Corruption Remains Major Threat to Decentralization
Decentralization was introduced in 2001 as a new way of running the public sector. Dramatically different from the New Order, the Reform Era opened more opportunities for regional administrations to manage their areas autonomously.
Today, the country’s 34 provinces and 514 regencies and municipalities are authorized to manage their budget under fiscal decentralization. Over half of public spending is now managed in the regions, according to the World Bank’s Indonesia report this year. Administratively, 32 functions have been deferred from the central government; politically, public participation in policymaking is much more open, mainly through direct elections for local leaders.
However, we still find major obstacles to autonomy, the “big bang” policy that marked the end of the New Order. Some regions still have not met a number of prerequisites for decentralization, while others have progressed greatly in their policy delivery and the ultimate goal of regional autonomy (seefigure).
There are a number of problems we can learn from to improve relevant policies. If the ultimate goal of decentralization is to improve the people’s quality of life and regional development, we are still far from the ideal.
Autonomy is indeed considered an important tool to build human capital that possesses good health through healthcare services, intelligence through education services and strong purchasing power through economic progress. Presently, 18 provinces and most regencies and municipalities have low to medium human development indexes according to the Central Statistics Agency (BPS), with critical points on infant mortality rate and school dropout rates.
Social inequality and regional disparity remain serious challenges. We still lack breakthrough policies to solve the structural problem between Java and the other islands.
Moreover, discrimination is prevalent among regions in fiscal allocation for institutions, redistribution of development resources and in other budgetary areas. National infrastructure projects are being aggressively promoted, particularly under President Joko “Jokowi” Widodo, but their impacts have yet to be seen in opening geographical isolation as well as in strengthening the local competitiveness of specific areas.
In policy delivery, decentralization has paved the way for many local innovations, either through support from governors, regents and mayors or through transformed bureaucracies.
The great news is that at least 50 regencies and municipalities have consistently won awards from the government and other state institutions for their outstanding achievements, including in public services, financial governance and business climate. Here, decentralization has been a blessing, a distinguishing factor that is unprecedented in Indonesia.
However, inefficiency and corruption remain major challenges elsewhere. Local budgets have failed to stimulate improvements in public services and economic growth due to inefficient delivery or mistargeted allocation.
Technically, institutional problems are weaknesses in planning, budgeting and implementation. A big gap remains between local authorities in managing administrative and budgetary matters and in their capacity for governance and development.
Stain on decentralization
Corruption is the most complicated problem. Today, corruption has reached a critical level that can paralyze the nation’s resilience. From 2005 to April 2018, 348 local leaders and about 3,600 local legislators were investigated for corruption. From 2003 to April 2018, almost 90 regional heads and 122 legislators were arrested by the Corruption Eradication Commission (KPK).
Despite the many attempts to understand corruption, aside from bringing many cases to trial, prevention strategies are still lacking. The corrupt system at the root of political corruption is largely untouchable. The disconnection between the decentralized governance system and the centralistic system of political parties has led to a closed recruitment pool of local leaders. Political party leaders and the oligarchy surrounding their central boards hold the authority to make final decisions, and are known for recruitment involving rampant “transactions” from political dowries from candidates to the “purchase” of local election tickets."
Successful regional head candidates that enter office bearing large financial burdens are easily drawn into corruption to repay debts and favors to various supporters of their political campaigns. Weak moral virtue, poor local integrity systems, weak inspectorates and ineffective public control worsen the condition. Suspected abuse of local budgets, especially social aid and infrastructure project funding, busi-' ness licensing, goods and services procurement, have become fertile fodder for critics.
Ironically, corruptors gamely risk the consequences of their illicit gains, as many have received relatively light sentences compared to the amount of stolen or abused funds. Corruptors rarely receive the maximum sentence with the added penalties of asset confiscation and voided political rights. Many have even been reinstated in political positions after serving their sentence, but with no guarantee that corruption will not reoccur in their regions.
Without a commitment to a comprehensive strategy against graft, corruption will continue to deny the people of their ba sic rights and damage our public life. Managing political corruption must start from fundamental reform to the political party system, primarily their funding source, which must be the state's responsibility. Limited state funding for political parties has become the parties’ justification for depending on their cadres to cover operational costs and programs.
A higher allotment of state funds for political parties could help reduce the parties’ dependency on illegal sources. The parties will be forced to manage their ’funds transparently through audits and’ publicly announcing the results. The parties would then no longer function like private companies, but like public entities with an obligation to produce appropriate candidates for public posts.
If such problems in the upstream political arena could be resolved, local governance issues would be more manageable. Political corruption would no longer deliver the next generation of cor- ruptors, since clean leaders would clean up the bureaucratic environment as well as local politics.
Effective, accountable autonomy
Law No. 23/2014 on regional autonomy, the latest revision to the first 1999 Regional Autonomy Law, has marked a new era in the relationship between central and regional governments. The model introduced in the latest law seeks effective and accountable decentralization.
Local administrations should therefore not only reach better national and local targets; the targets will also be incentives — or disincentives when they are not attained. A performance-based fiscal transfer, for example, could be a breakthrough in redesigning fiscal instruments, with different amounts allotted to each region based on the targets they achieve. Accountable decentralization will hopefully strengthen the local governments’ downward accountability to the public and upward accountability to the central government.
As the main enemies are inefficiency and corruption, decentralization’s next challenge is to design a new policy to increase incentives for local leaders to be more accountable to the people and the central government. Therefore, we need to meet the prerequisites of decentralization as outlined in the logical framework of figure above. First, leadership and political management always need improving at the central government to guide and improve autonomy.
Second, a solid and consistent policy framework is vital, including national standards (NSPK) and minimum standard of service (SPM). Third, we need to narrow the gap between local authorities and the capacity and integrity of political elites and local bureaucracies.
Finally, improved public welfare is absolutely necessary. Under regional autonomy, people should no longer be the victims of bad governance, wicked corrupt elites and be marginalized by development in their own areas. As a system governed by the people, regional autonomy must prove itself in yielding great benefits for the people, the owner of sovereignty. Otherwise, public distrust will downgrade the legitimacy of the decentralization that brought great hopes at the start of reformasi.
Author: Robert Endi Jaweng
Position: Executive Director of Regional Autonomy Watch (KPPOD)
Source: The Jakarta Post, Wednesday, May 23, 2018
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