Should big-bang decentralization continue?

This article originally appeared in the opinion column of The Jakarta Post, March 8, 2014

Too much proliferation leads to profligacy. Under Soeharto, at least, there was only one person to bribe, but with decentralization, there are now more than 500 of them.

Proliferation of new administrative regions ( pemekaran wilayah), however, is set to accelerate again. In December 2013, the House of Representatives recommended the creation of 87 new municipalities, districts and provinces, the largest of such expansion since decentralization began in 1999.

Proponents argue that by carving up more jurisdictions into smaller administrative units of local governments, government accountability and quality of service provision will improve. However, the opposite might be true. Redistricting resembles a tangled mesh. When new administrative regions are formed, money starts to flow and many structures are duplicated since the government wants to maintain some organizational structure at the local level to execute its authority.

Qualitative and quantitative evidence suggests concerns over governance quality at the local level. Service provision has been found to be improving in some districts and provinces, but has languished in others.

Many local administrators simply lacked the appropriate technical capacity and competency. Audit data from the Supreme Audit Agency (BPK) shows that the percentage of budget compliance deviation is significantly higher among local governments compared with the central government. This may provide some indication of the quality of financial management between the center and the regions.

A more visible sign is that there has been more corruption cases brought against former or current heads of local governments — the latest one being Ratu Atut Chosiyah, the first democratically elected female governor in Indonesia. She was recently indicted in a graft case involving Akil Mochtar, the former Constitutional Court chief justice.

Although nobody has yet to show empirically that corruption in Indonesia is worse now than before, the sheer number of cases is disturbing. Gamawan Fauzi, the home minister, was quoted by local media in July 2013 as saying that 298 heads of local government have been jailed for corruption since 1999. More allegations of local corruption can be due to increasing transparency and political liberalization or because there is indeed more corruption.

Big fishes aside, petty corruption is also profuse among lower ranking officials. Many of us have faced a situation where authorities extorted fees higher than sanctioned to get things done.

Lucky you if you have never faced that situation, either out of ignorance or affluence. On average, households reported paying more for basic services than the charges that were set out in local regulations. For example, households spent twice as much as the official cost to obtain an ID card (KTP).

The central government has also raised the amount it spends on assistance apportioned to local administrations to Rp 593 trillion (US$52 billion), a third of total government expenditure in 2014. Roughly half of that sum is spent on salaries, which can be meted out to family members and allies.

Growth in the newly created administrative regions is also wanting, coupled with increasing regional imbalance. North Sumatra, Aceh, areas of Kalimantan, East Nusa Tenggara and Papua require more attention to bring them up to the level of growth similar to that of other parts of Indonesia.

Advisor to the Home Ministry, Reydonnyzar Moenek, revealed a disappointing evaluation of the new administrative regions, in which as many as 78 percent of the 57 3-yearold administrative regions had failed to develop.

It is premature to conclude that further proliferation of local governments leads to better accountability and improvement in service-delivery outcomes. Instead of accelerating, the Indonesian government must stop and ponder.

Clear criteria must be drawn up to justify the creation of new municipalities, districts and provinces. Assessments against these criteria must be published and verified to ensure transparency and accountability.

An agency must be created to effectively coordinate between various intergovernmental organizations and between the central and local governments. In particular, there are some services to promote economic growth, such as electrification, public infrastructure and environmental mitigation, which require the attention of cross-jurisdictional authorities. The agency should also engage in evaluating the effectiveness of decentralization.

Bureaucratic reform and institutional capacity building must take priority. The central government could harness local governments’ strong dependence on fiscal transfers from the center to create fiscal incentives tied to the promotion of these reforms.

The popular joke today, “Piye kabare? Enak jamanku to?”( “How are you doing? Wasn’t it better during my [Soeharto’s] time?”), is probably an innuendo to what many Indonesians are feeling right now.

Although things may seem to be only getting worse, Indonesia should not return to the old authoritarian regime.

The only option that Indonesia has is to improve.

The writer, formerly a research assistant at the National University of Singapore, is studying public policy at Harvard University’s John F. Kennedy School of Government in Cambridge, Massachusetts.

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