Jumat, 02 Juli 2010

The Flux of Decentralization in Indonesia and Obstacles of Creating Democratic and Decentralized Local Governance

Brief History of Decentralization Mainframe in Indonesia

Indonesia is probably a unique country in terms of perpetual process of discovering national and communal identity.

On the one hand, Indonesian society is characterized by heterogeneous ethnic groups, languages, believes and religions, history, and any other features. One Indonesian founding fathers, Mr. Muh. Yamin, observes that there are 47,305 masyarakat adat or traditional community groups having their own social customs and institutions. The name of such community is also varied among regions. It is called Desa or Dusun in Jawa, Gampong in Aceh, Negeri in Maluku, Banjar in Bali, Huta/Kuta in Batak, Nagari in West Sumatra, Pasirah in South Sulawesi, etc. (Gunawan, 2003). Normatively, they are self-governing societies having wide autonomy to govern and administer the interests of the local people according to its own initiatives based on the people’s aspirations in accordance with the prevailing convention or tradition. In this sense, those societies have various kind of autonomy such as rights on self-determination or rights to denote border and width of area. They also have rights to arrange their household affairs, to elect and appoint head of community, to possess physical and financial assets, and to pick up tributary (upeti) or local taxes (Kartohadikoesoemo, 1965: 214). In can be found that Indonesian ancient society was typically independent entity.

On the other hand, traditional communities in Indonesia are also illustrated by vigorous social kinship, willingness to resolve common problem in a consensual manner (musyawarah or mufakat), and homage and trust to their leaders to make decision concerning daily activities or any socio-economic relation among the society members. Leaders are always treated as patron, while ordinary people are only positioned as client. Such paternalism attribute is indeed the genesis of state intervention or kingdom co-optation in any types of society, even individual, lives.

The real feature of patrimonial society in Indonesia might be clearly reflected from a famous folklore called Si Unyil. In April 1981, an Indonesian puppet film called Si Unyil appeared for the first time on television screen. Within a very short time, Unyil, the hero, became a close friend to Indonesian children, appearing regularly on Sunday mornings to entertain millions of viewers. The program, while entertaining, talks about patriotism, nationalism, health, the environment, the armed forces, family planning, art and culture, and all the other things an Indonesian child should know. There is still of course, room for fantasy. Some Unyil stories are intended merely to entertain and amuse children (Suyadi). Notwithstanding of the aim for entertain and educate children, Si Unyil also replicates the psychological and sociological thought and spirit of the people. Whenever having problems, Unyil always suggests his friends to come to the Village Headman, and they will obey whatever the Headman’s decisions are. In this regard, community leader is often believed to be kind, wise, intelligence, democratic, and tolerance, while people (including children) are structurally accustomed to be good devotees for their leaders. People are barely encouraged to be independent, either in resolving the problems encountered or determining shared-program should be taken. In other words, people, the clients, are always under the subordination of the community leaders, the patrons.

The fact that people have autonomy on the one hand and strict obedience to the patron on the other hand has long root in Indonesian history. Before the emergence of Kingdoms in Indonesian archipelagos, villages or traditional community groups had full authority over their regions. In the subsequent stages, however, socio-political interaction among villages brought about the formation of broader region consisted of many villages. Such process of unification had eventually led to the appearance of Kingdom as new social and political entities. Since then, the villages were merely part of bigger authority, and autonomy of the village had transformed into supremacy of the State/Kingdom. In this context, the King was the patron for the Village Headmen, and the Kingdom constituted the superior of the villages. Under such circumstances, political constellation was definitely centralized.[1] As new clients, Village Headmen had no choices but total submission to the patron, i.e. the King.

What important to be noted is that even though the Kingdom was very centralized, but still there were cases for delivering special rights and autonomy to a certain region or community groups. During the Sultanate of Pajang (1546-1582), for example, Sultan Hadiwijaya gave a piece of land called Alas Mentaok to Sutawijaya or Mas Ngabehi Loring Pasar for suppressing rebellion from Aria Penangsang of Jipang.[2] The region of Alas Mentaok was called tanah perdikan (independent region) that was exempted from paying tributary or any other types of taxes. It indicated that there was a political will from the central government (the King) to share power with regions or community groups in the Kingdom’s jurisdiction.

In the more modern era, the efforts to build decentralized and efficient local government were also rather obvious.

During the Dutch colonial period, the issue of local autonomy started in 1899 when the movement called Etische politiek led by Van Deventer was born. The Etische politiek movement was the starting point of the decentralization history in Indonesia which led to Law of July 23, 1903 concerning Decentralization of Government in the Netherlands Indies or Decentralisatie van het Bestuur in Nederlandsch-Indie, known as “Decentralisatie Wet”. Consequently, the state administration had changed from the centralistic to a decentralized government. The Dutch Decentralization Law of 1903 created local councils for the autonomous Residencies and Municipalities. As the implementation of the decentralization laws, the Dutch Kingdom administration issued a decision on decentralization called Decentralisatie Besluit which stipulated the principles of the formation, the arrangement, the position and the authority of a council (LAN, 2003: 121). In this sense, the decentralizatie wet was functioned as a means of making colonial administration more effective in ruling population and extracting resources. But still, the colonial power maintained strong central control and a rigid hierarchical system of government (IRDA, 2003: 5).

