INTRODUCTION: The Regional Governance Reform in Indonesia, 1999–2004

Summary

INTRODUCTION

In 1999, interim President B.J. Habibie initiated an ambitious reform of Indonesia's regional autonomy based on of the decision of the 1998 People's Congress No. XV on the reorganization of regional autonomy. It provides rural districts (kabupaten) and municipalities (kota) with the freedom to regulate their internal as well as their external affairs with the consent of the provincial governor and president. Before 1999 these regions had autonomy only on their internal affairs, that is, the regulating and managing of their socio-economic household and raising of traditional taxes. This autonomy was called “real autonomy”. The 1999 reform endows local communities with autonomy also on external affairs like the implementing of national laws and policies and provision of services. These tasks are called “accountable autonomy” and are paid for by the government and thus are accountable to the government. Before 1999 these external tasks were handled by government offices in the regions, the so-called kantor wilayah or kanwil. The sum total of the two types of regional autonomy is called “broad regional autonomy”. The heads of region, that is, the bupati for the rural district and the mayor (wali kota) for the municipality, lead the reorganization and the implementation of the new tasks. The representative parliament of districts and municipalities has to be prepared for its new role in the regulating process. Village communities have been made part of the regional governments. Nomadic communities are not mentioned by the reform laws, nor by the constitution. Legally, they simply do not exist. The reorganization had become financially necessary because of the financial crisis of 1997 which had depleted the dollar reserves of the government and Indonesian banks considerably, forcing the government to rationalize its expenses. The reform was made politically possible by President Suharto's enforced abdication in 1998 and became financially feasible by the sponsorship of the World Bank and other domestic as well as foreign donors.

The main aim of the reform is to rebuild local government from a poor and backward stronghold of tradition, which had hitherto been excluded from doing government tasks, to a regional government which has the money and the capacity to regulate and manage its external affairs.