DECENTRALIZATION 2009 Stock Taking on Indonesia’s Recent Decentralization Reforms Update 2009 Main Report Stock Taking on Indonesia’s Recent Decentralization Reforms Update 2009 DECENTRALIZATION 2009 DECENTRALIZATION 2009 Stock Taking on Indonesia’s Recent Decentralization Reforms Update 2009 Main Report Prepared by USAID Democratic Reform Support Program (DRSP) With support from the Donor Working Group on Decentralization July 2009 Stock Taking on Indonesia’s Recent Decentralization Reforms Update 2009 Published by Democratic Reform Support Program (DRSP) Jakarta Stock Exchange Building Tower 2, 20th floor Jl. Jend. Sudirman Kav. 52-53 Jakarta 12190 Indonesia Tel. No. ++ 62 21-5152541 Fax. No. ++ 62 21 5152542 Email: [email protected] Web. www.drsp-usaid.org v DECENTRALIZATION 2009 pReface MAX POHAN Deputy for Regional Development and Regional Autonomy BAPPENAS IN ACCOrdANCE with the National Long-term This study is expected to form the input for the Development Plan (RPJPN) 2005-2025 that is di- preparation of the policy and planning for the RPJMN rected towards improving the implementation of 2010-2014. In addition, the lessons contained within decentralization and regional autonomy during the it can also provide useful input in the revision of Law period 2010-2014, within the context of the prepa- No. 32 of 2004 on Regional Administration. ration of the National Medium-term Development Plan (RPJMN) 2010-2014 a review of the decentral- We would like to express our appreciation for the ization and regional autonomy policy needs to be support and cooperation of the various parties conducted. This is expected to provide input for the that have made it possible to conduct this study reformulation of the decentralization and regional effectively, especially the USAID Study Team as the autonomy policy in Indonesia. In order to identify main implementer of this study through the USAID- the issues and problems as well as to collect input DRSP program, as well as to all those agencies and and suggestions to refine future decentralization respondents who provided valuable contributions and regional autonomy policy, a series of activities and input to enrich the substance of this report. The is needed. These include studies (research), semi- input, criticisms and suggestions in the following nars, workshops, discussions and ongoing public days will also certainly provide valuable material consultations. for the future stocktaking activity. n During 2006, the Democratic Reform Support Program (DRSP/USAID) conducted a stocktaking study on the implementation of decentralization. This study identified strategic reform issues and presented policy options for the government in preparing the decentralization grand strategy. The Stock Taking Study (STS) Update 2009 presented a new picture of decentralization reform and iden- tified the progress that had been achieved in rela- tion to decentralization policy and procedures. STS Update 2009 identified 21 important and pressing issues that could assist the Indonesian government in defining a more strategic approach to progress decentralization reform. The study was undertaken over a 7 month period and focused on the short- and long-term reform priorities, with a focus on the medium-term. Stock Taking on Indonesia’s Recent Decentralization Reforms Update 2009 v TaBLe Of cONTeNTS PREEFACE ......................................................................................................................................................... v ACKNOWLEDGEMENT .................................................................................................................................. 1 ABBREVIATIONS ............................................................................................................................................ 2 INTRODUCTION .......................................................................................................................................................... 6 I. MANAGEMENT OF THE DECENTRALIZATION PROCESS AND THE LEGAL ARCHITECTURE OF DECENTRALIZATION ............................................................ 9 1. MANAGEMENT OF THE DECENTRALIZATION PROCESS / LOCAL GOVERNANCE POLICY ........... 9 2. LEGAL FRAMEWORK FOR DECENTRALIZATION / LOCAL GOVERNANCE ........................................ 19 II. INTERGOVERNMENTAL RELATIONS .............................................................................................. 28 1. TERRITORIAL REFORM ....................................................................................................................................... 28 2. FUNCTIONAL ASSIGNMENT ............................................................................................................................ 