When Japan occupied Indonesia from 1942-1945, wartime demands put a premium on centralization of powers in the hands of the Japanese forces. However, there were barely references that show the change in the government system. Consequently, up to the early period of Indonesia’s independence, the effect of Dutch administration system has prevailed as the system of the administration of Republic of Indonesia reflected by the dominance of ex-Dutch laws currently practiced. The Japanese military did not alter the existing government structure in Java immediately. By Law No. 1 issued on 7 March 1942, the Japanese only transferred all official powers of the former Netherlands Indies Governor-General to the Chief Commander of the 16th Army Division (Niessen, 1999: 55-56).

The 1945 proclamation brought a new system of local government in Indonesia. The Constitution of 1945 provides for a local government system and makes it clear that local autonomy is one of the principles of governance in Indonesia. The new republican government understood the importance of center-region relations and quickly issued laws on center-region powers that established more discretion on the part of the regions. The period of liberal democracy in the early and mid-1950s also provided for a wide degree of power to the regions, culminating in 1957 legislation (IRDA, ibid). Up to New Order period (Soeharto regime), IRDA conveys a very informative summary concerning central-region relationship as follows:

The pendulum began to swing toward centralization as Indonesia entered into a more authoritarian period with then President Soekarno’s Guided Democracy in 1959. With the Orde Baru (New Order) regime beginning in 1967, the centralization became pervasive. In almost all aspects of politics and government – democracy, fiscal balance, and public administration – the Soeharto regime instituted a rigid hierarchical power structure with central government exercising strong control over every level in the political, governmental, and societal hierarchy. The regime managed this effort through the military and the bureaucracy. During this period, the central government monopolized economic management and natural resources extraction in the regions. The authoritarian power structure created a deep-rooted social discontent, particularly in the region.

In a similar way, Antlov (2002: 2-3) also criticizes the practice of centralized governance under Soeharto administration. He says that during Soeharto’s 32-years term, Indonesia was characterized by a strong central accumulation of power and a patrimonial governance system. The relationship between the state and society is highly skewed in favor of state precedence, with the public administration being paternalistic, interventionist, and everything but transparent and accountable to the public. The lack of accountability or transparency, along with paralyzing paternalism and discouragement of local initiative has led to uniformity and standardization, destruction of social fabric, co-optation of leaders on all levels, abuse of power and corruption and, perhaps most serious of all, a deep distrust in civil institutions.

Only since the fall of Suharto has it been truly possible for citizens of Indonesia to express their voices in public and speak up about what they feel important in life. This can best be done at a local level, where interaction can occur between citizens and where decision-making is confined enough to influence on a day-to-day basis. In other words, it was only after the fall of Soeharto on May 21, 1998 that the regions demanded a new framework in center-region relations. MPR Decree No. XV/1998, Law No. 22/1999 and Law No. 25/1999 are the pillars of this framework. IRDA (ibid) has even confidently noted that the 1999 decentralization framework is believed to be the most daring decentralization policy in developing countries.

The formulation of new decentralization laws in 1999, therefore, had been tightened by so many fundamental failures happened in the previous system under Law No. 5/1974. Up to 1999, the implementation of government in the region had many weaknesses that prevented smooth implementation of democratic government in the regions. In general, those weaknesses derived from the following aspects:

  • The substance of Law No. 5/1974 reflected the emphasis of the central interest than promoting the effort of empowerment of the potential and self-reliance of the local government and society.
  • The system of local government organization tended to become bigger without considering the principles of organizational development. Consequently, hierarchical structure with longer span of control was formed, which in turn made the local government less efficient in implementing regional autonomy.
  • The articles in Law No. 5/1974 which was already 25 years old had not been operational due to lack of implementing regulations. In other words, the existence and function of Law No. 5/1974 had been no more than just relatively a malfunctioned legal product. (LAN and Local Autonomy Bureau, 1999/2000: 1-2).

These three problems have contributed to the less effective implementation of regional autonomy. Based on the issue above, MPR Decree No. XV/1998 concerning the arrangement, the division, the exploitation of national resources and local-central financial balance has been issued. Basically, it provides the following points:

  • The implementation of regional autonomy is carried out on the basis of democratic principles and the heterogeneity of the regions.
  • The implementation of regional autonomy, division, fair use of national resources, and financial balance between central and local government is carried out on the principles of strong social deliberation and sustainability under the supervision of the local parliament and the local people.

