Regional autonomy has not lived up to expectations: Minister

Tiarma Siboro The Jakarta Post Jakarta

Regional autonomy has sparked disputes between the central government and local governments, local governments and the public and even among the local administrations since it came into effect more than three years ago. To make matters worse, the government intends to revise the ruling, which, to many, signals a move to transfer the power back to the central government. The Jakarta Post's Tiarma Siboro interviewed Minister of Home Affairs Hari Sabarno over the implementation of regional autonomy and its implications.

Question: After more than three years, has decentralization succeeded in reaching its goals?

Answer: The concept of decentralization is to transfer the central government's duties to local governments to allow locals to directly enjoy achievements in development in their own region. When it was first introduced in 1999, decentralization was also aimed at preventing the central government from intervening too much in local affairs so that we could focus on macro policies. It means that the central government is supervising and observing the whole process of regional autonomy.

Through decentralization, we can also improve the regions' ability to tackle their own problems, and it also symbolizes the trust of the central government in local governments.

But nowadays we consider that the regions have not yet met our expectations due to various obstacles, including their lack of readiness to manage their problems. This situation has forced us to intensify control over local governments to enable them to run the program.

Do you think the whole process of decentralization has been completed, including the handover of authority from the central government to local administrations to run businesses with foreign parties?

In general, we have completed the whole process, including transferring authority to the regions to do business with other parties. The authority related to business management is stipulated in Article 7 of Law No. 22/1999 on regional autonomy. Of course, we insist on implementing our macro policies on national economy to regions, while at the same time paving the way for them to develop their own policies to maximize their strength.

In this context, regional autonomy opens the way for regions to promote investment, to speed up the process of issuing business permits and to establish various infrastructure to support the running of the economy. This means that through regional autonomy, we can improve regional welfare continuously. In line with decentralization, there are three major points that local administrations have to take into account: strict and simple regulations, the removal of unnecessary costs and enhancing favorable social and security conditions.

In regard to foreign investment, we have not authorized regions to issue permits because based on Article 10 of Law No. 24/2000, the mechanism dealing with foreign investment and foreign loans or grants designated to the central government or private sector needs the approval of the House of Representatives.

But I think investors understand which business permits come from the local authorities or the central government. Foreign investment, of course, involves the central government because regions have no authority to conduct direct business with foreign parties. In this case, it is the authority of the BKPM (Investment Coordinating Board) to facilitate the investment and to negotiate with foreign investors. Regions will only get involved once the deal has been settled, especially on issues that affect their interests, such as the location of the investment or benefits they may earn from the investment.

So far, I can see that local administrations perceive they have to develop fair competition to attract foreign investment because it provides job opportunities for them. It will also improve a region's standard of living, and that eventually affects the local administration's revenue from taxes.

Have you noticed various problems filed by foreign investors due to overlapping regulations between the central government and local administrations?

Foreign investors commonly complain about the confusing regulations because they change from time to time. They also complain about the security condition in some regions, although investors who have run their businesses for years in certain regions voice the same complaint.

We hope regions will be able to change their mentality to realize that the presence of both domestic and foreign companies around them is part of the ongoing efforts to help them improve their welfare.

These companies, of course, are expected to allocate more funds to improve the regions' standard of living, so as to create a synergic environment that includes social contact and sustainable development.

Despite various limitations made by the central government, several regions have established a cooperation with foreign parties.

Of course we cannot prohibit them (other countries) from building a cooperation with local administrations, but the question is, are these investors afraid if successors of the incumbent (local) regime, as well as local councillors, revoke all policies taken by their predecessors?

Foreign investors have to realize that the incumbent local administrations have only a limited time of service, and are not permanent. A regent or mayor is in power for five years, and that power can be extended for another term.

This could mean that a project funded by foreign investment in a region should not last more than five years. The situation is extremely different with the state government, in which the successor continues the policy made by his predecessor. That is why a cooperation with foreign parties has to involve the central government.

Currently, we (the Ministry of Home Affairs) are preparing a regulation on cooperations between foreign parties and locals, especially in dealing with foreign loans and financial investments. Of course, regions can cooperate with foreign parties in social and cultural fields without the prior approval of the central government. The cooperation is expected to prevent the local administration from going bankrupt as what has happened in other developing countries, such as Mexico, following the adoption of decentralization.

