The practice of regional development in Indonesia: Resolving central‐local coordination issues in planning and finance
| Date | 01 November 2006 |
| Published date | 01 November 2006 |
| Author | Randall Crane |
| DOI | http://doi.org/10.1002/pad.4230150205 |
PUBLIC ADMINISTRATION AND DEVELOPMENT,
VOL.
15,
139-149 (1995)
The practice
of
regional development
in
Indonesia: resolving
central-local coordination issues
in
planning and finance
RANDALL CRANE
Department
of
Urban
&
Regional Planning, University
of
California, Irvine
SUMMARY
Renewed interest by the Indonesian government in decentralization and cost-recovery practices
has led to both real and illusory reforms, though the distinction between the two is often not
clear. This is particularly true with respect to infrastructure planning and finance. Recently, the
allocation criteria for capital grants to local governments have been substantially revised, nearly
every year, to reflect long lasting concerns regarding differences in interregional development
needs and resources. In addition, the level
of
funding for local government investment has risen
dramatically to support increased local responsibility in planning. Most development spending
does not pass through local budgets, however. In either case, the project planning process has
remained firmly under the direction of the central government’s technical ministries.
Infrastructure investment thus tends to be segmented, not only by sector, but also by funding
source. The rate at which these two factors balance off in current practice does not indicate a
strong commitment to effective decentralization. The article suggests that greater regional
government participation in the national planning process would be beneficial.
To
deal with the
fragmented nature of sectoral planning is more problematic, as a more integrated approach
would in the long term require either a new layer of bureaucracy or
a
substantial reorganization
of the technical ministries. In the shorter term, a gradual shift toward general purpose grants
would also generate regional development plans more consistent with the goals of decentral-
ization while maintaining substantial central control and oversight.
INTRODUCTION
Indonesia is the fourth most populous nation in the world, with an estimated 180
million people in 1990. Recent economic growth has been strong and prospects
for
continued development and increasing prosperity are judged good, as indicated by the
diversity of the economic base and the moderate macroeconomic policies that have
spared Indonesia the heavy debt problems faced by many other petroleum-based
economies during the 1980s (Booth, 1992). With this growth has come many
of
the
familiar problems
of
rapid urbanization and regional inequality seen elsewhere (Hill,
1989).
In
part they follow from the physical and ethnic construction of the nation.
Although the archipelago stretches some 3,000 miles
from
end
to
end, and includes
several hundred distinct ethnic groups, the island of Java, forming less than
7
per cent
of the land area of the nation, dominates the country with roughly
60
per cent of both
the population and
GDP
(BPS, 1990).
Randall Crane
is
Assistant Professor at
the
Department of Urban and Regional Planning, University
of
California, Irvine, California 92717-5150, USA.
CCC
0271-2075/95/020139-11
0
1995 by John Wiley
&
Sons, Ltd.
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