Based on such provisions, the new paradigm of local government refers to the promotion of democratization, people empowerment and excellent public service. That is to say that the local governments have freedom to make the best decision within their authority and to develop the whole potential in enhancing qualified public service.

It can be implied from the above description that policy debates and resulting directives surrounding center-region relations in Indonesia are not recent phenomena. Even in the near future, the pendulum of decentralization framework will probably swing again in line with the revision of Law No. 22/1999. However, it cannot be predicted yet whether the pendulum will favor to more decentralization or re-centralization. It depends on the readiness of local governments to implement the ongoing policies effectively, for which local officials require continuous process of capacity building. The higher capability the local government has, the bigger power the central government may transfer. Likewise, re-centralization will be unpopular option if the ongoing decentralization produces significant progress in promoting local democracy and enhancing socio-economic development. In other words, if decentralization fails to deliver peace and prosperity, we might once again see the rise of authoritarian rule.



Law 22/1999 as Political Breakthrough: Back to Basic

Following the fall of Suharto and the independence of East Timor, the demands for regional autonomy had been reemerged dramatically. These demands triggered a debate between those who favored federalism and those who advocated for a unitary state.[3] President Habibie took a middle path by introducing radical legislation in 1999 providing for wide regional autonomy within the existing unitary constitution.

It is not surprising then, that Law No. 22/1999 has fundamentally transformed the system and structure of local government in Indonesia. The decentralized local government introduced by the Law No. 22/1999 can be seen as a starting point to change the pendulum from centralized and relatively undemocratic regime to autonomous and relatively democratic governance. By quoting USAID’s study, Hadiz (2003: 4) has also confessed that Indonesia is moving rapidly from years of tight central control to a far more decentralized and autonomous system of local government.

The periods prior to 1974, the government system could actually be considered as decentralistic. This can be comprehended through the principles of autonomy professed, i.e. the ‘real and extended/wide’ autonomy (otonomi riil dan seluas-luasnya). However, with the implementation of Law No. 5/1974, the autonomy principle of ‘real and wide’ autonomy was abolished and replaced by the principle of ‘clear and responsible’ (otonomi nyata dan bertanggungjawab).[4]

Simultaneously, the basis of decentralization was paralleled with deconcentration principle, in which the latter was much more prominent than the previous one. It was no wonder that, in practice centralization was stronger than decentralization. One of the real practices of deconcentration principles was that every Kepala Daerah or Head of Region (both Province and District/City) represented the Kepala Wilayah or Head of Administrative Territory (the extension of central government in the regions) (article 80 Law No. 5/1974). In addition, in each region Vertical Agencies (Instansi Vertikal) were established as the executors of the certain central institutions’ affairs (Department/Non-departmental Government Institutions) or higher-level institutions.

With the implementation of Law No. 22/1999, the principles of autonomy were returned to the principles of ‘wide, real and responsible’. Additionally, the function of deconcentration was abolished at district/city level and this function is only mandated to provincial government. In other words, district/city fully becomes an autonomous unit.[5]

Another basic change due to the implementation of Law No. 22/1999 occurred in term of local government authority. According to Law No. 5/1974, local governments were only responsible for the authorities mandated to them. Meanwhile, based upon Law No. 22/1999, central government does not need to formally transfer authorities to local governments, because these authorities essentially become the rights and responsibilities of the local governments. In other words, Law No. 5/1974 adopts the principle of ‘delegation of authority’ (penyerahan kewenangan); whereas Law No. 22/1999 embraces the principle of ‘acknowledgement of authority’ (pengakuan kewenangan).

In this sense, Law No. 22/1999 basically states that central government will only be responsible in judicial system, religious affairs, national defense and security, fiscal and monetary affairs, and international diplomatic relationship. Other than those five duties plus macroeconomic planning and standardization, all of government duties have to be handled by local governments, especially at districts and municipals level. However, the local governments are not necessary to do all of those duties. Law No. 22/1999 has a list of government services that local governments have to perform: public works, health, education, trade and industry, investment, environment, agriculture, cooperatives, and labor (Article 11). 

These distinguished principles affect the delivery system of responsibility of the heads of local governments. In the past, all heads of local governments were responsible to the president through Ministry of Home Affairs (MOHA). Now, heads of local governments were responsible to Local Parliament body or DPRD.[6]  

Finally, Law No. 22/1999 has also altered the culture or behavior of local government organization. Prior to 1999, most of local officers have experienced a sort of “structural trap”, in which they were customized to wait central government’s guidance to arrange local government affairs, or to perform whatever central government requests. Self-initiative and innovative decisions could scarcely be found in executing local affairs both by executive and legislative power. Law No. 22/1999 gradually eliminates such kind of structural obstacles and encourages local governments to take actions on their own vision and originality. Furthermore, Law No. 22/1999 does not require local regulations to be approved or acknowledged by central government or superior local government, a common practice in the previous era. Article 113 only requires that “Regional Regulations and Decisions of the Head of Region shall be submitted to Government by no later than fifteen days after the stipulation thereof.

