Indonesia: Toward the Era of Decentralization

Indonesia:
Toward the Era of Decentralization

Dadang Solihin
Deputy Director for Local Government Apparatus Empowerment-Bappenas

Country-Focused Training Course on Local Government
Administration for Indonesia
Hiroshima, January 8, 2001

dadang-solihin.blogspot.com 2

Contents

 Introduction
 Central and Local Government
 The Organization
 The Main Issues
 The Policy Strategies
 Development Programs Priorities
 Area of Interest


Introduction

 The purpose of this report is to provide some understanding
regarding the current state of local government in Indonesia to the
discussion group.
 The report consists of four parts.
 The first part is introduction.
 The second part explains about the relation between central
and local governments after decentralization, and to compare
the ‘before-and-after’ situation affected by the changes.
 The third part explains an outline of the organization to which I
belong, and my job.
 And the fourth part explains my specific area of interest.


Central and Local Government (1)
 The Law No. 22 (1999) on Regional Governance, and Law No. 25
(1999) on Fiscal Balance between Central and Regional
Governments will change the roles and functions of local
government as well as the allocation of development fund to the
local level.
 The implementation of greater local autonomy will enhance local
discretion in spending and in turn require modifications in the
approach in the practice of local development planning.
 Accordingly, a departure from the established development planning
system with its centralized distribution of power and authority is
necessary.


 Planning system reform will mean removing or modifying centralized
system and procedures that supported centralism in the past and
build on a new decentralized capacity building and decision-making.
 Following Law No. 22 (1999) the newly empowered local
parliaments together with the local administration will determine
policies and objectives of local development.


 Development programs in Indonesia have been highly
centralized over the past 30 years.
 The time is now changing, with more rooms opening up
for democratization process, plans for decentralization
and regional autonomy, and more intense and active
participation from community groups involved in local
development programs.


 According to the regional government law, decentralization is
the delegation of the governance authorities by government to
autonomous regions in the context of the unitary state of the
Republic of Indonesia.
 Moreover, the regional autonomy is the authority of
autonomous region to govern and administer the interests of
the local people according to its own initiatives based on the
people’s aspirations in accordance to the prevailing laws and
regulations.


 The idea of decentralization and increased local autonomy follow
the well-accepted and benign principle of bringing government
closer to the people.
 The move will make governments more responsive and
accountable.
 Consequently, increased local legislative and executive power in
policy and law making authority could means a proliferation of
differing laws and regulations across kabupatens and regions.
 Mere differences in laws are not generally matters of concern –
except in those areas where laws should be uniform across the
country or where local laws interfere with some national interest.


The Organization (1)
 I currently work for the Bureau
for Local Government Capacity
Improvement, under the
Deputy Chairman for Regional
and Natural Resources
Development, National
Development Planning Agency
(Badan Perencanaan
Pembangunan Nasional-
BAPPENAS).


 The bureau consists of three divisions.
 The first is the division for improvement of regional autonomy.
This division is responsible for performing study on
implementation performance of regional autonomy.
 Second, is the division for local government apparatus
empowerment that is responsible for preparing material for
preparation of policy, plan, and budget of development regarding
the capability enhancement of local institution and apparatus,
and local legislators (DPRD).
 And the other division is the division for regional finance that is
responsible for preparing material for formulation of development
policy, plan, and budget regarding the improvement of financial
performance of local government.


Section Head for
Regional Autonomy
Information System

Section Head for
Regional Autonomy

Improvement of
Analysis Deputy Director for

Regional Autonomy
Performance

Section Head for
Institution and Apparatus
of Regional Government
Planning and
Programming

Section Head for
Apparatus
Empowerment
Improvement

Institution and Apparatus
Local Government
Deputy Director for
Director for Local

of Regional Government
Government Capacity

Monitoring and

dadang-solihin.blogspot.com
Evaluation
Organization Chart of

Section Head for
Regional Finance
Planning and
Programming

Section Head for
Regional Finance
Directorate for Local Government Capacity Improvement

Monitoring and
Regional Finance
Deputy Director for

Evaluation
12

 My position in the bureau is the head division for Local Government
Apparatus Empowerment.
 The main functions of this division are:
 Preparing material for formulation of development policy, plan
and budget regarding the improvement of capability of institution
and apparatus of regional government and legislators
 Preparation of material for monitoring, evaluation, and reporting
as well as suggestion on further action to the implementation of
development plan regarding the improvement of capability of
institution and apparatus of regional government and legislators


• One of the missions in order to realize the future vision of the
Indonesian nation is to form regional autonomy in the framework of
regional development in line with equality in growth within the
umbrella of the Unitary State of the Republic of Indonesia.


 The directions of the regional autonomy improvement policy within
the state policy (GBHN) are:
1. Developing regional autonomy that is wide-reaching, evident
and accountable;
2. Carrying out a study or policy concerning validity of regional
autonomy for provinces, regencies/cities and villages; and
3. Realizing fiscal balance between central and regions that is
just by prioritizing regional interest that is wider through
decentralization of permits and investment as well as
management of resources;
4. Empowering the local legislators in the framework of carrying
out the function and role for implementing regional autonomy
that is wide reaching, real and accountable.


 With such policy direction, the aim of improving regional autonomy
shall be in order with the effort to improve the capacity of regional
government in order to deliver public service in a more effective,
efficient, accountable, transparent, and responsive manner.
 In reality, regional autonomy is a transfer of governing duty that is
accompanied with authority in order to make decision on policies,
managing public funds, and regulating activities in the framework of
arranging government and public services to the areas of province,
regencies/cities, and villages.
 Until recently the realization of regional government autonomy was
faced with several constraints, either concerning political, economic,
socio-cultural aspects as well as other technical aspects.


