Intergovernmental fiscal relations bill under fire

JAKARTA (JP): The Indonesian Economists Association (ISEI) urged on Monday the House of Representatives to cancel debates on the intergovernmental fiscal relations and local government bills, contending the draft legislation were so flawed they would contribute nothing to the improvement of regional autonomy.

An ISEI delegation, headed by Irzan Tanjung, argued at a meeting with the House's special committee on the two bills that the draft legislation still vested most administrative power on the central government in Jakarta.

"If the bills, in their present form and with their present stipulations, were forcefully enacted by the April 24 deadline set by the government, they would not be effective in enforcing an adequate decentralization of government," Tanjung said.

He said the two bills should supplement each other because power sharing without revenue sharing would be meaningless.

According to Tanjung, the government and the House should first complete the legislation on local government and only then formulate the bill on intergovernmental fiscal relations according to the financial needs of local administrations.

"We can not establish a good financial-sharing mechanism if the power sharing is still not clear."

"Without a clear definition of the functions of both the central and local governments, there will be overlap and confusion in the management of financial resources between the central and local governments," Tanjung said.

The House currently is deliberating the two related bills, which the government hastily prepared in response to the rising disillusionment of local administrations over what they see as an unfair distribution of revenue derived from local natural resources.

He added that the time allotted for deliberation on the two bill also was too short to allow for a meaningful and critical analysis of such important legislation.

"The two bills stipulate only general principles and simply empower the central government to determine the technical details through regulations or presidential decrees."

"It creates a back door for the central government to issue regulations which will further entrench its power over local administrations," he said.

Sri Mulyani Indrawati, a member of the ISEI delegation, expressed concern that the absence of a clearly stipulated revenue-sharing formula in the bills would again give the central government a blank check to do whatever it wished with revenue derived from local natural resources.

"We are worried that if this formula is not stated outright in the legislation and left to the central government to determine through regulations, the present gross injustices will remain," she said.

She said several areas covered by the two bills, including revenue sharing, were politically sensitive issues which could lead to the country's disintegration if they were not properly addressed.

Sri said the hasty deliberation of the two bills was a token gesture from the government to address local administrations' demands for greater autonomy and to win political favor.

"We are afraid the two bills, seemingly designed merely to reduce pressures from disappointed provinces, will create new problems which will be more difficult to be addressed," Sri said.

Protests and separatist calls have been seen in several natural resources-rich provinces, including Aceh, Riau and Irian Jaya, over the perceived unfair distribution of natural resources-derived revenue by the central government. Calls for independence in some provinces have been fueled by the issue.

The two bills were designed to create a more equitable distribution of income and power between the central government and provincial administrations. Moves which are hoped will dissipate separatist pressures.

Meanwhile, legislator Alfian Darmawan admitted the two bills failed to address several crucial issues, including revenue sharing, the demand for transparency in the management of local natural resources and local administrations' accountability in managing financial resources.

"We realize the government still is not ready to address the demands for decentralization, both in political and economic issues," he said. (gis)