The document summarizes problems with Indonesia's recent decentralization policy and proposes solutions to address these issues. Specifically: 1) The policy has largely devolved power to district/city governments rather than empowering local institutions like village governments, leading to issues like lack of resources and services at lower levels. 2) To prevent failures, the document proposes "internal decentralization" that distributes power from district/city governments to sub-district and village levels. It also recommends strengthening local institutions like neighborhood associations to participate in decision making. 3) These changes would create a "new format" of regional autonomy with power focused at the lowest governmental levels rather than district/city, democratizing governance from within local

1. The-12th
Indonesian Scientific Meeting, Osaka University, September 6-7, 2003
Indonesian Student Association in Japan 42
“Democratization from inside” and vision to construct new format of
regional autonomy in Indonesia: keeping local authorities democratic
through empowerment of local institution
Tri Widodo W. Utomo
Department of International Cooperation, Graduate School of International Development,
Nagoya University, 1 Furo-cho, Chikusa-ku, Nagoya, 464-0861, Japan
Keywords: regional autonomy, decentralization, democratization of local institution.
Abstract. The recent format of decentralization policy in Indonesia grants extensive discretions to
district/city governments and limited authorities to province governments. On the one hand, this
policy generates some political and socio-economic progresses. However, there are some
unrealized agendas that indicate the potential failure of regional autonomy. The most prominent
unsuccessful story of Law 22/1999 is that autonomy is seen merely as local governments’ rights.
As a result, it fails to strengthen grass root democracy and to improve local residents’ welfare. This
situation implies two negative facets of recent decentralization in Indonesia: the appearance of
local arrogances and decreasing quality of democracy; and the ignorance of public interests and
services. To prevent such kind of policy failure, “democratization from inside” is required through
empowerment of local institution below district/city level.
Introduction
The debate on the implementation, the problems and the prospect of regional autonomy in
Indonesia has been sharpened. Oftentimes, however, it disregards the core essence of autonomy.
According to Law No. 22/1999, the spirit of wide-autonomy policy is returning back the
authorities of legal-and-political local communities (kesatuan masyarakat hukum) to arrange their
household affairs independently. In this sense, the concept of “legal-and-political local
communities” refers not only to local governments (districts/kabupaten and cities/kota), but
substantially it should entail local business actors, NGOs, professional associations, as well as
governmental units at the grass root level i.e. village government (kelurahan and/or desa),
including two tiers of neighborhood association (rukun tangga and rukun warga).
Nevertheless, autonomy and decentralization is largely perceived as a process of devolving
functions and responsibilities and transferring resources from central to local government (with
emphasis on district and city governments). Consequently, Law No. 22/1999 has frequently been
considered as a regulation on “autonomy of local government units” rather than “autonomy of
legal-and-political local communities”. Some phenomena support this observation. In rearranging
their organizations, for example, many district and city governments tend to establish “big-sized
government”, though it would make their financial capacity weaken. The passing of many new
local regulations on fee and tariff that generates high-cost economy is another case.
Under such situation, pessimistic calculation takes place. Up to the third year of the
implementation of wide-autonomy policy, many observers hesitate its efficacy in improving public
welfare and public services.
In order to accelerate the expected results of decentralization, amendment of Law No. 22/1999
or promulgation of new regulations as interpretation of Law No. 22/1999’s articles is really

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required. In this regard, the devolution process of function, responsibilities and resources from
district/city governments to internal institutions and community groups should be the priority
scheme in the future. By giving trust and power to both lower organizational units and social
groups, not only keeping local authorities democratic, it will also empower local organizations to
actively and autonomously participate in the decision-making process of decentralized governance.
Problems of Recent Autonomy: Unrealized Agendas
Many literatures explore the benefits of decentralization in political, economic and
administrative field (MOHA and Ministry of National Development Planning, 2002; Smith, 1985,
Rondinelli, 1981, Ford, 1999, etc.). Politically, decentralized government is generally viewed as a
participatory, and therefore, democratic governance. In other word, decentralization policy
constitutes the entry point for introducing good local governance. On the other hand,
decentralization should, economically, be able to produce higher social welfare and better quality
of public services. In short, there is a wide-ranging agreement that decentralization or regional
autonomy is extremely needed to promote a superior, more effective and more democratic
governance. That is the reason why both in developed and developing countries, decentralization
forms a key element of the reform agendas.
