Sat, 27 Jun 2009
Aditya Suharmoko, The Jakarta Post, JAKARTA

Continued proliferation of administrative regions in Indonesia may no longer be economically sustainable, as it creates additional costs to the state with relatively small benefits, says government official in UNDP forum.

Speaking at a UNDP forum on Thursday, director general of financial balance Mardiasmo said the government would have to spend Rp 14.27 trillion (US$1.4 billion) in “vertical” funds on branches of government agencies in new regions like police offices, courts, customs and excise offices, tax offices (BPN).

The figure, he said, rose from Rp 14.02 trillion in 2008, and Rp 8.09 trillion in 2007.

The government also has to spend more on general allocated funds (DAU) disbursed to regions.

This year’s DAU is Rp 186.41 trillion, up from Rp 179.51 trillion in 2008 and Rp 164.79 trillion in 2007.

Indonesia now has 524 autonomous regional administrations, comprising 33 provinces, 398 regencies and 93 cities.

But there are 20 new regional administrations being planned, seven of which would be provinces, which would result in a lower DAU to each region, said Mardiasmo.

“If we want to be strict, proliferation is allowed, but should [be done] within mother regions,’ he said.

“There are now 48 regional administrative units whose spending for civil servants is 70 percent of their budget,” he added.

A Finance Ministry study in 2007 showed that new administrative regions cost, on average, Rp 7.8 trillion to the state, while the positive impact to the economy was relatively small. Therefore the ministry suggests a moratorium on new regions.

“There are success stories, but from the fiscal side there are additional costs. The role of governors is important to [on] eligibility” he said.

Government Regulation No. 78/2007 on the procedures for initiating, abolishing and merging regions has tightened criteria for the creation of regions, including demography, economic potential and financial capacity.

Mardiasmo expects the House of Representatives to delay current proposals for 20 new regions.
Governors still lack the courage to control and coordinate the proliferation of regions, said Kausar AS, Home Affairs Ministry’s director general of general government.

GTZ senior advisor Agus Dwiyanto said Law No. 32/2004 and Government Regulation No. 38/2007 did not clarify the role of governors.

He said government should define the role of governors in the creation of new regions more clearly, or use central government ministries as supervise and limit the proliferation of new administrative regions.



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