Decentralization in Indonesia
Table of ContentsGovernance and Development Context1
The Indonesian state: Indonesia’s growing status as a stable democracy that plays a constructive role in the regional and international communities of nations is widely recognised. The bases of such development include, first, the strength of the electoral system, which arguably has become one of the more competitive in the region. Governments at all levels are elected in largely free and fair elections that result in a significant turnover of representatives. Second is the Indonesian presidential form of government, which is designed to provide – and, to some degree, succeeds in providing - checks and balances between the legislative, judicial and executive branches of government. Third, the Constitutional Court exercises critical oversight of parliament and of other institutions. Fourth, as a consequence of good economic management over several years, public debt has been reduced, foreign reserves have grown, the financial sector has been strengthened, and a more robust domestic economy has been established. As a result, Indonesia is better placed than most economies in the region to weather the current global financial turmoil and economic slow down. In short, Indonesia’s macroeconomic condition is stable and not in crisis. Fifth, all of this has helped to increase local and foreign investor confidence, and civil society organisations are better able than before to pursue their interests and to be heard. Sixth, recognizing its low standing in international comparisons of the extent of systemic corruption, the government has embarked upon a vigorous and well-publicised anticorruption drive. Nevertheless, most observers would agree that there is considerable ground to be made up here and in other aspects of governance. Crucial institutions - such as the civil service, the legal system, the security sector, and district levels of government - are still weak.
Development indicators and poverty: Perhaps most importantly, however, poverty remains a problem. While considerable progress has been made on some indicators (for example, life expectancy) and there is some debate about measurement and indices, it is generally accepted that the number of people living in poverty is high for a middle income country, and comparable to or worse than that of some low-income countries such as Vietnam. For example, maternal mortality rates are as much as three times those of Vietnam and six times those of China. Less than 1% of Indonesians have access to piped sewerage. As in many other countries, there is significant geographical variation in poverty levels – the most adversely affected region is eastern Indonesia.
National benefits of decentralization: In many countries that have embarked on major programmes of decentralisation, the primary purposes have been political, either those of consolidating the position of a ruling party and of ruling elites or those of preventing the fragmentation of the state and ensuring political stability, or both. Our brief discussion above would suggest that in Indonesia in large measure the latter political purposes have been well served by government policy on decentralisation, and are well on the way to being achieved.
Local-level benefits of decentralization: The realization of national goals derives from local-level benefits. The new decentralisation has changed local government throughout the nation significantly. For example, new funding mechanisms delegate significant discretionary spending authority to local governments; local legislative assemblies are empowered to oversee local allocations and approve local budgets; and the authority and responsibility of district heads (bupati) and mayors (walikota) have been expanded significantly to cover a range of new functions.
Policy choices: As suggested above, however, the evidence for service delivery, poverty reduction and some aspects of good governance is clearly less encouraging. The Jakarta Commitment reaches similar conclusions: ‘notwithstanding the progress made so far, Indonesia continues to face significant development challenges, especially in the areas of poverty reduction, service delivery and decentralisation’ (p. 1). One question that arises is whether the (early) development and political successes of decentralization may lead to some degree of complacency and create the circumstances for the re-emergence of a strong central government bent on reasserting its authority over (what may sometimes be perceived to be ‘recalcitrant’) local governments, or whether the benefits to sustainable human development and poverty reduction promised by decentralisation will be encouraged. In these respects decentralisation in Indonesia has reached an important watershed.
Getting the balance right: To the extent that local governments have grown accustomed to the greater autonomy afforded to them by decentralisation (particularly since 2001), a major task facing government will be to strike a balance between national concerns such as the recurring (though seemingly diminishing) threat of secession, on the one hand, and legitimate demands from the periphery for the maintenance of gains in local government autonomy on the other. The danger is that preoccupation with national politics and the balancing of institutional powers between different levels of government may distract attention and divert resources away from continuing improvements to local service delivery and poverty reduction.
Recognition of the risks involved is inherent in the goal of the DSF and its strategic priorities, which accord prime importance to improvements in service delivery for ordinary citizens.
------
1 This section draws on recent national and comparative empirical evidence and analysis, including: Government of Indonesia documents, such as the National Medium-Term Development Plan (RPJMN 2004-2009); Regional Autonomy Implementation Strategy; National Action Plan on Fiscal Decentralisation; National Framework for Capacity Building to Support Decentralisation; the Jakarta Commitment: Aid for Development Effectiveness - Indonesia's road map to 2014; MacIntyre, A., & Ramage, D.E. (2008). Seeing Indonesia as a Normal Country. Canberra: Australian Strategic Policy Institute; Lewis, B.D., & Smoke, P. (2008). Fiscal Decentralisation in Indonesia: Where to Now? DSF Working Paper: December 2008, mimeo, pp. 15; Blunt, P., & Turner, M. (2007). ‘Decentralisation, Deconcentration and Poverty Reduction in the Asia Pacific’. In S. Cheema & D. Rondinelli (Eds.), Decentralized Governance: Emerging Concepts and Practices. Brookings Institution Press and the Ash Institute for Democratic Governance and Innovation, John F.K. Kennedy School of Government, Harvard University; Blunt, P. (2009, in press). ‘The Political Economy of Accountability in Timor-Leste: Implications for Public Policy’. Public Administration and Development, 29 (2), in press; and Silver, C. (2003). ‘Do the Donors have it Right? Decentralization and Changing Local Governance in Indonesia’. The Annals of Regional Science, 37 (3), pp. 421-434.