Another typical phenomenon in the recent era is pemekaran wilayah or formation of new (autonomous) regions. Until the end of 2003, there were 110 new districts and cities, so that the total amount of district/city governments is 434 (Kompas, November 21, 2003). There are different reasons for establishing such autonomous entity. From legal perspective, Article 125 of Law No. 22/1999 stipulates that “… all Administrative Cities may be upgraded into Autonomous Regions with due observance of Article 5 hereof”.[7] Based on such provision, many Kotip (Kota Administratif) or Administrative Cities, including Cimahi, the adjacent region of Bandung City, had become autonomous local government.

Meanwhile, from economic and sociological perspective, pemekaran wilayah is expected to reduce regional disparity and to improve people’s well being. The Bupati of Bandung, for example, believes that the creation of new sub-district and village will lead to a better public service delivery, improvement of social order, and acceleration of people’s potencies (Pikiran Rakyat, December 18, 2003). Similarly, one member of DPRD Papua states that pemekaran wilayah is aimed at improving the balance of physical and mental development among Papua’s people. As a matter of fact, the number of district/city in Papua has been doubled from 13 to 26 in consequence of such policy.[8]

The issue of disparity and iniquity is one of the most prevailing motives to mobilize local potencies in order to create self-government units. Unfortunately, both decentralization and pemekaran wilayah do not guarantee to reduce such problems. In contrast, the gap among local government is, to some extent, getting sharpened particularly in terms of budget or financial resources. Regions with affluent natural resources tend to have much more income compared to poor-resourced regions. East Kalimantan, one of the four richest provinces[9], for example, receives ten times more money per inhabitant than the poorest province, Banten. Similarly, Fakfak, the richest district in West Papua, takes in 50 times more per person than the poorest district of Belu in East Nusa Tenggara (The Economist, February 15, 2003).

Nevertheless, it is actually the logical consequence of decentralization. Giving higher political power to local government must be accompanied by bigger portion of financial resources.[10] In this sense, the role of Central Government is to ensure that changes on new financial balance do not hamper poor-resourced regions. In fact, the transition to decentralization was relatively smooth, experiencing no much disturbance of government service delay or tension between rich and poor local governments.

Certainly, the policy changes mentioned above have political, administrative, and judicial implications. From political facet, roles of central government have tended to be lower while responsibilities of local government are becoming higher. Besides, local representatives body (DPRD) purely functions as legislative body (regulatory / reglementaire pouvoir), so that policy and decision-making might be formulated based on people-centered orientation. The most important administrative implication is that regional authorities shall cover the authorities in all fields of governance, except 5 authorities excluded. Moreover, the design of the organization structure is formed based on the scale of their authorities, and the shape of human resource balance alters from reversed pyramid to normal pyramid.[11] Finally, from judicial perspective, Regional Regulation (Perda) functions not only to interpret or spell out higher-level regulation, but also to make a new regulation (law/regulation making function).

Since local governments have tended to be more independent from central government’s intervention, there is widespread buoyancy that those three implications are in conjunction with democratic demand and movement.

With the radical changes contained, it is reasonable enough to say that Law No. 22/1999 is returning the basic concept of local autonomy to the original idea as found in laws concerning local government or regional autonomy in the past. In can also be stated that Law No. 22/1999 constitutes a political breakthrough from which local governments may independently and democratically deal with their own territory and authority as well as with their local constituents.

Structural and Cultural Obstacles in Transition Period

The decentralization law of 1999 is effectively implemented since January 1, 2001.[12] Therefore, it would be entering the fourth year very soon. Honestly, it should be noticed that three years, even five years, is not enough to fully execute such fundamental policy. In other words, it is quite fair to consider the first five-years of implementation as transition period. During that period, many activities have been prepared while many policy adjustments have being accomplished.

It is natural that during that time local governments undergo some difficulties in executing new decentralization framework. The obstacles might be structural or cultural. Structural obstacles include resources gap among different level of government, confusing accountability mechanism and disharmony in coordination among institutions, or misleading Echelonering system. Meanwhile, cultural obstacle includes the problem of institutionalization and politicizing of local public officers.

1.      Human and financial resources gap between District/City Government and Sub-District / Village Government.
After the enactment of financial balance law (Law No. 25/1999), financial resources in district/city government are quite affluent.[13] In addition, decentralization policy leads to transfer of personnel from central to local government. The number of local employees is overwhelming the main tasks of the organizations. It implies the demand to redistribute the huge amount of personnel to other institutions. Ironically, prosperous resources in district/city government are not shared with the lower government, i.e. sub-district and village governments. It is the fact that sub-district and village governments are often complaining about lack of human and financial resources. As a result, complain on the low performance of public services are rather pervasive.
In the near future, sharing of power and resources between district/city government and sub-district/village government (including other social components) should be accommodated in the policy agenda. Yet it is important to bear in mind that redistribution of human resource to sub-district and village government may have to be performed hand in hand with other policy adjustment such as increasing echelon level at sub-district and village government offices.

