Decentralization of Forest Administration in Indonesia
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Decentralization of Forest Administration in Indonesia Since the collapse of Soeharto’s New Order regime in May 1998, Indonesia’s Implications for Forest Sustainability, national, provincial, and district governments have engaged in an intense struggle over how authority and the power embedded in it, should be shared. How this Economic Development and ongoing struggle over authority in the forestry sector will ultimately play out is of Community Livelihoods considerable significance due to the important role that Indonesia’s forests play in supporting rural livelihoods, generating economic revenues, and providing environmental services. Decentralization of Forest Administration This book examines the process of forestry sector decentralization that has occurred in post-Soeharto Indonesia, and assesses the implications of more recent efforts by the national government to recentralize administrative authority over forest resources. It aims to describe the dynamics of decentralization in the forestry sector, to document major changes that occurred as district governments assumed a greater role in administering forest resources, and to assess what the ongoing struggle among Indonesia’s national, provincial, and district governments is likely to mean for forest sustainability, economic development at multiple levels, and rural livelihoods. Drawing from primary research conducted by numerous scientists both at CIFOR and its many Indonesian and international partner institutions since 2000, this book 157 mm witdh x 2 (+ 13mm) = 327mm x sketches the sectoral context for current governmental reforms by tracing forestry 235 mm height development and the changing structure of forest administration from Indonesia’s independence in 1945 to the fall of Soeharto’s New Order regime in 1998. The authors further, examines the origins and scope of Indonesia’s decentralization laws in order to describe the legal-regulatory framework within which decentralization has been implemented both at the macro-level and specifically within the forestry sector. This book also analyses the decentralization of Indonesia’s fiscal system and describes the effects of the country’s new fiscal balancing arrangements on revenue flows from the forestry sector, and describes the dynamics of district-level in Indonesia timber regimes following the adoption of Indonesia’s decentralization laws. Finally, this book also examines the real and anticipated effects of decentralization on land tenure and livelihood security for communities living in and around forested areas, and summarizes major findings and options for possible interventions to strengthen the forestry reform efforts currently underway in Indonesia. Edited by Christopher Barr Ida Aju Pradnja Resosudarmo Ahmad Dermawan John McCarthy with Moira Moeliono and Bambang Setiono Decentralization of Forest Administration in Indonesia Implications for Forest Sustainability, Economic Development and Community Livelihoods Edited by Christopher Barr Ida Aju Pradnja Resosudarmo Ahmad Dermawan John McCarthy with Moira Moeliono and Bambang Setiono National Library of Indonesia Cataloging-in-Publication Data Decentralization of forest administration in Indonesia: Implications for forest sustainability, economic development and community livelihoods/ed. by Christopher Barr, Ida Aju Pradnja Resosudarmo, Ahmad Dermawan, John McCarthy with Moira Moeliono and Bambang Setiono. Bogor, Indonesia: Center for International Forestry Research (CIFOR), 2006. 178p ISBN 979-24-4649-4 CABI thesaurus: 1. decentralization 2. forestry 3. administration 4. central government 5. local government 6. sustainability 7. economic development 8. livelihoods 9. rural communities 10. Indonesia I. Barr, C. et al. (ed.) @ 2006 by Center for International Forestry Research All rights reserved. Front Cover photo: Christian Cossalter Design & Layout by Ahmad Yusuf Center for International Forestry Research Mailling address: P.O. Box 6596 JKPWB, Jakarta 10065, Indonesia Office address: Jl. Cifor, Situ Gede, Sindang Barang, Bogor Barat 16680, Indonesia Tel.: +62 (251) 622622; Fax +62 (251) 622100 E-mail: [email protected] Web site: http://www.cifor.cgiar.org Contents List of Editors v Preface vi Acknowledgements viii Abbreviations x Glossary xiv Chapter 1 Forests and Decentralization in Indonesia: an Overview 1 1.1 Introduction 1 1.2 What is Decentralization? 