Copyright © 2022 EAI DOI 10.4108/eai.18-9-2022.2326047