Sadanand Dhume, Jakarta – With a shaky currency, the former president's son on the run from police and a series of recent bomb blasts in major cities, you would be forgiven for thinking that Indonesia has more than its share of troubles.
Still, on January 1, as if inviting further instability, the country began implementing two laws designed to give more power to 361 districts and cities nationwide.
Though the laws were drafted by idealists who see devolution of power as a panacea for Indonesia's problems, pragmatists favouring slower change seem to have taken over the implementation process.
Faced with the prospect of widespread chaos if inexperienced local politicians were to take over real power, Jakarta has tried to apply the brakes. In August, the regional-autonomy portfolio was taken away from Ryaas Rasyid, the academic-turned-politician widely regarded as the brains behind the laws, and given to the Ministry of Home Affairs. On January 2, Rasyid tendered his resignation as minister of state for administrative reforms, citing differences with President Abdurrahman Wahid over implementation of the laws.
Continued uncertainty over the final contours of the programme has raised concerns, notably among foreign investors, over the future distribution of power.
The two laws were passed in 1999 during the presidency of B.J. Habibie. Their intention: to blunt the edge of dissent against Jakarta's often heavy-handed rule and to encourage economic enterprise and better local services by giving hundreds of districts wide-ranging powers, including the ability to tax and to grant business licences.
But faced with serious doubts about the quality of district administrations, the danger of fiscal profligacy and fears of widespread corruption, Jakarta has decided to back-pedal. After scrapping the Ministry of Regional Autonomy in August, it refused to set up a special coordinating agency to speed up the process.
It has also slowed the transfer of civil servants from central to local control and moved to curb the ability of local governments to borrow indiscriminately for spending binges. And on January 5, Minister for Mines and Energy Purnomo Yusgiantoro said the mining industry would remain under Jakarta's control for up to five years.
Yet concerns remain about whether the central government can retain much of its authority without provoking a backlash from restive local governments eager for their promised slice of power. The prognosis, so far, is not encouraging.
"Regions have different expectations," says a senior World Bank official. "Central ministries have different expectations. It could be a real dog's breakfast."
It wasn't meant to be this way. Regional autonomy, says Rasyid, was supposed to bring government closer to the people, encourage healthy competition for investment, and minimize the risk of Indonesia disintegrating. But those rosy expectations aren't shared by many. Instead of business-friendly local governments competing to offer companies tax breaks and good infrastructure, foreign investors worry that they will face rapacious politicians who raise taxes arbitrarily and officials who lack the capacity to implement regulations.
"These are extremely politically immature governments," says a senior Jakarta-based employee of an American mining company. "The worst legacy of the Suharto regime was that it was like a banyan tree that would not allow any growth below. These might as well be student-body, high-school governments."
Unpleasant consequences
Even before the laws' implementation, multinationals, particularly in oil, gas and mining, have faced the unpleasant consequences of the breakdown of central authority, from violent attacks to seemingly random taxation.
A Western security consultant in Jakarta says decentralization only adds to worries about a breakdown of law and order. In the Suharto era, "when in trouble, you would pick up the phone and call Jakarta and there would be 300-400 troops there in a day," he says. "People are scared after May '98. You pick up the phone and ask for help and nobody's on the other end."
According to Andi Mallarangeng, a political scientist who worked on the original autonomy law, the Ministry of Home Affairs has effectively sabotaged regional autonomy. "That idealism has been lost," he says. "The Home Affairs people taking care of it are bureaucrats, not academics like us. We wrote that law. We had that vision."