In the draft regulation, we stipulate that there should be a strict arrangement regarding the maximum foreign loans a region can accept and a maximum due date for the loans, which are less than five years.

How long will it take for local administrations to manage their own problems without the intervention of the central government?

It depends on human resources and natural resources alike. The more resources they have, the faster they can manage themselves. Regions which lack natural resources are expected to possess quality human resources to create various innovations to attract investors. They can do many things, including providing better services for investors.

Should decentralization run smoothly, it would boost economic expansion beyond Java. Would it have any impact on relations between the central government and the local administrations?

We get the impression that the implementation of regional autonomy has been partial, sporadic and misinterpreted, despite the fact that the regions maintain the spirit (of regional autonomy) because it helps them develop their own policies and improve the standard of living.

But on political issues, we can see that regional autonomy has sparked euphoria among executives and legislators as we often witness in disputes among them. Of course, this affects the development process and even spreads the threat of disintegration among regions.

Governors once complained that following the introduction of regional autonomy they no longer had the same power as they had before. How do you deal with that issue?

Since we introduced regional autonomy, we have handed over 18 areas of authority to governors in a bid to give them some control over regencies and mayoralties. Of course, these jurisdictions only deal with administrative issues in forestry, mining, ports and other fields.

How about the government's plan to revise the regional autonomy law?

We are currently preparing a revision of five major issues: a clear cut separation between the authority exercised by local administrations and the central government; relations between the local legislature and the local administration, which is crucial in promoting political stability in regions; the arrangement of local revenues, ranging from regional revenue to revenue sharing, and special and general allocation funds; the policy on the placement of civil servants in regions to make them more flexible; and the evaluation of various border regulations.

Do you think that regional autonomy tends to promote ethnocentrism and if so, how can we cope with the problem?

People have to understand that the meaning of regional autonomy, including its philosophy, vision, concept, background, basic regulations and the strategy to implement it, is to avoid any instant way of thinking, including the thought that they can force their demands and aspirations through mass rallies or demonstrations.

And since regional autonomy is the fruit of decentralization and democratization, the process should be seen as an effort to open the way for the selection of legitimate local leaders who are able to promote their ideas to the people. There is also the need for local leaders to maintain the decision-making mechanism, which makes them accountable to the public.

We consider democratization should be promoted in a situation where local leaders are transparent to the public and responsible for all the decisions they make.

Regional autonomy has to be seen as an opportunity for local people to develop their administration and create a system that develops its political career so that they can promote good governance. It means that regional autonomy should be managed well for the sake of keeping up social harmony between the locals and the various elements living around them. In this way, we hope that local people can be responsive to their surroundings.

Is the government developing a plan to provide scholarships in an attempt to improve human resources in areas?

In a bid to improve human resources in a region, the ministry has established a cooperation with the related institutions to provide regular education and training, including offering scholarships. But since we have a limited budget, we have to select and set up priority programs.

In line with decentralization, regions can organize the programs with other regional institutions.

Local legislatures apparently play prominent roles in promoting good governance. But judging from the several cases that have affected the relations between executives and the legislature at the local level, it seems that local councillors have failed to do this. Since people will be voting for a legitimate representative, do you see the situation improving after the 2004 general election?

Regions have been prone to political disputes between executives and legislatures following the inception of regional autonomy. If the conflicts are sparked by attempts to discharge the heads of local governments for the sake of people's interests, I don't mind. But what we have mostly seen is legislatures using illogical reasons to replace political opponents.

We have to underline that dismissals should comply with the rules of the game. Local councillors have the authority to discharge a regent or mayor should they fail to carry out their duties according to government regulation No. 108/2001. For example, regents and mayors are not accountable, so councillors can reject their annual report or accountability speech, or they introduce conflicting policies that affect public trust.

Nevertheless, these reasons do not automatically legitimize the unseating of the head of a local government until an independent team set up by the provincial administration verifies the mistakes.

What we have seen is councillors ignoring all the procedures. Some of these cases are related to political rivalry.

Speaking about the quality of our local councillors, I'm sure we will have better ones after the 2004 election with the introduction of several criteria for legislative candidates, including formal education and legitimacy. Besides, people will directly cast their vote. In this situation, we hope that local councillors will be able to accommodate their constituents' aspirations.