2000年-世界发展银行全球_Indonesias_Decentralization_After_Crisis_4页_435kb

Summary of Indonesia's Decentralization After Crisis

Core Content

Indonesia, a vast and ethnically diverse nation with 26 provinces and over 330 districts, has historically maintained one of the world's most centralized fiscal systems. In fiscal 1999, the central government collected 94% of general government revenue, and 60% of subnational spending was funded through central transfers. Despite several proposals since the 1970s, key elements of fiscal decentralization have never been implemented. However, following the 1997 financial crisis and the fall of the Soeharto regime, Indonesia is now undergoing a major decentralization reform.

Main Points of the New Decentralization Laws

• Fiscal and Administrative Decentralization: Two new laws were enacted in 1999 to implement a "big bang" approach to decentralization, covering all major aspects of fiscal and administrative devolution.
• Responsibilities: All public service delivery functions, except for defense, foreign affairs, monetary and trade policy, and legal systems, will be decentralized to subnational governments.
• Service Delivery: Most public services, including education, health, and infrastructure, will be delivered by districts and cities, with provinces acting as coordinators.
• Revenue Sharing: Subnational governments will receive a share of natural resource revenues, including 15% of onshore oil, 30% of onshore gas, 70% of forestry, and 100% of fisheries revenues, on an origin basis.
• Tax Powers: Regions have limited taxing powers, relying mainly on small local taxes like water use and street lighting taxes.
• General-Purpose Allocation: The central government will transfer at least 25% of its revenue after sharing to subnational governments, with 10% going to provinces and 90% to districts. This allocation is based on formulas to equalize fiscal capacities.

Key Risks Identified

• Unclear Spending Responsibilities: The Law on Regional Governance is too general, leading to confusion about which functions should be devolved to subnational governments.
• Incompatibility with Government Capacities: Decentralizing most public service functions to districts may not align with their administrative and financial capabilities.
• Incomplete Political Decentralization: Many regional heads were appointed by the previous regime, and full local accountability is not yet achievable.
• Regional Disparities: The revenue sharing model may worsen regional disparities and is inconsistent with the goal of equalizing transfers.
• Volatility of Resource Revenues: Oil and gas revenues are highly volatile, creating uncertainty in local budgeting.
• Lack of Coordination: Implementation has been slow due to political transition and lack of coordination among ministries.
• Tight Implementation Timetable: The rapid pace of implementation may disrupt local public services.

Lessons from Indonesia's Experience

• Synchronized Decentralization is Challenging: Political, administrative, and fiscal decentralization should not be implemented simultaneously. They should align with each other to ensure stability and effective service delivery.
• Phased Approach is Better: A phased approach to devolving responsibilities can help avoid disruption, by aligning with administrative and financial capacities.
• Clear Regulations are Essential: Detailed regulations on responsibilities, service delivery, and personnel management must be established early to prevent vertical imbalances and ensure accountability.
• Local Tax Autonomy is Crucial: Local governments should be assigned one or a few substantive taxes with some rate autonomy to ensure fiscal discipline and accountability.
• Central Government Role in Equalization: The central government must maintain sufficient fiscal resources to ensure reasonable equalization and minimum service standards across regions.
• Formula-Based Transfer System: A general transfer system based on revenue capacities and spending needs is feasible and desirable, but care must be taken to avoid drastic cuts to overstaffed local governments.
• Political Forum is Necessary: A political forum involving all levels of government should be established to facilitate dialogue and consensus on decentralization.

Conclusion

Indonesia's decentralization process presents both opportunities and challenges. While the "big bang" approach aims to rapidly transfer power and resources to local governments, it risks destabilizing the economy and undermining local accountability. A well-designed, phased implementation that aligns fiscal resources with administrative capacities and includes clear regulations and tax autonomy is essential for a successful decentralization. The experience highlights the importance of process design and coordination in managing such a complex reform.