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PRESS RELEASE

Indonesia: The Government Explores Alternative Approaches For Decentralization

March 12, 2012




Data shows that decentralization has helped improve service quality in education, health, and other social sectors. However, significant progress has yet to be seen in the development of local infrastructure, public transportation, and water and sanitation.

In response, the Ministry of Finance, Ministry of Home Affairs, and Bappenas -- in cooperation with the Decentralization Support Facility administered by the World Bank-- are hosting an international conference on “Alternative Visions for Decentralization in Indonesia”. This 2-day conference aims to rethink decentralization in ways that would help boost public service delivery and make economic growth more inclusive.

Ideally, decentralization policies should help harmonize diversity at the local level and the common objectives of the state. Yuswandi Temenggung, Director General of Regional Finance, Ministry of Home Affairs explained, “Learning from our decentralization experiences, there are two basic issues that need to be revisited: functional assignment that tends to be uniform across all regions and how local governments can be further empowered.”

"Synergy across stakeholders is key to making new approaches to decentralization work. Local governments need to be flexible and creative in this regard," says Marwanto Harjowiryono, Director General of Fiscal Balance, Ministry of Finance.

Max Hasudungan Pohan, Deputy Minister for Regional Autonomy and Regional Development, Bappenas remarked, “Decentralization should be a synchronized collaboration between provincial governments, district or city governments, sub-districts, and village administrations.”

Two key topics are discussed in this international conference. Firstly, empowerment: how can the unique potentials of each region be used to enrich decentralization, and how local administrations can be empowered. This topic also discusses the notion of incentives to reward development creativity.

The second topic addresses funding for regional development, including market mechanisms such as municipal bonds and public private partnership. With regards to funding, Franz Drees-Gross, Sustainable Development Sector Manager for the World Bank in Indonesia, says, “Ideally, new funding mechanisms like municipal bonds should complement increased local revenues, including those gained from devolution of land and building taxes to the regions.”

Notes for the Editor: Decentralization Support Facility (DSF) is a multi-donor trust fund led by the Government of Indonesia (Ministry of Finance, Ministry of Home Affairs, and Bappenas).

Media Contacts
Leitizia Fauzy
Tel : 021-5299 3199
lfauzy@worldbank.org


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