2.      Accountability Mechanisms and Local Arrogances.
Decentralization has basically minimized, not to say eliminated, the vertical accountability mechanism in which the local governments do not have to report their budget process and implementation to the central government. As stated above, additionally, Law No. 22/1999 (article 113) does not require local regulations to be approved or acknowledged by central government or superior local government.
Concerning financial accountability system, Brodjonegoro (2002: 10) prevails:
“ … the state internal auditor cannot audit local governments anymore. Every local government now has their internal auditor. The reason for very minimum vertical accountability mechanism can be traced from the structure of local revenue. The local revenue now consists of local own revenue (tax and charges), natural resources revenue sharing, tax revenue sharing, general-purpose grant, and specific allocation grant. Among these types of revenue, only on specific allocation grant (specific-matching grant) central government has some authority to do monitoring and evaluation. The local governments that receive this type of grant have to report to respective ministries and ministry of finance. Other types of revenue are local governments’ full authority in allocating the spending needs, while central government has obligation to allocate the money but not to monitor or evaluate the use of the money. Horizontal accountability mechanism now plays an important role in monitoring and evaluation process. The local parliament (DPRD) is now the institution that has rights to monitor and evaluate the budgeting process and budget implementation. They will be involved in budgeting process and have to give approval before it becomes the proposed budget of fiscal year.”
Having huge power, unfortunately, often leads local governments to be arrogant. It might be the reason why from the beginning, experts warn that regional autonomy may result in the expansion of “local kingdom”. In this case, there are two types of local egoism, upward and downward egoism.
Upward egoism can be observed from the unwillingness of many district/city governments to comply with national and superior rules. For instance, Indramayu district government in West Java Province persists to implement Perda (Regional Regulation) on oil processing tax even though it has been abandoned by MOHA. The reason is that the Decree of Ministry of Home Affairs (MOHA) has no executable legal power due to Indramayu’s request to the Supreme Court on judicial review. In fact, Decree No. 41/2001 provides that MOHA has a right of repressive control over local regulations. Similarly, Cilacap district government in Central Java Province, Gresik district government in East Java Province, and Cilegon district government in West Java Province involve in a conflict with Ministry of Transportation and MOHA regarding management of sea harbor.
Meanwhile, downward arrogances are quite noticeable from the unwillingness of many district/city governments to share or redistribute their power/resources to social organizations or local components in their region. Instead, there is a propensity that local governments are becoming much more powerful whereas local people and other social organizations are still powerless. That’s why, local executive and legislative bodies seem to be much more influential as corruption becomes more apparent. At the same time, although there are some emerging positive awareness from local people as indicated by the establishment of NGOs, the expansion of social protest/demonstration, the enhancement of people’s self-help capacity, etc., the role of local government is still much more dominant than that of private and community sectors. As a result, public participation never emerges as real participation of individuals; it materializes merely as institutional participation, and even mobilization.
One of the consequences of local arrogance is the difficulty to build a harmonious coordination among different level of government, not to say conflict among them. In fact, according to Hadiz (2003: 15) there is a tension between provincial level authorities and sub-provincial authorities that no longer believe that they should be accountable to those at the provincial level. The governors of North Sumatra and Yogyakarta, for example, have lamented how the bupati under them have been increasingly inclined to defy their authority. This condition, indeed, complicates not only the relationship among governmental units, but also hamper the local development processes.
Considering such situation, the amendment of Law No. 22/1999 is unavoidable. One focuses of amendment is on the new relationship and distribution of functions between levels of government. Besides, there are some crucial issues such as the direct election of the Heads of Region (Kepala Daerah), the relationship between the regional councils (DPRD) and the Kepala Daerah, financial and personnel issues, and the problem of maritime territories (Kompas, November 12, 2003).

