FEDERALISM AND DECENTRALIZATION Perceptions for Political and Institutional Reforms Editors WILHELM HOFMEISTER EDMUND TAYAO Federalism and decentralization Federalism and decentralization Perceptions for Political and Institutional Reforms © 2016 individual works, the authors Editors: Wilhelm Hofmeister Edmund Tayao Sub-editor: Megha Sarmah Konrad-Adenauer-Stiftung 34/36 Bukit Pasoh Road Singapore 089848 Tel: (65) 6227-2001 Tel: (65) 6227-8343 Email: [email protected] Website: www.kas.de/singapore Local Government Development Foundation Unit 403, 4th Floor, Fedman Building 199 Salcedo Street, Legaspi Village Makati City, Philippines Philippines Website: www.logodef.org All rights reserved. No part of this publication may be reprinted or reproduced or utilised in any form or by any electronic, mechanical or other means, now known or hereafter invented, including photocopying or recording, or in any information storage or retrieval system, without permission from the publisher. The responsibility for facts and opinions in this publication rests exclusively with the authors and their interpretations do not necessarily reflect the views or the policy of Konrad-Adenauer-Stiftung and Local Government Development Foundation. Cover design: Veronica Teo National Library Board, Singapore Cataloguing-in-Publication Data Names: Hofmeister, Wilhelm, editor. | Tayao, Edmund, editor. | Konrad-Adenauer-Stiftung (Singapore), publisher. | Local Government Development Foundation (Manila, Philippines), publisher. Title: Federalism and decentralization : perceptions for political and institutional reforms / editors, Wilhelm Hofmeister, Edmund Tayao. Description: Singapore : Konrad-Adenauer-Stiftung ; Makati City, Philippines : Local Government Development Foundation , [2016] Identifiers: OCN 940895741 | ISBN 978-981-09-8749-7 (paperback) Subjects: LCSH: Federal government--Asia.| Federal government--Europe. | Decentralization in government--Asia. | Decentralization in government--Europe. Classification: LCC JQ36 | DDC 320.45049--dc23 c ontents Foreword vii Federal Governance and Weak States 1 Felix Knuepling / Forum of Federations, Ottawa Canada Federalism in Europe, America and Africa: 23 A Comparative Analysis Jörg Broschek Political Engineering, Decentralization and Federalism in 51 Southeast Asia: Strengths and Weaknesses of Governance Patrick Ziegenhain Hybrid Federalization in India, Sri Lanka and Nepal 67 Laura Allison-Reumann and He Baogang Decentralisation, European Integration and Peripheral 97 Nationalism: Managing Multilevel Governance in Pseudo- Federal Spain Francisco Javier Moreno Fuentes Pursuing Federalism in the Philippines: The Context of State 119 and Democratization Edmund S. Tayao Cambodia’s D&D Reform Program: Progress and Challenges 141 Min Muny Feckless Federalism in Malaysia 165 William Case Inevitability of Hybrid Model: Trajectory of the State’s 189 Transformation in Post-Suharto Indonesia Purwo Santoso and Joash Tapiheru Crafting State Nations: India’s Federalism as a Case for 209 Developing Economies George Mathew Federalism in Australia Revisited: Political History and Culture 235 as Forces for Stasis and Change A J Brown Authors’ Information 267 Foreword Decentralisation has become a prominent topic for political and institu- tional reforms in Asia, in general, and in the Philippines in particular. In the Philippines, for instance, an ambitious decentralization reform was initiated in 1991 through the enactment of the landmark 1991 Local Government Code (LGC), and since then the country has made remarkable progress in devolving autonomy to Local Government Units. The code was the most radical and far- reaching policy solution for the devolution of power in Manila. It addressed the decades-old problem of a highly centralized politico-administrative system and the concentration of political and administrative decision-making power in Manila. More than 20 years have passed and despite numerous successes, the decentralisation process has been marred by problems too. In recent times, scholars, politicians and experts have been looking into the federal op- tion as the next step for Philippine governance. Therefore, LOGODEF and the Konrad Adenauer Foundation organised an international conference in September 2015, which aimed to look at the different kinds of federal systems in various countries in Asia and Europe and see what would be the best way forward for the Philippines. The papers that were presented during this con- ference and which are published in this book confirm the broad international consensus that decentralisation is a necessary element for the promotion of good governance, particularly with regard to combating poverty and the strengthening of democratic rule. Decentralisation and the strengthening of subnational governments and administrative units are indispensable elements for the successful and efficient resolution of problems and the promotion of local, regional and national de- velopment. Therefore, many, if not most, states have opted for the transfer of political, administrative and fiscal competences to decentralized levels of government and administration. Decentralisation is closely linked to the democratization of political structures, the participation of social groups that had been previously excluded from decision-making processes, the improve- ment of local services of public agencies, and, not least, improvement in efforts targeted at reducing poverty. Good governance is highly dependent on decentralisation and local self-administration. Good governance is probably the single most important factor in eradicating poverty and promoting development. Therefore, in every viii Federalism and Decentralization country the political decision makers will look for the best way to improve good governance and in this context they must consider decentralisation as one—not the only but the utmost important—instrument to achieve this goal. What does decentralisation mean? Different countries offer specific responses to this question, which thus indicates that decentralisation has to be designed according to local political, social, regional etc. circumstances. Despite the necessity for each country to find its own response to the require- ment of decentralisation, in a more general perspective we can understand decentralisation as the transfer of duties, responsibilities, resources and po- litical decision-making powers to subnational levels. This understanding goes beyond administrative decentralisation. For the proper fulfilment of the tasks of the decentralized units, an ap- propriate resource base is necessary. Fiscal decentralisation will enable local units to realize autonomous revenue and expenditure policies. The transfer of political legitimacy to the subnational levels is an essential component for both social acceptance as well as optimisation of the capacity of the newly created local units. However, whilst we are emphasising the advantages of decentralisation, we also have to be aware of some risks of decentralisation processes, which have to be considered and avoided in the context of political and adminis- trative reforms. These risks refer to the unreasonable strengthening of the dominance of local elites, the decentralisation of corruption and the weaken- ing of national unity. Similarly, one has to emphasise that not all processes striving towards decentralisation will automatically or immediately lead to successes in terms of democratization, reduction of poverty and development. Therefore, while discussing decentralisation and federalism in the Philippines, it is only wise and appropriate to look to other countries and learn from their experiences, both positive and negative ones. If we analyze the experience of other countries we will see that under appropriate conditions, the different forms of decentralisation and federal structures can play important roles in broadening participation in political, economic and social activities of a country. Where it works effectively, decen- tralisation helps alleviate bottlenecks in decision-making that are often caused by central government planning and control of important economic and social activities. Decentralisation can help to simplify complex bureaucratic Foreword ix procedures and can increase government officials’ sensitivity to local condi- tions and needs. Furthermore, decentralisation can help national government ministries reach larger numbers of local areas with services; allow greater po- litical representation for diverse political, ethnic, religious, and cultural groups in decision-making; and relieve top managers in central ministries of “routine” tasks so that they can concentrate on policy-making. Decentralisation may also lead to more creative, innovative and responsive programmes by allowing local “experimentation”. It can increase political stability and national unity by allowing citizens to better control public programmes at the local level. Nevertheless, decentralisation may not always be efficient, especially for standardized, routine, network-based services. It can result in the loss of economies of scale and control over scarce financial resources by the central government. Feeble administrative or technical capacity at local levels may result in services being delivered less efficiently and effectively in some areas of the country. Therefore, it is essential to improve local technical capacities by providing training programmes for local public servants and other forms of investment. Another challenge