Nevertheless, there is no guarantee that people’s life will automatically raise after the
implementation of decentralization policy. Some countries (including Indonesia) have either actual
or potential failures in executing such policy (Utomo, 2002a). Achievement of decentralization
purposes, hence, depends strongly on the readiness and capability of local government in actuating
and interpreting national policy into local context.
On the perspective of Indonesian policy on regional autonomy, there are some quandaries that
may halt the realization of decentralization agendas. The following are some examples of the
recent problems faced.
1. There is a big gap between district/city government on the one hand, and sub-district/village
government on the other hand, in terms of human and financial resources.
After the enactment of financial balance law (Law No. 25/1999), financial resources in
district/city government are quite affluent. In addition, decentralization policy leads to transfer
of personnel from central to local government. Since then, many local governments
experience a kind of “obesity”, particularly in personnel aspect. The number of local
employees is overwhelming the main tasks of the organizations. It implies the demand to
redistribute the huge amount of personnel to other institutions. Ironically, prosperous
resources in district/city government are not shared with the lower government, i.e.
sub-district and village governments. It is the fact that sub-district and village governments are
often complaining about lack of human and financial resources. As a result, complain on the
low performance of public services are rather pervasive. Unfortunately, both district/city and
village government is not so efficient, though they encounter different situation.
In the near future, sharing of power and resources between district/city government and
sub-district/village government (including other social components) should be accommodated
in the policy agenda. Yet it is important to bear in mind that redistribution of human resource
to sub-district and village government may have to be performed hand in hand with other
policy adjustment such as increasing echelon level at sub-district and village government
offices.
2. The passing of many new local regulations on fee and tariff (retribusi).
Related to the problem of financial balance, some district/city governments insist that flow of
funds from central government is far from adequate. Therefore, they try to optimize their own

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sources through promulgation of Local Regulation (Perda) on tax and charges. During the
period of May 1999 to May 2002 there were 1.183 Perdas on tax and charges reported to and
evaluated by MOHA; and 80 of those had been cancelled either by MOHA or individual local
government issuing the Perda (Media Indonesia, 21 Nov 2002). According to Soesastro (2001),
one of the most hazardous impacts is obstructing inter-regional trade and weakening
competitiveness of local commodities.
3. Local egoism and arrogances.
From the beginning, many experts such as Kimura (1999) warn that regional autonomy may
lead to the expansion of “local kingdom”. Recent phenomena advocate such caution. Utomo
(2002b) asserts that there are two types of local egoism, upward and downward egoism.
Upward egoism can be observed from the unwillingness of many district/city governments to
comply with national and superior rules. For instance, Indramayu district government in West
Java Province persists to implement Perda on oil processing tax even though it has been
abandoned by MOHA. The reason is that the Decree of MOHA has no executable legal power
due to Indramayu’s request to the Supreme Court on judicial review. In fact, Decree No.
41/2001 provides that MOHA has a right of repressive control over local regulations.
Similarly, Cilacap district government in Central Java Province involves in a conflict with
Ministry of Transportation regarding management of sea harbor.
Meanwhile, downward arrogances are quite noticeable from the unwillingness of many
district/city governments to share their power/resources to other local organizations or local
components. That’s why, executive and legislative bodies seem to be much more influential as
corruption becomes more apparent. At the same time, although there are some emerging
positive awareness from local people as indicated by the establishment of NGOs, the
expansion of social protest/demonstration, the enhance of people’s self-help capacity
(swadaya), etc., the role of local government is still much more dominant than that of private
and community sectors. As a result, public participation never emerges as real participation of
individuals; it materializes merely as institutional participation, and even mobilization.
4. Although there are some progresses in delivering public service, but the quality of services is
still far from satisfying.