3.      Quandaries due to Echelonering system and Problems on Personnel Management.[14]
According to Wasistiono, the echelonering policy was initially implemented in 1977 in accordance with the execution of the army dual function policy[15]. The system ran quite well with the adoption of integrated-personnel system through Law No 8/1974 and Law No. 43/1999. However, with the implementation of Law No. 22/1999 (article 76), the personnel system is altered to a separated system in which local governments acquire the full rights over the personnel but the source of personnel financing still depends on the central government.[16] In addition, personnel regulations are still in the hand of central government as well.
In this separated system, job rotation exists only within the local government (internal rotation). Simultaneously, horizontal mutation (inter-regional) and vertical mutation become very difficult to be instigated. As widely known, because the highest echelon in District/City is only II-a, it is hard for a local government official to acquire a higher post.  
In other cases, echelonering becomes an obstacle for organization development in the sub-district and village levels. As widely known, decentralization policy triggers massive transfer of employees from the central to the local institutions. As a result, district/city encounters surpluses of employees. Concurrently, sub-districts and villages still undergo personnel deficits both quantitatively and qualitatively. Having known this, some part of personnel and hierarchical posts of the district/city should be distributed to the sub-district and village institutions. This way also bears another problem, i.e. the low level of echelon posts at the sub-district and village administration.[17] Consequently, the personnel structures cannot be equally distributed. This might even cause the swelling of organizations at the district/city.           
In particular cases, Echelonering instigates unharmonious relationships among institutions at the district/city. This may happen between District/City Secretary Assistant and Heads of Service Departments and/or Heads of Technical Agencies. In this circumstance, it becomes difficult for the District/City Secretary Assistant to coordinate with Heads of service departments to perform his/her duties because they have equal rank echelon, II-b.   
Having recognized the three obstacles above, it is necessary to eliminate the Echelonering system. In addition, the personnel authority should be assigned to the provincial level so that it opens wider opportunity for mutations to take place within the regional scope. If the personnel state of affairs fails to improve, this will not only de-optimize human resource potency in the region but this may also become a latent problem for the region to implement wide and continuous regional autonomy.    
Another problem concerning personnel management is about transfer of employee from central to local government. It is really a dilemmatic situation. On the one hand, the number of local employees has increased very suddenly, so that local government looses its capability even for paying salary. That is the reason why local governments are still depending highly on subsidy (general allocation fund) from central government. Furthermore, the policies on personnel management are still in the hand of central government (i.e. President).[18] In other words, there is no real decentralization on personnel matters. It merely constitutes a semi-decentralized personnel management system instead.
On the other hand, disregarding the process of employment transfer, the total amount of central government officials is still quite high. Around 1.6 million public servants (PNS-Pegawai Negeri Sipil) remains at the central government excluding military and national policy members as well as those who serve in SOEs or State Owned Enterprises (BUMN-Badan Usaha Milik Negara). It also means that the employment structure between central and local level may have to be readjusted in the future.
In consequence of such transfer, problems are now beginning to emerge. Discrepancies have been found between the number of employees counted in the inventories, and the figures released by the National Agency of Civil Service Administration (BKN). A study conducted by SMERU (Newsletter No. 1/2001) in several provinces such as West Sumatra, Central Java, East Java and West Kalimantan discovered that the data from the BKN reported a higher number of employees, compared with the data from the regional Bureaus. In can be found, therefore, that policy on employees transfer has, to same extent, provoked the shape of phantom officials or disguise unemployment (pegawai siluman) in the regions. Surely, this will obstruct the efforts of improving local governments’ productivity.

4.      Problems of Institutionalization.
Local development policy often endures changes, especially after the new Head of Local Government is elected. Personal interest or vision of the newly elected official frequently negates the already planned development document and process. As a result, the development program does not run on the clear base of blueprint or grand strategy. In other words, development process proceeds partially and periodically (5 years), and there is no red line or continuity between one period of development programs and the following one.
This phenomenon indicates the weak role and position of bureaucracy including stakeholders in the process of development planning. In reality, a Bupati/Mayor has a so highly decisive role in determining the regional policy that he/she may ignore the need for consultation with social elements and business actors. 
For the future, the institutionalization of development policy should become the main agenda for local governments by generating the potency of and empowering all stakeholders such as high education institutions, local business actors, forums for social matters, NGOs, professionals’ organizations, mass-media, Chamber of Commerce and Industry (KADIN) and cooperatives, and semi-governmental organizations in the process of development planning. Members of Local Representatives (DPRD) and middle-ranked staff need to be involved in the consultation mechanism as parts of the stakeholders as well.  
The advantage of policy institutionalization is that a less-and-cheap government may emerge to reduce the cost in making a new development planning. At the same time, consultation mechanism may become the seedbed to raise local democracy in the context of stimulating a democratic infrastructure of local governance.