34 3. FUNCTIONS OF THE PROVINCIAL GOVERNMENT AND THE GOVERNOR ........................................ 45 4. INTERGOVERNMENTAL FINANCES ................................................................................................................ 50 5. OVERSIGHT AND SUPERVISION OF REGIONAL GOVERNMENT ........................................................... 57 III. CIVIL SERVICE REFORM IN THE CONTEXT OF DECENTRALIZATION ............................... 66 IV. SPECIAL REGIONS AND ZONES ....................................................................................................... 72 1. REGIONS WITH SPECIAL STATUS OR SPECIAL AUTONOMY .................................................................. 72 2. SPECIAL ZONES IN THE CONTEXT OF REGIONAL AUTONOMY ........................................................... 82 V. REGIONAL GOVERNANCE REFORM ............................................................................................... 90 1. REGIONAL GOVERNMENT SERVICE PROVISION ....................................................................................... 90 2. PLANNING AND BUDGETING .......................................................................................................................... 98 3. FINANCIAL MANAGEMENT .............................................................................................................................. 104 4. VILLAGE GOVERNANCE REFORM ................................................................................................................... 111 5. THE DYNAMICS OF PARTY PERFORMANCE ................................................................................................ 116 VI. POLITICAL ACCOUNTABILITY ........................................................................................................... 124 1. REGIONAL HOUSE OF REPRESENTATIVES (DPRD) PERFORMANCE .................................................... 124 2. REGIONAL HOUSE OF REPRESENTATIVES (DPRD) ELECTION ............................................................... 130 3. POLITICAL ACCOUNTABILITY : REGIONAL GOVERNMENT HEADS .................................................... 134 v DECENTRALIZATION 2009 VII. REGIONAL GOVERNMENT ASSOCIATIONS AND CIVIL SOCIETY .................................... 139 1. REGIONAL GOVERNMENT ASSOCIATIONS .............................................................................................. 139 2. CIVIC ENGAGEMENT IN REGIONAL GOVERNANCE ............................................................................... 143 3. ROLE OF CIVIL SOCIETY ORGANIZATIONS .............................................................................................. 150 CONCLUSION OF STOCK TAKING 2009 FINDINGS ......................................................................... 159 REFERENCES .................................................................................................................................................... 165 LIST OF ANNEXES ........................................................................................................................................... 170 ANNEX 1 : SCOPE OF WORK FOR UPDATE OF STOCKTAKING STUDY ON DECENTRALIZATION REFORMS ............................................................................................ 170 ANNEX 2 : LIST OF RESEARCHERS INVOLVED IN STOCK TAKING STUDY 2009 ................................. 171 ANNEX 3 : LIST OF MAIN RESOURCE PERSONS ........................................................................................... 172 ANNEX 4 : LIST OF FGD CONDUCTED ON STS UPDATE ........................................................................... 174 ANNEX 5 : CIVIC ENGAGEMENT EXAMPLES IN INDONESIA’S REGIONS ............................................... 174 ANNEX 6 : LEGAL INSTRUMENTS ISSUED SINCE 2006 RELATED TO PLANNING AND BUDGETING ................................................................................................. 175 ANNEX 7 : LIST OF DEVELOPMENT PARTNER SUPPORT TO REGIONS .................................................. 176 ANNEX 8 : LIST OF DEVELOPMENT PARTNER WORKING ON VILLAGE GOVERNMENT ................... 177 Stock Taking on Indonesia’s Recent Decentralization Reforms Update 2009 v v DECENTRALIZATION 2009 acKNOWLeDGeMeNTS A grEAT many people from government, civil society civil society organizations, and citizens, who gener- and development partner organizations have con- ously gave their time and valuable inputs during tributed to this updated picture of decentralization/ the many meetings and focus group discussions local governance (D/LG) reforms in Indonesia. The conducted in the implementation of the study and U.S. Agency for International Development (USAID)- the review of the study report. Democratic Reform