ADB pledges grant to support RI decentralization program

ADB pledges grant to support RI decentralization program

M. Taufiqurrahman, The Jakarta Post, Jakarta

The Asian Development Bank (ADB) has pledged a US$700,000 grant
to strengthen the audit function against rampant corruption in
Indonesia, apart from a $1 billion loan for a six-year term to
support the country's decentralization programs.

The financial management specialist of the ADB's Indonesian
mission, Farzana Ahmed, said on Tuesday that there was a need to
support the country's audit function at the regional level to
ensure good governance, accountability and transparency.

"The assistance is of great importance, as auditors have poor
understanding and application of internationally recognized audit
practices and standards," she told a press conference here.

She said there were overlaps and confusion about the roles and
responsibility of audit institutions such as the Supreme Audit
Agency (BPK), the Development Finance Comptroller (BPKP),
Inspectorate Generals and government supervisory bodies at the
provincial and regional levels (Bawasda).

Asked if the grant was part of the ADB's effort to stamp out
corruption in the country, which had reached a worrying level,
principal programs coordination specialist of the ADB's
Indonesian mission Shiladitya Chatterjee said, "Yes, we are
naturally worried about the overall governance situation in the
country, and governance is one of the most important areas of
reform ... and that is what we are trying to improve."

Audit was the principal instrument the government had to
prevent corruption, Chatterjee said.

The technical assistant program, which will be undertaken by
the National Development Planning Board (Bappenas), will wrap up
in February 2004.

Chatterjee also explained that the decentralization aid was
part of the ADB's full commitment to supporting the
decentralization programs started by the government in 2001.

"The aid would be concentrated on supporting the fiscal
capacity of the regions that have a high level of poverty and low
natural resources, because ever since the decentralization
programs began, the central government has been spending less for
them," he said.

The ADB was also concerned about the lowering of development
subsidies for villages, which it considered to have impacts on
the country's poor. A lack of investment in infrastructure at the
regional level also hampered regions in thriving.

The loan is allocated toward a variety of ongoing projects in
health, education, environment and urban development. It is also
aimed to improve the flow of resources to poorer regions.

Chatterjee said that regions targeted for the loan were
provinces endowed with limited natural and human resources such
as North Sumatra, South Sumatra, Lampung, East Java, Central
Kalimantan, Central Sulawesi, Southeast Sulawesi and East Nusa
Tenggara.

"But we aren't entirely abandoning resource-rich regions. For
rich provinces like Aceh, Riau, West Sumatra and East Kalimantan,
we are committed to boosting the involvement of the private
sector in the next three years," he said.

He added that the aid was to be channeled through the central
government with which the ADB has an established relationship.

Since the outset of the decentralization programs, the ADB has
approved $438 million in loans devoted to regional autonomy-
related projects.

Every fiscal year, the ADB allocates aid ranging from $600
million to $1.2 billion to Indonesia.

Established in 1966, the ADB is a multilateral development
finance institution aimed at reducing poverty in Asia and the
Pacific