In this webinar, Dr Yanuar Nugroho, Dr Sujarwoto, Dr Wilmar Salim and Ms Uly Faoziyah explore the effects of Indonesia’s decentralisation reforms over the past two decades. They examined state capacity and infrastructure development at the subnational level.
REGIONAL ECONOMIC STUDIES PROGRAMME WEBINAR
Thursday, 3 December 2020 – ISEAS – Yusof Ishak Institute hosted a webinar on “Indonesia’s Decentralisation Reforms 20 Years On: Part 2”, delivered by Dr Yanuar Nugroho (Visiting Senior Fellow, ISEAS – Yusof Ishak Institute; and Co-founder and Adviser, Centre for Innovation Policy and Governance, Jakarta), Dr Sujarwoto (Senior Lecturer, Department of Public Administration, Brawijaya University, Indonesia), Dr Wilmar Salim (Associate Professor, Regional and City Planning Program and Head, Research Center for Infrastructure and Regional Development, Bandung Institute of Technology, Indonesia) and Ms Uly Faoziyah (Junior Lecturer, Regional and City Planning Program; and Researcher, Research Center for Infrastructure and Regional Development, Bandung Institute of Technology, Indonesia).
The webinar commenced with a presentation by Dr Yanuar and Dr Sujarwoto on the state capacity of Indonesia since decentralisation two decades ago. A distinctive feature of Reformasi 1998 was democratisation and decentralisation which enabled political and administrative transformation. Theoretically, decentralisation promises better local administration capacity. Additionally, it allows the sub-national government more autonomy in achieving development objectives. However, Indonesia’s experience with decentralisation from 1999 to 2019 has resulted in unexpected problems and unfulfilled promises.
Decentralisation removes the hierarchy between central and local governments. This process involves shifts in the political, fiscal, and administrative power to local governments and increased independence. Indonesia’s decentralisation resulted in a radically transformed political system whereby branches of sectoral ministries were placed under local governments for local duties. However, Dr Yanuar and Dr Sujarwoto noted that despite some increase in independence, local governments still face the issue of reducing their dependency on the central government.
Using a the ‘state capacity’ framework, Dr Yanuar and Dr Sujarwoto assessed whether decentralisation has improved the capacity of local governments in delivering outcomes of the central government over time. The analysis which employs a combination of insider’s perspective, qualitative and quantitative investigation showed that the local governments’ capacity in output and outcome delivery had increased. This includes improvements in accountability mechanisms and the ability to formulate policies for essential public services by many local governments. Some governments were also able to implement economic policies favourable to small and micro-enterprises. In addition, the reformation provided non-government organisations opportunities to be involved in decision-making, monitoring and evaluation of outcomes, and even act as public service providers. However, gaps in capacity seem to be widening between the regions of Jawa & Bali and Nusa Tenggara Timur, Maluku & Papua. Moreover, there have been issues on various regulations such as high rates of local corruption. On the national government front, there is a struggle to manage local governments compounded by a lack of coordination, sectoral ego and political tensions among ministries and national stakeholders.
Dr Yanuar and Dr Sujarwoto concluded their presentation by sharing that while Indonesia has managed to achieve some of their envisioned outcomes, there remains other goals that have not been fulfilled. Also, gaps and discrepancies still exist despite improvement in the local governments’ capacities. As such, the national government needs to improve coordination and management of the various entities and interests, including managing political intervention in bureaucracy.
The webinar was then handed over to Dr Wilmar and Ms Uly who began their presentation on decentralisation and infrastructure development in Indonesia which includes facilities that involve engineering techniques with economic functions such as transportation. The decentralisation has provided opportunities and challenges for infrastructure development such as privatisation of infrastructure construction and incomplete fiscal equalisation respectively. Since then, local roads have improved while the health system has only seen minor improvements. Furthermore, regions that are experiencing proliferation have seen increasing infrastructure access gaps compounded by an inequality of access to education.
Dr Wilmar and Ms Uly’s study aims to understand the infrastructure index trend of post-decentralised Indonesia, the regional pattern of infrastructure achievement and potential challenges in the future. Using data from numerous cities and regencies, they developed an infrastructure index that encompasses the infrastructure features which include electricity, sanitation, health and waste infrastructure amongst many others. Across the various infrastructures, they observed an increase in its index, especially for electricity and sanitation. Conversely, the lowest increase was observed in health and waste infrastructure. Moreover, they found that inequality of infrastructure development was widening. Java was the only region which reported indicators above the national level, while eastern Indonesia (Papua and Maluku) appeared to experience challenges in upgrading their infrastructure.
These results show that despite improvements across the regions, Java accounts for much of the advancements while eastern regions and small islands have not been showing much progress. Also, the broadening range in value of the infrastructure index indicates likelihood of inequality. In addition, Dr Wilmar and Ms Uly raised the question of whether implementing the “same” form of decentralisation policies across all regions is appropriate when infrastructure development can be influenced by geographical conditions and availability of resources. With the 2020 Omnibus Law on Job Creation, there are increased opportunities for broader infrastructure financing and changes to the central government’s role in determining national strategic projects. Such factors may potentially impact Indonesia’s future infrastructure performance.
Dr Wilmar and Ms Uly ended their presentation by summarising their study’s findings. Despite the improvement in performance in Eastern Indonesia, improvements have been concentrated in Java. Inequality in performance across the various regions has been increasing as well. Additionally, since the decentralisation, performance in electricity, sanitation and communication experienced the most rapid progress, while improvements in health and waste facilitates have been slow. The results also indicate that regional characteristics do affect infrastructure performance.
The seminar then concluded with the speakers engaging in a question-and-answer session. Questions answered included the role of population size in the infrastructure index, key issues faced by the Eastern Indonesia that hinder their improvement, and how the findings can be aligned with President Joko Widodo’s plans of building East Indonesia.
This webinar is supported by Konrad Adenauer Stiftung.