The Main Issues (1)
 The limited availability of capable regional human resources and
government apparatus in accordance with the demand in needs
both from the quality and the quantity sides in the framework of
providing services in accordance with the public demand and
aspiration;
 The lack of regulatory means in order to increase regional
revenues that in the end shall be the cause of the still low capacity
of regional government finance in order to finance the
implementation of regional government duties and function.


The Main Issues (2)
 In the framework of improving the role and duty of the Local
Legislators, there is a mismatch between the role and duty that
should actually be carried out with the existing organizational
capacity, among others are caused by the limited number of experts
that can assist in the duties and restrictions in obtaining feedback as
well as in analyzing the process of decision making in the Local
Legislators that may as a whole affect the effectiveness of the
regional autonomy implementation.


The Main Issues (3)
 Future challenges that is likely be encountered during the
implementation of the regional autonomy are in the preparation of
human resources that are professional in public management that
covers the policies planning and creating aspect, procedures and
organizational system, financial management, implementation and
delivery of services, supervision, as well as management of public
participation.


The Main Issues (4)
 As an important prerequisite during the implementation of the
regional autonomy is how to carry out the effort in order to improve
revenues or regional revenues either through the balance of funds
or through regional owns revenues, together with providing
opportunities in finding potential source of revenues and developing
regional economic activities.
 Furthermore, efforts should be made in order to increase the
accountability of the financial management and correct uses of
funds in order to support routine activities and public services in
accordance with the public demand.


The Main Issues (5)
 Considering that not all of the regions have the wealth of natural
resources or have adequate financial capability in order to carry out
the autonomy duty, the government has to make a policy in order to
equalize allocation of funds between the regions that is fair to all.
 The challenges in order to improve the role and duty of the regional
legislator are how to meet the requirements for experts that can
assist institutions, to develop communication and consultation
facilities with the public and government parties, to improve the
quality of legislation decision making process, and to make effective
supervision of the regional government while carrying out their
duties.


The Policy Strategies (1)
1. Improving the capacity of regional human resources into more
professional in accordance with the regional potential and interest
through education, training as well as developing an adequate
incentive system.
2. Improving the capacity of the regional government finance through
the fiscal balance that is more just and proportional, providing
larger authority for the regions to exploit regional sources of
revenues, while considering allocation of funds for regions that are
poor in natural resources and a backward economy.


The Policy Strategies (2)
3. Developing regional government organizational
structure that is modern and is implemented by human
resources that have competence in the process of
decision making and oriented to a public interest,
productivity of public services, protection of poor
people, cooperation between government and the
public, as well as improving public participation and
intention.
4. Improving the role of the local legislators through
providing experts that shall assist in the quality
improvement of feedback in the framework of legislation
decision and a more effective supervision on the
government.

Development Programs Priorities (1)

1. Improvement of the local government apparatus,
 Enhancing the professionalism and managerial capacities of
local government apparatus proportionally in accordance with
the demand in order to support the implementation of the
autonomy and to create clean and accountable local
government.
 Improving the availability of professional and qualified local
government apparatus that are suitable to the job requirement
and responsibilities.
 The priority activities that will be implemented included:
standardization of job competency; analysis of manpower
needs, improvement of reward and punishments system; and
training need assessment.


2. Enhancement of local government institution capacity,
 Enhancing the institution capacity of local government. The
enhancement will covers work mechanism, the organization
structure, and the adequate legislation regulations.
 The target to be achieved is the creation of organization
structure, the high performance of institution, and the
establishment of work relationship between organizations
within the government environment as well as between
government organizations and public organizations, and the
creation of good and clean governance.


 The priority activities that will be implemented are the study of
autonomy and decentralizations, included:
 the study of dividing, uniting, and removing the autonomous
region;
 arrangement of regional organization structure that follows
modern organization principles; and
 development of work relation between organizations within
the government environment either horizontally or vertically,
and between the government and the public that shall be
interactive and parallel.


3. Arrangement for regional finance management,
 Enhancing regional government capacity in managing the
sources of revenues in a more efficient, transparent, and
responsive manner. The target to be achieved is the ever-
increasing significant role of regional original revenues in the
implementation financing of the public service and
development function.
 The priority activities that will be implemented included: the
widening and improving of regional revenues sources;
simplifying the regulations and straightening out the
institutions; developing the financing mechanism and
developing accounting system, developing the transparent and
accountable financial information, and managerial regional
finance.


4. Strengthening people institution.
 Enhancing the capability and involvement of formal as well as
informal people institution in the process of decision-making,
planning, implementation, and monitoring of public service and
development.
 The purport of people institution included local legislators,
village representative body, non-government organization,
traditional institution, religion institution, and others civil society
institutions.
 The target to be achieved is functioned and developed people
institution participation mechanism in the process of decision-
making, planning, implementation, and the creation of social
monitoring mechanism in more democratic manner.


 The priority activities that will be implemented included: the
capability enhancement in policy analysis, public management,
financial management, political communication; the enhancement
of communication and consultation with the local people, private
company, and local government.


Area of Interest
 There are three specific areas of interests that I want to acquire from
this training. First, the role and functions of local government bodies.
This will include: The roles of prefectures and the significance of
their function in coordinating national policy enforcement and
municipal village affairs.
 Second, the development of human resources. This will include: The
rules for public servants’ appointment, personnel affairs, pay
structure, and the issues facing the local public servant system in
Japan.
 Third, the local vitalization plans. This will include: The medium-
term plans formulated by prefectures, the planning of basic items
concerning major policies, and the actual practice of overall
coordination.


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Terima Kasih


Indonesia: Toward the Era of Decentralization

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