5.      Highly politicized Local Government.
Since the implementation of Law No. 22/1999, symptoms of politicized local governments have become more and more evident. Head of Local Government that used to be called ‘public officers, has become ‘political officers’. Head of Local Government during the implementation of Law No. 5/1974 was appointed by central government. This official was chosen among three candidates proposed by Local Representatives (DPRD). This means there was an effort to integrate the local and central interests. In the meantime, based on Law No. 22/1999, Head of Local Government is appointed by Local Representatives (DPRD). Central government has basically no authority to intervene the process of selecting and appointing the Head of Local Government. However, for the appointment of a governor, DPRD needs to consult with the president.[19]
With the new system, the real political authority moves from central government to political parties through their representatives in DPRD. Political parties hold influential roles in the process of the appointment of the Head of Local Government. Therefore, it is common that during the vote for a new Head of Local Government, practices of lobbying, bargaining, political barter, and vote buying might occur. These may become the root of corruption and money politics practices in the region.
Moreover, the position of the Regional Secretary is not aside from particular political interests because referring to article 61 Law No 22/1999, the Regional Secretary is appointed by the Head of Local Government with the consent of DPRD. In other words, one cannot hold the position of Regional Secretary without the endorsement of DPRD. This indicates that DPRD has a vital role in the regional bureaucratic system. The Regional Secretary is a purely career job position. Thus, it should be free from political interests among fractions in DPRD. Unfortunately, this unconsciously leads bureaucracy to political subordination (legislative ascendancy).
Political parties in the democratic regimes indeed play important roles as a medium for political education as well as medium for catering public aspirations. It would even be better if they do not deeply intervene executive affairs and could maintain bureaucratic neutrality in running the government management. This has to be carefully noted for the future revision of Law No. 22/1999.


Antlov, Hans, 2002, The Making of Democratic Local Governance in Indonesia, paper presented in International Workshop on Participatory Planning: Approaches for Local Governance, Bandung Indonesia, 20-27 January.
Brodjonegoro, Bambang, 2002, Fiscal Decentralization in Indonesia, unpublished paper. The Institute of Economics and Social Research and The Graduate Program of Economics, University of Indonesia 
Gunawan, Jamil, 2003, Quo Vadis Masyarakat Adat: Demokratisasi atau Redekonstruksi (Orientation of traditional community groups: democratization or re-deconstruction?), in Bulletin Flamma, Vol. 15. Available online at http://www.ireyogya.org/F15_utama2.HTM
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IRDA, 2003, July, Indonesian Rapid Decentralization Appraisal (IRDA): Third Report, Jakarta: Asia Foundation. Available at http://www.asiafoundation.org/pdf/IRDA3-english.pdf
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This article is taken from a part of my Master Thesis, “Decentralization and Capacity Building in Indonesian Local Administration: A Long Journey for Discovering a Model of ‘Democratic Developmental Regime’ (Case Study of Bandung City Government)”, 2004, Graduate School of International Development, Nagoya University, Japan.

