Rich regions reject Jakarta hand

By Anne Booth

LONDON: In the latter part of 1998 and early 1999 there were many manifestations of regional unrest. Some were violent and tragic, such as the events in Ambon and West Kalimantan. Some, such as student demonstrations in Caltex facilities in Riau, obviously intended to make a political point to both the national and the international media. The B.J. Habibie government's apparent promise, made at the end of January, of self- determination for the troubled province of East Timor, immediately provoked predictions of a domino effect in other parts of the archipelago, from Aceh to Irian Jaya.

By the end of April, press reports suggested there was a strong military backlash against any promise of ultimate independence for Timor, based in large part on the conviction that, once the Pandora's Box had been opened, several other provinces would want to escape as well. Increasingly, newspaper pundits in various parts of the world began to talk about 'another Yugoslavia' in Southeast Asia. To many, the world's fourth most populous country appeared to be unraveling in much the same way as the former USSR in the early 1990s.

To a number of observers of the Indonesian scene (myself included) it had seemed obvious for some years that the highly centralized system of government which Soeharto and his key advisers had put in place in the 1970s was, by the 1990s, both politically unacceptable and, from an economic viewpoint, inefficient and inequitable.

In the early 1970s, the establishment of firm central government control over revenues from natural resources (mainly of course oil) had seemed essential if the government was to provide infrastructure and improve the quality of life for populations in all parts of the country. After all, much of the oil was in fact located in two rather small and isolated provinces, both of which seemed to lack any strong sense of regional identity. Given the development needs in other parts of the country, it would have been very difficult to make a case in the 1970s for handing over a significant part of the oil revenues to either Riau or East Kalimantan.

When huge gas reserves were located in Aceh, a province which did have a long tradition of rebellion against outside control, some observers predicted that there could be trouble, although I cannot recall anyone in the 1970s forecasting the tragic events of the latter part of the 1980s and early 1990s in that province.

But as rapid economic growth and industrialization transformed both the urban and the rural landscape in Indonesia, and especially in Java, over the 1980s and early 1990s, the whole nature of the 'regional problem' in Indonesia changed. In the 1970s the central government could claim to be playing the role of a benevolent Robin Hood, robbing the rich few to pay for improved living standards for the poor millions, especially but not exclusively in Java. But by the mid-1990s, it was clear that the incidence of poverty in Java was in fact lower than in a number of provinces outside Java, including some such as Irian Jaya with abundant mineral wealth.

Even in those provinces such as East Kalimantan and Aceh where poverty was lower than the national average, there was growing resentment at the differences in living standards between the local populations and those of neighboring Malaysia. Per capita Gross Domestic Product in East Kalimantan in 1993 was about the same as in the neighboring Malaysian state of Sarawak, and higher than in Sabah, but poverty incidence was much higher in East Kalimantan. Given the porous nature of the land borders and the widespread movement of labor from Indonesian Kalimantan into East Malaysia by the early 1990s, it was inevitable that local populations would make comparisons between their own living standards and those in adjacent regions of the neighboring country.

In addition, by the early 1990s, the combination of rapid economic growth and over two decades of administrative centralization had produced a situation where government ministries in Jakarta were handling huge budgets for both routine administration and development projects in all parts of the far- flung archipelago. Given the absence of effective audit procedures, and the demonstration effect of growing nepotism in the first family, there was inevitably a sharp increase in the magnitude of official corruption throughout the central government apparatus.

Even those government ministries and agencies which had been considered 'clean' in the 1970s became increasingly blatant in the way they creamed off funds for the personal use of senior staff, including lavish housing and cars, foreign travel and foreign education for their children. Regional and local government officials often followed suit.

That there is now, with greater freedom in both the print and the electronic media, an explosion of public outrage against such manifestations of bureaucratic abuse is hardly surprising. The Habibie government was not slow to sense the public mood. On April 23, the legislature, the same body which slavishly approved the centralist policies of President Serrate, passed a new law on inter-governmental fiscal relations which allows for a considerable amount of revenue-sharing between center and province, especially for revenues from oil, gas, other mining, forestry and fisheries. The issues are complex and it is, as yet, far from clear how the law will operate in practice (see John McBeth in Far Eastern Economic Review, May 13, 1999). It is also possible that the new legislature will press for even more sweeping changes.

There seems to be little doubt that what James Mackie once termed the 'powerful centralizing and integrating forces' of the New Order era have been halted and indeed thrown into reverse. But how far will the reverse process proceed, and will it inevitably lead to the breakup of Indonesia?

On this question, I can only give a personal view, based on my own observations over nearly three decades of study. It does seem to me that, after more than 50 years of independence from Dutch colonialism, most inhabitants of this vast archipelago do wish to be part of some entity called Indonesia. Understandable demands for greater autonomy from a corrupt and predatory central government apparatus should not be confused with a desire for outright independence. Indeed it was the repeated failure of both Soeharto and the armed forces to comprehend this distinction which led to so many human rights abuses in places like Aceh and Irian Jaya.

While the East Timor problem may only be resolved ultimately by independence, it ought still to be possible for other regions to remain within the Indonesian state, but with different conditions of membership from those which were laid down in the Soeharto era. New conditions of membership in effect mean constitutional change.

Accommodating growing demands for such change while at the same time trying to restore confidence in both the economic and the administrative system will severely test the skills of whatever government assumes control in Indonesia in the post- Soeharto era.

But one thing is clear: Soeharto's New Order has gone, and with it the highly centralized political and economic system which he fashioned. There will be a very powerful group of losers from the changes now in progress in the central bureaucracy (both civilian and military), and especially in its upper echelons.

The logic of the decentralization measures introduced in April will be that provincial and local governments will assume more direct responsibility for sectors such as health, education, family planning, women's affairs and environmental protection. Much economic and social planning will have to be done in the regions rather than at the center. Many officials will thus have to move to the regions or find alternative employment.

To the extent that they will be forced to leave central departments, they will also be cut off from the extensive patronage networks which developed at the center; indeed these networks will themselves wither as they are deprived of resources. Senior bureaucrats were among the most privileged people in Soeharto's New Order and they can hardly be happy about the inevitable attenuation of their power which a genuine process of decentralization will entail. What, if anything, they can do about the situation remains to be seen.

Professor Anne Booth teaches at the School of Oriental and African Studies, University of London. She has written numerous books and articles on the Indonesian economy. This article is reprinted with the courtesy of the Australia-based Inside Indonesia in which the article first appeared and with permission of the writer.