Decentralization alternatives vital

By Santo Koesoebjono

THE HAGUE, Netherlands (JP): "We are doing well during this period of economic crisis. In fact we hope that this situation will last longer," a government official in Bali said recently.

A senior research fellow of the island's state University Udayana expressed a similar opinion about the economic progress of this island. His wife's family, merchants of gold and silver wares, is doing good business now because the economic uncertainty usually drives people to invest in precious metals or property.

The ugly corner has been turned and the economy of the island is booming, supported by the favorable exchange rate between the U.S. dollar and the rupiah.

Motorcycles and popular four-wheel-drive Kijangs and Panthers are purchased and driven, contributing to overcrowding on the small roads unprepared for huge flows of transportation.

Similar economic growth is also noted on other islands, such as Sumatra and Sulawesi. The economic crisis had a differential impact on the economies of different regions, said an economist from LIPI, the national research institute of Indonesia.

Java may be the hardest hit. The situation on Java dominates the focus of the economic crisis because of its high percentage of the population (59 percent of the total population of 202 million), high concentration of manufacturing industries and services, and because the central government is located there.

This differential welfare gap between the regions may stimulate the desire for more autonomy and the decentralization of activities. Political parties should be prepared to meet and accommodate these demands, otherwise unrest and regional secession movements will continue to mount. By ignoring the wind of and need for change, reforms will get out of step with popular demand.

The political turmoil in May 1998 led to the fall of former president Soeharto. The harassment of the Chinese ethnic minority caused an exodus of these non-pribumis (non-indigenous) abroad and to the more peaceful and safer island of Bali. Estimations run to around 60,000 to 70,000 pendatang (newcomers) from Jakarta to Bali since May 1998, although such figures should be interpreted with care.

This mass influx of members of the middle and well-to-do classes has had a big impact on the economy of Bali, although in terms of numbers they represent only a tiny percentage of the island population of three million people. Prices of properties in the capital city Denpasar and in the popular resorts of Sanur and Kuta have skyrocketed. This has influenced the prices of specific consumer goods and life-styles. Although the situation in Jakarta has somewhat calmed down, life in this city is still unsafe.

Newspapers, radio and TV continuously give reports which confirm this. It has become a topic of discussion among relatives and friends, noted in warnings to foreign tourists, which makes foreigners hesitant to visit and invest in Indonesia. Although many non-pribumis have returned to Jakarta to resume their businesses, their family members remain abroad or in Bali. This sudden influx and settlement of the Jakarta elite in Bali, with their different life-styles, stimulated a demographer at Udayana University to question the impact on the social, religious and traditional life on Bali.

A more pungent question is whether the differential effect of the economic crisis will lead to a growing gap in welfare between the peoples of the different islands. Moreover, what will be the consequences on the government and its administrative structure?

The fall of the autocratic and centralist regime has allowed the blooming of different types of activities. Diverse business activities are mushrooming, bypassing government controls. Businessmen are moving their activities to different regions, such as Sumatra and Sulawesi, to develop trade directly with their immediate clients abroad. Palm oil, rubber, cocoa beans, coffee and copra are some of the commodities finding direct outlets abroad. This trade results in an inflow of cash for local producers and businessmen, and rising welfare and consumerism in the regions. The local populations are doing well during this period of national economic malaise.

The economic development of different regions may further increase the sense of economic independence from the central government, although one wonders whether the present reformasi clique condones this development. This progress is instrumental to avoid social and economic unrest in the regions, and it is also keeping resources flowing in to the advantage of the clique in power.

However, as politics and economics are good bedfellows, the rising welfare stimulates the demand for more autonomy for the regions. Regions will be more assertive, as former minister Sarwono Kusumaatmadja said recently in an interview with a Dutch national newspaper.

Decentralization is preferable to an outright split of the regions. However, we should not fear that these regions will ask for independence, because it is very unwise to demand independence knowing the fate of the newly created independent states after the fall of the Soviet Empire in 1989. Moreover, if a region really wanted its independence it could have raised the issue during the period of instability around May 1998. However, there were no serious indications that this was an issue.

The situation becomes more complicated when the regions ask for more political, economic, financial and administrative autonomy from the central government. The demand for more autonomy is spreading through the country and not limited only to independence-minded provinces. Regions will ask for a stronger say in the development of their region, contrary to the decentralization policy rhetoric of the Soeharto regime which was merely cosmetic. The regions will also demand equitable development and a bigger share of the profits generated by local resources.

Redressing the bitter legacy of 32 years of the Soeharto regime is a main task of reformasi for the regions. If this fails, frustrations will increase and social unrest may explode. Confronted with the demand for decentralization, are political parties ready to meet this request when they are in power? What agenda do they have for a diversified economy in a united Indonesia?

Once this voice for more decentralization becomes stronger it is infeasible to suppress such a demand. Political turmoil might create opportunities for basic institutional changes and the reshuffling of personnel.

The other side of the decentralization coin is whether the regions are ready to plan, implement, direct and administer regional development. Do they have the required human resources and skills to do this?

Decades of being obedient and loyal to the central government, not allowed to take initiatives and make decisions on their own, may hinder the achievement of local personnel. These issues were put forward by local government officials from various provinces of Indonesia who were attending a training session on decentralization in the Netherlands one year ago.

Examples can be observed in former communist countries. At present, most managers and personnel in those countries, although highly educated, are lacking in managerial skills and experience, a sense of initiative and the imagination to create and shape development. Will regions in Indonesia be able to counter these deficiencies within a short time?

It is therefore pressing to formulate alternatives to the decentralization of regions which will shape the future of the country. Scenarios should be developed showing the consequences of these alternatives in all aspects. They should not remain merely general plans, but must go into more detailed plans of action, such as the relation between the central and regional governments, responsibilities and obligations for national safety and international relationships, the development of the infrastructure, human resources and skills and the allocation of funds.

One also ought to explore the potential competitive advantage of regions given the differences between the natural resources and skills of the regions.

In The Jakarta Post, author-philosopher Mangunwijaya once alluded to the United States of Indonesia in the 21st century. Of course, this is just one alternative for a more equitable distribution of wealth. However, let us shift some of the emphasis from "Tunggal Ika" (one unity) to "Bhinneka" (plurality).

The writer is an economist-demographer based in the Netherlands.

Window A: The fall of the autocratic and centralist regime has allowed the blooming of different types of activities. Diverse business activities are mushrooming, bypassing government controls.

Window B: Regions will ask for a stronger say in the development of their region, contrary to the decentralization policy rhetoric of the Soeharto regime which was merely cosmetic.