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The Politics of Patronage in Intergovernmental Financial Transfer: the Role of Local Elites in East Kalimantan Province, Indonesia

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The Politics of Patronage in Intergovernmental Financial Transfer: the Role of Local Elites in East Kalimantan Province, Indonesia THE POLITICS OF PATRONAGE IN INTERGOVERNMENTAL FINANCIAL TRANSFER: THE ROLE OF LOCAL ELITES IN EAST KALIMANTAN PROVINCE, INDONESIA Ahyar Muhammad Diah College of Arts and Education, Victoria University Melbourne, Australia Submitted in fulfilment of the requirements of the degree of Doctor of Philosophy 2017 ABSTRACT Intergovernmental financial transfers from central to local governments provide a vital source of income to support local development of public services and infrastructure. However, most local governments in developing countries, such as Indonesia, fail to meet the transfer objectives due to misuse of the funds by local elites. Although financial transfers increased significantly with increased local autonomy since 2001, local development has not been commensurate with the larger budgets, with unfair wealth distribution denying equitable outcomes. Previous studies have addressed the involvement of political rulers in the misuse of intergovernmental financial transfers, but there has been limited investigation into the role of other elites. Working with theories of the politics of patronage derived from Eisendtat (1980) and Bearfield (2009), this study examines the role of a much wider range of formal and informal elites—from bureaucrats and politicians to businessmen and religious and ethnic leaders—in intergovernmental financial transfer within the Indonesian province of East Kalimantan. The aims of the study are twofold: to provide insight into how local elites exercise their power and influence to structure and allocate financial resources, and to help local governments curb the misuse of financial resources. The study utilises data derived from three main sources: in-depth interviews with 36 elite stakeholders, direct observation, and information contained in local government documents, collected during two field visits and follow-up telephone interviews and email contacts. The study identifies four variations of political patronage practised by local elites—organisational patronage, reform patronage, democratic patronage, and tactical patronage—with ethnicity playing a key function in enabling elites to structure and control intergovernmental financial transfer. It provides new insights into the operation of the politics of patronage through such means as appointment of cronies and friends in local government bureaucracies and awarding of project funds to affiliates and followers. As the study concludes, the result is that the intergovernmental financial transfer mechanism has not delivered what was intended to be a key outcome of the decentralisation agenda—local development in priority areas serving the needs of all. ii DECLARATION I, Ahyar Muhammad Diah, declare that the PhD thesis entitled ‘The Politics of Patronage in Intergovernmental Financial Transfer: The Role of Local Elites in East Kalimantan Province, Indonesia’ is no more than 100,000 words in length including quotes and exclusive of tables, figures, appendices, bibliography, references and footnotes. This thesis contains no material that has been submitted previously, in whole or in part, for the award of any other academic degree or diploma. Except where otherwise indicated, this thesis is my own work. Ahyar Muhammad Diah March 2017 iii ACKNOWLEDGEMENTS Alhamdullillaahi rabbil ‘alamiin (Praise be to Allah, Lord of the Worlds) Quran 1:1 I thank Allah the Almighty for giving me the strength and power to carry on through this study. I also take this opportunity to express my gratitude to the Ministry of National Education of the Republic of Indonesia for their support in providing me with a scholarship to undertake my doctoral studies in Australia. My appreciation also goes to the Governor of East Kalimantan Province for helping me with an additional scholarship for covering my living allowance after the DIKTI scholarship ended. I am greatly indebted to my previous supervisors Dr Richard Chauvel, Dr Maxwell Lane and Dr Mark Stevenson, for their invaluable support and advice during the preparation of this thesis, and for the training they provided in political and social science methodology. My journey at Victoria University placed me in an extraordinary situation due to the sudden College of Arts change plan proposal to disestablish the Asian Studies discipline, which also directly affected my supervisors, Dr. Richard Chauvel and Dr. Max Lane. The loss of the supervisors was beyond my control but undoubtedly severely impacted on the direction and progress of my research. Dr. Mark Stevenson as a substitute principal supervisor appointed by College of Arts also departed from the university after the second restructure of the College of Arts at the end of December 2015. Therefore, I would like to express my highest appreciation and thanks to Professor Ronald Adams (Ron), my principal supervisor, for his willingness to take over the supervisory role and to rescue my study in this critical situation. Without his invaluable insight, support, guidance and supervision throughout this study, I might not have been able to complete this thesis. My thanks to the academics and staff at the College of Arts and the Graduate Research Centre for research assistance and advice, in particular to Dean Professor Helen Borland, and staff of the College Support Office, Grace Schrippa and Tina iv Jeggo. My great appreciation also goes to staff from the Department of Academic Support and Development for providing feedback on writing drafts, in particular to Fiona Henderson, Eileen Hanrahan and Pauline Omaley for proofreading parts of the thesis. I also owe a great deal of gratitude to Rachel Le Rossignol who carefully and expertly proofread the complete final version of the thesis. Furthermore, my thanks go to Victoria University’s Research Ambassadors, especially Amirullah and Muhammad Subhan Iswahyudi, who have provided high quality consultation for the improvement of my research. I am grateful for having opportunities to present a paper and gain valuable feedback from reviewers and seminar participants at the academic conferences that I attended during my research journey. I also thank my fellow researchers for exchanging ideas and thoughts as well as sharing their experiences, including Wawan Mas’udi, Nanang Indra Kurniawan, Riaty Rafiudin, Rimsky, Dwi Mulyatari Dicky Pelupessy, Saefur Rochmat, Slamet Budi Santoso, Monica Madyaningrum and all members of the Victoria University Indonesian Students Association (VUISA). I would like also to express my heartfelt acknowledgement to the Director and Vice Director of State Polytechnic Samarinda for their support in giving me leave from duties to undertake this study. A special thanks to the Provincial Government of East Kalimantan for enabling me to conduct research in the area. My special sincere thanks go to the people who have helped me in one way or another during my field work, particularly the 36 respondents who willingly sacrificed their time to take part in this study. Your willingness to participate provided invaluable information. My great thanks also go to the staff and members of groups and communities with which my family and I have interacted and enjoyed being with during our time in Melbourne, including the Madania Foundation, Pengajian Footscray Community, and Indonesian Muslim Community of Victoria—Western Suburbs. v Finally, I am greatly indebted to my parents who always prayed for my success in study and life. I also thank God for having such a wonderful family. My special thanks go to my wife, Ade Suryati, who has accompanied me during the tough years of my study in Australia. Her unconditional love and attention to me and to my whole family could only be rewarded with Paradise. I am also very grateful to be granted wonderful children: Diah Ameliah Khaerunnisa and Dzulhaj Dzuljalali. They have cured my fatigue and recharged my soul during my research journey. This thesis is dedicated to them. vi TABLE OF CONTENTS ABSTRACT ................................................................................................................. ii DECLARATION ....................................................................................................... iii ACKNOWLEDGEMENTS ....................................................................................... iv TABLE OF CONTENTS ......................................................................................... vii LIST OF FIGURES .................................................................................................... xi LIST OF TABLES .................................................................................................... xii APPENDICES .......................................................................................................... xiii GLOSSARY AND ABBREVIATIONS .................................................................. xiv CHAPTER 1 INTRODUCTION ................................................................................ 1 1.1 Background .......................................................................................................... 1 1.2 Intergovernmental Transfers ................................................................................ 5 1.3 Decentralisation and Intergovernmental Financial Transfer in Indonesia ........... 6 1.4 Research Framework and Methodology ............................................................ 10 1.5 Research Aims and Objectives .......................................................................... 11 1.6 Research Questions ...........................................................................................
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