Pointers from Indonesia
WHEN I visited Sulawesi Tengah (Sulten) some months ago, I was stunned to find many roads, although only two lanes wide, are far better than those leading to two oil palm plantations that I am familiar with in Sabah.
Several weeks later, a trip to Kalimantan Barat (Kalbar) revealed a striking disparity: some roads are on par with the best in Sulten while others can be described as “bone jarring.”
These two visits prompted my interest in finding out more about the impact of Indonesia’s decentralisation.
Implemented in 1999 after President Suharto was forced to resign amid the Asian Financial Crisis, decentralisation was driven by two factors – a reaction to 30 years of a Jakarta-centric central government and as a response to regional conflict, particularly in Acheh and Irian Jaya or Papua.
Several aspects of Indonesia’s decentralisation are noteworthy. Labelled “Big Bag” because the transformation was radical, massive and, for bureaucrats, swift.
Because mayors, regents or “bupatis” and governors in Indonesia are now elected directly, this promotes greater accountability. Local Indonesian electorates have reportedly voted out of office those perceived as corrupt, inefficient or both.
In Malaysia, although mentri besars are elected to state assemblies, these state chiefs and mayors are appointed by Putrajaya.
After decentralisation in the archipelago, regencies and municipalities were given full autonomy, provinces have more limited jurisdiction while the central government’s authority was scaled back and confined to security and defence, foreign affairs, fiscal and monetary policies, justice and religious affairs.
Responsibility for public services and 16,000 service facilities – including providing infrastructure like roads – were transferred to the local level.
Also reassigned to the regions from the central government were two tranches of civil servants – 150,000 in 2000 and 2.1 million in 2001; the latter figure accounted for two-thirds of Indonesia’s civil service, according to a World Bank report, published in June 2003, titled “Decentralizing Indonesia.”
Despite some drawbacks, decentralisation has yielded several positive outcomes.
First, decentralisation has been well received by Indonesians. Contrary to expectations, over 40% of Indonesians believe public services have improved after decentralisation, the World Bank noted.
Second, within one year of decentralisation, the regional share of government spending almost doubled, the World Bank added.
Third, regional unrest has been dampened considerably.
“Separatist movements have also largely died down, with the best organised, that in Acheh, now in power in the province and running municipal services, rather than an armed conflict,” the Oxford Business Group (OBG) wrote in its 2012 report titled “Decentralisation has presented both challenges and opportunities.”
Special fiscal policy arrangements enabled Aceh and Papua to receive 70% of total income extracted from these two provinces, according to M. Ryaas Rasyid in a paper titled “The Policy of Decentralisation in Indonesia.”
Fourth, decentralisation has been an incubator for local government politicians. An overwhelming front-runner for Presidential elections slated to be held next year, Joko Widodo, better known as Jokowi, was spring-boarded to national prominence through his effectiveness as mayor of Solo in Java and currently as Jakarta governor.
Jokowi revived Solo’s economy, badly damaged by riots in 1998, partly through fostering growth in the traditional batik trade without subsidies, the OBG report notes.
In Jakarta, Jokowi has persuaded previously immoveable squatters and street vendors to relocate, raised by 46.6% the minimum wage to 2.2 million rupiah (RM620), initiated a mass rapid transit system and announced the introduction of e-catalogue to undertake direct procurement.
Fifth, greater autonomy has spurred provinces, regencies and municipalities to compete aggressively for private investment.
To improve local governance, cities, regencies and provinces are regularly assessed by the Regional Autonomy Watch (KPPOD). In June 2011, Blitar in East Java was named as the best in local governance.
Meanwhile, provinces compete annually to be selected by the Indonesian Investment Coordinating Board (BKPM) as “regional champions”. In October 2011, Kalbar and Sulten were among seven provincial winners.
Underscoring more dispersed economic development throughout the archipelago, a McKinsey report titled “The archipelago economy: Unleashing Indonesia’s potential,” forecasts around 90% of urban areas whose economies are expected to grow faster than 7% by 2030 will be from outside Java.
Drawbacks of decentralisation include more red tape, increased corruption at local level, regional governments’ inadequate capability in policy making and financial management and conflicting land titles due to legislation that failed to delineate clearly the jurisdictions of central and regional authorities.
Additionally, the proliferation of local government units – from 299 regencies and cities in 1999 to 500 last year, according to the OBG report – has resulted in infrastructure projects lacking economies of scale and poorly coordinated with other counterparts.
Prior to decentralisation, corruption and red tape were endemic. Arguably, giving more decision-making authority to mayors and governors will enable more politicians like Jokowi to showcase their effective and transparent style of governance.
Opinions expressed in this article are the personal views of the writer and should not be attributed to any other organisation she is connected with. She can be contacted at[email protected]