3 1.3 Decentralization and Forests 6 1.4 Decentralization of Forest Administration in Indonesia 9 1.5 Organization of the Book 15 Chapter 2 Forest Administration and Forestry Sector Development Prior to 1998 18 2.1 Introduction 18 2.2 Forest Administration from Independence through the Soekarno Era, 1945-1966 19 2.3 New Order Timber Policy and the Basic Forestry Law of 1967 22 2.4 Banjir Kap and the Timber Boom of the Late-1960s 24 2.5 Centralized Control and Log Exports in the 1970s 25 2.6 Growth of Domestic Wood Processing in the 1980s and 1990s 26 2.7 Indonesia’s Forestry Crisis 28 Chapter 3 Origins and Scope of Indonesia’s Decentralization Laws 31 3.1 Introduction 31 3.2 Momentum for Decentralization 32 3.3 Designing the 1999 Regional Autonomy Laws 34 3.4 Law 22/1999 on Regional Governance 37 3.5 Government Regulation 25/2000 41 3.6 Decentralization and Recentralization in Forestry Legislation 43 3.7 Law 41/1999 on Forestry 44 3.8 Government Regulation 34/2002 46 3.9 Revision of the 1999 Regional Autonomy Law 51 Chapter 4 Fiscal Balancing and the Redistribution of Forest Revenues 58 4.1 Introduction 58 4.2 Regional Government Finance during the New Order Period 59 4.3 Distribution of Forestry Revenues before Decentralization 62 4.4 Fiscal Balancing Under Decentralization 64 4.5 Forest Revenue Sharing 69 4.6 Redistribution and Use of the Reforestation Fund 72 4.7 Forests as a Source of Regionally-Generated Revenues 79 Chapter 5 Decentralization’s Effects on Forest Concessions and Timber Production 87 5.1 Introduction 87 5.2 Proliferation of District Logging Permits 88 5.3 Timber Profits for New Actors 94 5.4 ‘Legalization’ of Illegal Logging 97 5.5 Challenges for HPH Timber Concession-Holders 99 5.6 A Pendulum Swing Toward Recentralization 103 Chapter 6 The Impacts of Decentralization on Tenure and Livelihoods 108 6.1 Introduction 108 6.2 De Facto Decentralization 108 6.3 Adat as a Vehicle to Claim Rights 111 6.4 Changing Local Understandings of Territory and Boundaries 113 6.5 Communities Redefined 114 6.6 Decentralization and Community Livelihoods 116 6.7 Trends? 118 Chapter 7 Decentralization and Recentralization in Indonesia’s Forestry Sector: Summary and Recommendations 121 7.1 Introduction 121 7.2 Legal-Regulatory Contradictions and Lack of Coordination 122 7.3 Fiscal Balancing and the Redistribution of Forest Revenues 124 7.4 The Struggle over Timber Rents 126 7.5 Impacts on Land and Forest Tenure 128 7.6 Implications for Forest Community Livelihoods 131 7.7 Recommendations for Policymakers 132 References 134 Annexes 145 Annex 1 Timeline of Events that are Related to Decentralization in the Forestry Sector 145 Annex 2 Indonesian Laws and Regulations Relevant to Decentralization 150 Annex 3 Distribution of Shared Revenues to Regional Governments (not including DR), 2004 (million Rp) 155 iv List of Editors Christopher Barr is a Policy Scientist in the Forests and Governance Program, at the Center for International Forestry Research (CIFOR), located in Bogor, Indonesia. Ida Aju Pradnja Resosudarmo is a PhD Scholar in the School of Resources, Environment, and Society, at the Australian National University. Ahmad Dermawan is a Research Assistant in the Forests and Governance Program, CIFOR. John McCarthy is a Senior Lecturer in the Environmental Management and Development Program, Crawford School of Economics and Government, at the Australian National University. Moira Moeliono is a Social Scientist in the Forests and Governance Program, CIFOR. Bambang Setiono is a Financial Analyst in the Forests and Governance Program, CIFOR. v Preface Indonesia is currently entering a new era of governance. After more than three decades of being under a highly centralized system, the central government has issued several important pieces of legislation aimed at transferring authority to the provincial and district governments, and at allowing resource-rich regions to retain a larger share of the fiscal revenues generated within their jurisdictions. The foundations for decentralizing Indonesia’s highly centralized governance system were laid out in Law No. 22/1999 on Regional Governance and Law No. 25/1999 on Fiscal Balancing between the Central and Regional Governments, both of which were issued in May 1999. Since the late 1990s, the Center for International Forestry Research (CIFOR) has realized the importance of decentralization issues as they relate to forestry in Indonesia. Several research projects carried out since 1997 have shown the increasing role of regional government in decision-making regarding forests. Based on these observations, CIFOR decided to carry out specific studies on decentralization in Indonesia. The first wave of research was carried out in 2000 under the topic “Decentralization of policy making and management affecting the forests of Indonesia”. The research was undertaken in nine districts in four provinces---Riau, West Kalimantan, Central Kalimantan and East Kalimantan; and was mainly focused on documenting the changes during the transition period before decentralization was formally implemented in Indonesia. Since 2002, additional research has been carried out under the theme,