Sat, 22 Aug 2009
From: The Jakarta Globe
By Muhamad Al Azhari
The central government has again urged a halt to the carving out of new regions throughout the country, warning that the process significantly weighed on the national budget while doing little to improve social welfare standards.

“We want to see a halt to the proliferation of new regions,” Finance Minister Sri Mulyani Indrawati said during a special plenary session of the outgoing Regional Representatives Council (DPD) on Wednesday.

The more administrative regions that are established, the less each will receive in financial transfers from the central government, she said.

The DPD session was convened to deliver its response to the government’s draft 2010 budget.

The number of administrative regions has increased dramatically since local autonomy was first offered in 2001.

The country now has 524 administrative regions, made up of provinces, districts and municipalities, compared to 309 prior to the shift to local autonomy.

Mardiasmo, the Finance Ministry’s director general for fiscal transfers, warned in June that the government could not afford the continued establishment of new administrative regions.

General transfer payments (DAU) - funds that the central government makes to the regions to help them provide basic services - have increased threefold to Rp 186.4 trillion ($18.6 billion) in 2009 from Rp 60.3 trillion in 2001, Mardiasmo said.

This year, general transfer payments will account for about 22 percent of the central government’s projected revenues of Rp 911.5 trillion.

Mardiasmo said that the carving out of new regions meant that new government infrastructure had to be established, such as police headquarters, courts and prosecutor’s offices.

In 2009 alone, the central government allocated Rp 14.27 trillion for such purposes, versus the Rp 14 trillion allocated in 2008 and almost double the Rp 8.7 trillion allocated in 2005.

Despite the additional expenditure, the establishment of new regions does nothing to improve the well-being of residents, Mardiasmo said.

“In some of these regions, as much as 87 percent of the local budget is spent on paying bureaucrats’ salaries,” he said.

Also during Wednesday’s plenary session, DPD Speaker Ginanjar Kartasasmita said that the implementation of the local autonomy legislation had been far from ideal, with many officials now seeing decentralization as an obstacle to better public welfare.

He said that special transfer payments (DAK) to the regions - financial transfers made by the central government for specific purposes - were often misdirected.

“It’s no longer a secret that a transactional’ atmosphere colors the negotiating processes between officials at the central and local governments,” Ginanjar said. He pointed to figures published by the Supreme Audit Agency (BPK) showing that some regions that actually needed funds often didn’t receive them, while others that did not need money received funds, due to so-called lobbying efforts.

The terms “transactional” and “lobbying” are frequently employed as euphemisms for bribery and other forms of corruption.

Sri Mulyani, whose ministry is responsible for local government transfers, said that she would take action against any Finance Ministry officials caught engaging in corruption.

She also warned local government officials not to attempt to bribe their peers.

The government has poured enormous sums of money into the regions since 2004 in an attempt to equalize public services throughout the country and encourage national economic development.

Transfers have increased gradually from Rp 129.7 trillion in 2004 to Rp 309.6 trillion this year.

Some Rp 309.8 trillion is earmarked for the regions under the draft 2010 budget.



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