Almost in all indicators of public services, most of local governments could not able to
achieve better performance. In “macro” indicator such as education services (literacy rate and
mean year of schooling), health services (life expectancy and infant mortality rate) and
purchasing power parity (PPP), many province and district/city governments fail to improve
the index of human development (Utomo, 2002c). Accordingly, they show a low performance
of “micro” public service such as roads and traffic congestion, garbage/disposal, clean water
and sewerage, electricity sufficiency, etc. The main justification for low quality of public
service is financial obstacles. However, professionalism and “sense of good city management”
are also crucial factors in promoting better, cheaper, and faster public services.
Certainly, there are many other unidentified problems. The main cause is not decentralization
policy itself, but lack of supporting actions such as empowering local institutions as a way of
democratizing local governments. The following part proposes two required actions to prevent the
above dilemmas, and, at the same time, to fortify the implementation of recent policies on
decentralization.

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Ways toward New Format of Regional Autonomy
The present policy on regional autonomy can actually be corroborated as “on the right track”.
However, some adjustments might alter the basic format of the policy. The following proposals, if
consistently applied, would shift the focus and spirit of wide-autonomy from district/city to
sub-district/village governments.
1. Internal Decentralization (second stage of decentralization) and Competitive Governance in
the Framework of Sub-district and Village Governments Empowerment.
In general, the term “internal decentralization” requires district/city governments to their
discretion of power to the lower level of governmental units within their own region, just after
receiving from central government. The balance of resources (human, financial and
infrastructure) between district/city and sub-district government should be formulated soon. To
some extent, a consequence will occur from this policy, that is, a need for institutional
arrangement. In this sense, the institution of district/city government should be downsized,
whereas that of sub-district and village government might be expanded and strengthened. As a
result, organization in sub-district and village level will satisfy the principle of rich in structure
and function, while organization in district/city level prefers to be fit in function but lean in
structure.
In the near future, some delegation of power from district/city as well as sub-district
government to village government is required. By so doing, local governments may obtain at
least four benefits: 1) the working load of district/city as well as sub-district government will
be shared to the lowest level of government. It also means that village and sub-district
government will be the leading agent of public services; 2) district/city governments do not
need to assemble a big structure of internal organization; 3) district/city’s expenditure may be
utilized evenly, and therefore, productively for all sub-district and village governments; and 4)
as a means to optimize sub-district and village governments’ functions.
In line with this, the allocation of funds (similar to Dana Alokasi Umum – General Allocation
Fund) should be distributed for all sub-district and village governments in a competitive way.
This mechanism is known as “Competitive Government”. The idea is that every success should
be rewarded, whereas each failure should be punished (reward and punishment system).
According to this system, only sub-district/village government that is able to meet certain
requirements (e.g. fulfilling government’s minimum standard of services / Standar Pelayanan
Minimal) will be granted DAU or subsidy (subsidy as a reward).
It is fortunate that some local government has planned and implemented this idea. Ogan
Komering Ulu district in South Sumatra Province, for example, had declared the “village
autonomy” program in the beginning of year 2003. In case of Bandung City government, the
Major issued a Decree No. 1342/2001 that transferred 96 authorities and financial sources to
sub-district governments. To realize the delegated authorities, each sub-district is granted Rp.
400 million/year (around ¥ 6 million). However, this amount of money constitutes merely as
stimulus fund to encourage people’s self-help capacity (swadaya). Head of Margacinta
Sub-district government, City of Bandung, confirms that in a canal construction project, the
sub-district government spends only Rp. 11 million from the total cost of more than Rp. 80
million. Approximately Rp. 70 million is borne by local people through voluntary donation
mechanism.

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2. Strengthening Social Local Institutions.
a. Giving new roles to neighborhood association (RT or RW).
Previously, the functions of neighborhood associations are simply related to social affairs
such as conflict among members, incidence of mourning, sport and religious activities, etc.
Moreover, they often associated with government’s “agents”. Surprisingly, they have an
aptitude to be an entrepreneur society.
The neighborhood association in Cigadung Village Government, City of Bandung, is
probably an extraordinary case. There is a piece of land in the area of Wijayakusuma
housing complex. It was used to collect and store garbage that not only bothered the
inhabitants due to awful smell and view; it was also harmful for health and environment.
