RI's chaotic decentralization<\/p>\n
By Hans W. Vriens<\/p>\n
JAKARTA (JP): Two months ago Indonesia overnight moved from
\none of the most centralized to one of the most decentralized
\nstates in the world. The first results are not promising. There
\nis almost complete uncertainty, misunderstanding, and confusion
\namong all parties about the meaning and direction of the
\ndecentralization process.<\/p>\n
Jakarta has not clearly defined and explained the roles and
\nresponsibilities of different government bodies, or different
\nlayers of government.<\/p>\n
That does not bode well for a country whose virtually blind
\npresident is addicted to a diet of continues overseas travel
\ninstead of focusing on solving problems at home.<\/p>\n
Nobody in Indonesia seems to know what the responsibilities
\nunder so called \"regional autonomy\" are of the central
\ngovernment, the provinces and the municipalities.<\/p>\n
Because the central government still has to promulgate
\nhundreds of regulations the biggest overhaul of Indonesia's
\ngovernment in 56 years takes place in an almost complete legal
\nvacuum, and amid great political uncertainty.<\/p>\n
Worse, the president has abolished the ministry of regional
\nautonomy that was responsible for introducing it.<\/p>\n
What is clear is that Jakarta has devolved many powers to the
\nmunicipalities. In theory it may make sense to give powers to
\nlocal governments because they are closer to the people. In
\npractice municipalities in Indonesia have no clue how to govern.
\nThey were never supposed to.<\/p>\n
During the 32-year long kleptocratic rule of the authoritarian
\npresident Soeharto the huge Indonesian archipelago was ruled from
\nJakarta. All-important decisions were made by the president.
\nMinisters, provincial governors and mayors were supposed to
\nexecute, not to make, policies.<\/p>\n
To make sure mayors on outlying island understood their role
\nthe army and the central government had a presence in every
\nprovince and every municipality. Nobody knows what to do with the
\nmore than two million central government civil servants who are
\nbased in the provinces.<\/p>\n
Officially the regions have to employ them. However, many
\nregions have already made clear that the Javanese representatives
\nof the Jakarta elite in their municipality are somewhat less than
\nwelcome to join the local bureaucracy.<\/p>\n
The old system of over-centralization made sure the political
\npower, and the wealth of resource-rich Indonesia stayed within a
\nsmall group consisting of the president, his family, their
\ncronies and the Jakarta elite.<\/p>\n
As a result, the oil rich province of Riau opposite Singapore
\nproduces two-thirds of Indonesia's oil, but received less than 5
\npercent of this revenue in the form of central government grants.
\nThat is why Riau is known for two reasons: oil and poverty.<\/p>\n
After the overthrow of Soeharto three years ago the provinces
\nand regions demanded a fair distribution of wealth and a say in
\ntheir own affairs. The introduction of far reaching autonomy was
\nwidely seen in Indonesia as the only way to avoid a break-up of
\nthe fourth most populous country in the world.<\/p>\n
It was also viewed by its architects as a way to break the
\npower of the Jakarta elite, who are still very much in control.
\nIt would also make Indonesia more democratic. Revolutionary
\nthoughts for a country where the word federalism is still taboo.<\/p>\n
The fear is that a genuine federal state would make the 32
\nprovinces too powerful. Once the provinces realized they longer
\nneeded Jakarta, they might try to break-away, as the provinces of
\nAceh and Irian Jaya have been trying to for a long time.<\/p>\n
To avoid this dooms-day scenario for Indonesia the architect
\nof \"regional autonomy\" Ryaas Rasyid decided to handover many
\npowers directly to the 364 municipalities, and give the provinces
\na vague mediating role between municipalities. That these local
\ngovernments were completely unprepared to take over was a minor
\nconcern.<\/p>\n
One consequence of the introduction of \"regional autonomy\" is
\nthat mining companies no longer can negotiate about their
\ncontracts with the once powerful ministry for mines and energy.
\nInstead they have to deal with the mayor in the area in which
\ntheir mine is located.<\/p>\n
The mayor of Kutai in East Kalimantan makes clear why people
\ncall him \"little king\". \"For 32 years we handed the money over
\nto Jakarta. Now it's our turn to benefit to benefit from the
\nmines.\" Under \"regional autonomy\" the regions will receive 80
\npercent of government revenues generated by mining.<\/p>\n
Unfortunately Indonesia is \"decentralizing a dream\", as an
\nexecutive of an American mining company puts it. Tax rates in
\nIndonesia are already so high that no new significant investment
\nin the mining sector has come in during the last few years.
\nRegional autonomy effectively kills the necessary foreign
\ninvolvement in the mining sector.<\/p>\n
\"Try to get convince Citicorp in New York that you want a 10
\nyear loan because you negotiated a contract with the mayor of
\nKutai on the island of Kalimantan instead of the central
\ngovernment,\" an executive said. The mining industry in Indonesia
\nis expected to shrink by 30 percent in the next five years.<\/p>\n
Surprisingly the fundamental change of Indonesia's government
\nstructure has been introduced by stealth. President Abdurrahman
\nWahid and his many opponents in the legislature are too busy
\ntrying to \"impeach\" or \"dissolve\" each other to even think about
\nthe far reaching implications of handing over many powers to the
\nmunicipalities.<\/p>\n
To make matters worse some influential people in Jakarta have
\nsecond thoughts about having handed over so many powers to the
\nregions in a moment of democratic euphoria. At the same time the
\nprovinces have started a counter-offensive to reclaim their
\npowers.<\/p>\n
While at the same time the municipalities make clear they are
\nnot willing to give up any of their newly won powers and
\nbudgetary responsibilities.<\/p>\n
To make matters worse, the regions do not believe Jakarta is
\nwilling and able to relocate all the financial resources it is
\nsupposed to under \"regional autonomy\".<\/p>\n
As a result the central government and many local governments
\nare raising existing and inventing new taxes to make up for their
\nexpected budget deficits.<\/p>\n
There is no doubt that decentralization of Indonesia is long
\noverdue and that it will create good economic prospects in
\nregions that are well governed. The problem is that very few
\nregions in Indonesia have experience in governing.<\/p>\n
The writer is Managing Director of APCO Indonesia, a wholly
\nowned subsidiary of APCO Worldwide, a leading political risk and
\ngovernment relations firm.<\/p>",
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