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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