[1]     During Kingdoms periods, the concept of kawula-gusti (Indonesian term for patron-client) was very apparent. There was no equal position at all between kawula and gusti. The King or gusti was also seen as sacred, so that the King can do no wrong and King’s speeches would always be the law of the country (sabda pandhita ratu). In addition, all property rights, particularly property rights of land, were in the hand of the King.
[2]     In the future, the region of Alas Mentaok (Kotagede in recent Yogyakarta) became the capital of Mataram Kingdom (1588) with Sutawijaya or Panembahan Senapati as the first Sultan. For the complete history of early Mataram period, see http://www.munindo.brd.de/artikel/artikel_04/art04_mito_nyai_kidul_1.html and http://www.jogjakita.or.id/detailcerita.php?kategori=11&beritaid=28
[3]     In the past the concept of federalism was discredited in Indonesian nationalist eyes because it had been proposed by the Dutch during the anti-colonial revolution in the late 1940s as a means to obstruct full independence. The supporters of the unitary state claimed that federalism is really a first step toward national disintegration. On the other hand, the supporters of federalism argued that the establishment of a federal system might be the only way to prevent national disintegration. For comprehensive discussion on federalism, particularly the displacement issue of conflicting regions in Indonesia after the fall of Soeharto, see: Global IDP Project, Indonesia: Profile of Internal Displacement, November 13th, 2003.
[4]     Real here means that the transfer of autonomy to local governments should be based on factors, calculations, and actions, which guarantee that the regions are able to manage their own affairs. Responsible means that the transfer of autonomy is in line with its goal, accelerating development throughout the country, in harmony or not deviating from the blueprint, in harmony with the political building and the unity of nation and regions, and able to assure the regional growth and development.   
[5]     According to the elucidation on Law No. 22/1999, the political grounds to set the wide and extended autonomy at district/city level are to promote people empowerment, to encourage initiative and creativity, to promote people’s active participation, and to improve the role and functions of the Local Representative Assembly (DPRD). On the other hand, the placement of Provinces as Autonomous Regions and concurrently as Administrative Regions is conducted with the following considerations: 1) to maintain harmonious relationship between Central and Regional Government in the context of the Unitary State of the Republic of Indonesia; 2) to organize regional autonomy having the nature of inter district/city region, as well as to implement the authorities of regional autonomy which have not been implemented by district/city region; and 3) to implement certain governance duties delegated in the context of the implementation of deconcentration principle.
[6]     A governor is also a representative of central government in the region. Thus, he also has to be responsible to president. In other words, a governor has two types of responsibility: responsibility to Local Parliament/DPRD (as head of autonomous region) and responsibility to President (as the representative of central government).
[7]     Article 5 provides that Regions shall be formed based on the considerations of the economic capacity, regional potentials, social-politics, the size of population, the area of the region concerned and other considerations which enable the organization of Regional Autonomy.
[8]     See Free Papua Movement official website at http://www.geocities.com/opm-irja/news/05.html. Actually, there are many disagreement on the outlook that pemekaran wilayah has positive connection with people’s welfare. The Chairman of DPRD Papua has ever mentioned that dividing Papua into three Provinces is violating people’s aspiration. More perilously, this policy may widen regional disparity between mountainous and costal areas and urban regions. In addition, the formation of new provinces is culturally unsound, as it would escalate primordial sentiment and provoke conflicts among 260 ethnic groups in Papua (Kompas, October 19, 2002).
[9]     The other three are Riau, Aceh and (West) Papua.
[10]   Article 6 of Law No. 25/1999 provides that State Revenue of forestry, public mining and fishery sectors is divided into 20% for Central Government and 80% for the Region. Likewise, State Revenue of the oil mining produced by the region is divided into 85% for Central Government and 15% for the region after deducted by the tax component, which is appropriate with the current regulation.
[11]   After the implementation of Law No. 22/1999, hundred thousands of employees have been transferred to local level, especially district/city level. As a result, the number of civil servants in central level is lessening and employment structure is becoming much more streamlined. On the contrary, the number of local governments’ staffs increase very suddenly so that they encounter a sort of “obesity” situation. In Bandung City, for example, the total number of staff now is 25,373. Around 19,514 staffs (76.9%) of those are employees transferred from Vertical Agencies (see STPDN, 2002: 77).
[12]   Though it is said that formally, Law 22/1999 is fully and effectively implemented, empirical phenomena show that decentralization doesn’t always work the way it is supposed to. In other words, decentralization could not be fully implemented yet during its first 3-5 years of implementation. Different levels of government have been very busy to comprehend and interpret the content of the laws and to conduct some policy and institutional adjustments. In addition, many implementing regulations are still in process of formulation until 2003. Government Regulation No. 8/2003 on Guidelines of Local Government Organization is one of the cases. This regulation obliges Provincial and District/City government to rearrange their organizational structure according to the regulation. This phenomenon shows that many local governments is still dealing with preparation efforts rather than implementing the spirit of autonomy law. Ironically, before being fully implemented, some parts of Law 22/1999 are in process of amendment.
[13]   From the period of 2000-2002, the total budget of Bandung City was Rp. 282.9 billion, Rp. 727.15 billion, and Rp. 876.86 billion, respectively. The balance fund (Dana Perimbangan) is always exceeding the original regional revenue (PAD). The amount of balance fund was Rp. 202.86 billion (72.2%) in 2000, Rp. 471.99 billion (64.9%) and Rp. 560.172 billion (63.9%). In the same period, the amount of original regional revenue was Rp. 78.04 billion, Rp. 123.98 billion, and Rp. 188.45 billion, respectively (see STPDN, 2002: 80).
[14]   According to Article 1, Government Regulation No. 15/1994 concerning Appointment of Public Servants into Structural Position, “echelon” indicates the level of structural positions. Echelon I-a is the highest occupation in the public personnel management in Indonesia, while echelon V-b is the lowest one. Additionally, Article 2 provides that echelon is composed based on the work-load, complexity level, and width of rights or responsibilities of a given position.
[15]   Interview with Mr. Sadu Wasistiono, Director of Post Graduate Program, STPDN, February 26, 2003.
[16]   When Law No 5/1974 was still implemented, the rights over personnel matters were limited to the function of personnel management such as promotion, periodical salary increase, and other elementary aspects. After Law 22/1999 is implemented, regional government is not only in charge of personnel management but also human resource management in a wider, comprehensive, and sustainable manner. In other words, each region has the rights to and is responsible for designing a more accurate manpower planning, for short-term, mid-term and long-term periods (Wasistiono, 2003:1-2).
[17]   The highest echelon ranks at sub-district government level is III-b (Head of sub-district), and at the village level is IV-a (village headman).
[18]   Article 13 Law No. 43/1999 concerning Amendment of Law No. 8/1974 on the Ordinance of the Civil Service stipulates that the Civil Service management policies encompass the decision on the norms, standards, procedures, formations, appointments, civil service resources quality development, transfer, salary, allowance, welfare, discharge, rights, obligations, and legal status. The Civil Service management policies referred to in clause (1) are in the hand of the President as the head of the Government.
[19]   According to article 38 Law No. 22/1999, governor and vice governor candidates appointed by DPRD should be consulted to the president. Meanwhile, DPRD do not need to consult the president for the appointment of bupati/mayor and vice bupati/vice mayor candidates. It is only legalized through the approval of Head of DPRD. This mechanism is in line with the deconcentration principle, in which a governor becomes the representative of central government in the region. 

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