Under the agreement of all dwellers, the operation method was changed. The association
(RT) built some small kiosks and leased competitively to local businessmen that should
pay monthly fee. The changing use of the land leads to a cleaner, healthier atmosphere and
wealthier neighborhood association. In turn, their financial capacity is getting improved,
and indirectly, it supports local government’s financial capacity.
This is just an example of empowered community. The basic notion is how to enlarge
community groups’ rights and give them trust to manage their own residence, interests,
and all of their household affairs.
b. Establishing “consultancy mechanism” consisted of local purely private institutions
(NGOs, media companies, labor unions, research institutes, vested and pressure groups,
etc.) and semi-government / semi-private institutions (e.g. PKK or Dharma Wanita).
It is commonly recognized that people’s participation in the decision-making process is
rather dubious. Even though bottom-up planning is massively introduced, local
government remains the single actor of development. As a result, the management of
development in Indonesia deployed quasi-participatory planning mechanism for a long
time.
Improving the quality of development in a democratization era does require the dynamic
involvement of all shareholders and stakeholders. In that sense, building a local network as
a consultancy mechanism is a strategic alternative. Through such network, every decision
and policy should be discussed before implementation. Implicitly, it also means that local
development is a mutual responsibility of all local community components.
By executing the above two actions, the format of regional autonomy in future Indonesia will
automatically changed. The emphasis of discretion of power is being set at the lowest
governmental units (i.e. sub-district and village government), not at district/city level anymore. In
other word, the upcoming policy of decentralization is predicted to grant extensive discretions to
sub-district and village governments and limited authorities to province and district/city
governments.
Concluding Remarks
The recent format of autonomy highlights the political and governmental powers on
district/city government. In the future, such power should be shared out to both lower
governmental units such as sub-district and village government, and local social institution.
Without equal distribution of power, responsibility and resources among local community
components, decentralization policy will produce centralized regime in local level. To avoid sort of
“irony of autonomy”, a process of “democratization from inside”, i.e. empowering local
institutions to eagerly take part into local policy formulation and implementation, constitute a

6. 47
strategic option toward a new format of regional autonomy.
In addition, it is a fact that decentralization spirit introduced in Law No. 22/1999 was central
government’s initiative to democratize local governments. However, democratization from above
and from outside is not believed to be effective as democratization from inside or from oneself. In
other word, the commitment of district/city governments to build a “democratic infrastructure”
within their own environment will determine not only the success of decentralization policy, but
also the effort to realize good and democratic local governance.
References
Ford, James, 1999, “Rationale for Decentralization”, in Jennie Litvack and Jessica Seddon (ed.),
Decentralization Briefing Notes. World Bank Institute. Available online at
http://www.worldbank.org/wbi/publications/wbi37142.pdf
Kimura, Hirotsune, December 1999, “Decentralization: New Form of National Integration?”
(Indonesian version), in Ketahanan Nasional Journal, No. IV (3), Yogyakarta: Gadjah Mada
University.
MOHA and Ministry of National Development Planning, 2002, National Framework of Capacity
Development and Improvement to Support Decentralization (Indonesian version), Jakarta.
Rondinelli, Dennis, 1981, “Government Decentralization in Comparative Perspective”,
International Review of Administrative Sciences, vol. 47 (2).
Soesastro, Hadi, 2001, Regional Autonomy and Free Internal Trade (Indonesian version),
unpublished paper available at http://www.pacific.net.id/pakar/hadisusastro/010522.html
Smith, B.C., 1985, Decentralization: The Territorial Dimension of The State, London: George
Allen & Unwim.
Utomo, Tri Widodo W., 2002(a), Building Democratic Developmental Regime in Indonesia (Local
Government System After the Implementation of Law No. 22/1999), Proceeding of 11th
Indonesian
Scientific Meeting, Nagoya, Japan.
_____________, 2002(b), Autonomy and Threat of Local Authoritarianism (Indonesian version),
Kompas, May 1, 2003. Available online at
http://www.kompas.com/kompas-cetak/0305/01/opini/281612.htm.
_____________, 2002(c), An Analysis Of Human Resource Development Problems In The
Developing Country: The Case of West Java Province, Indonesia, unpublished paper, Nagoya.