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THREE YEARS OF FISCAL DECENTRALIZATION IN INDONESIA : ITS IMPACTS ON REGIONAL ECONOMIC DEVELOPMENT ... - page 5 / 21

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could be attributed as another significant contribution of law 22 amendment process where the provincial government has the authority to do monitoring and evaluation process over the districts and municipalities in their area. Some argue that with the amendment, the provincial government and the governor will become powerful again in the near future and that may explain why the governor election is still intense and interesting. By giving more power to the provincial government, the central government is trying to break the intense relationship between provincial and local governments that sometimes leads to the ignorance of local governments on the existence of provincial government.

However, the amendment process of both law 22/1999 and law 25/1999 revealed the old and continuous problem at the central level, lack of coordination among the ministries

and especially, rivalry between MOHA and ministry leadership at central level contributes significantly to

of finance (MOF). Lack of the coordination and rivalry

problems. Although the central government is decentralization is a nation agenda that has

trying

very hard to

to be

obeyed by

create impression that everybody at central

government, the perception that law 22/1999 is just there. As a result, the conflict with other sectoral

a sectoral law belongs to law such as mining law,

MOHA forestry

still law

still exists and it is far from 22/1999 (World Bank, 2003).

easy to make other laws adjusted to The rivalry between MOHA and MOF

the content

of law

seems to be

endless

when Each

it comes to the question of one of them proposes the

who should amendment

be of

the authority of decentralization law 22 and law 25 respectively

process. and the

bigger problem example is the

is that each one of them issue on how the local

is working on overlapped issues differently. One governments spend their budget. Both laws are

trying to reach the issue that did not exist in each one of them approached the issues standards. MOHA claimed that they should dealt with local expenditure issues for a long

the original version of both laws. However, from different perspective with their own be the authority in this issue since they have time, and for them, MOF should concentrate

on the should

revenue side of have authority

local budget (APBD). On the other over the expenditure side of APBD

hand, MOF claimed that they since they are responsible for

accounting

and

financial

reporting

standard.

The

rivalry

becomes

intense

when

it

comes

to the act in

idea of having only one law or legal act for decentralization like local government Philippine (Asanuma et al, 2003). They prefer to maintain the status quo by having

one law under their responsibility to be under their responsibility.

but if

there has to

That

preference

be one law, MOHA prefers that it has could lead to MOHA domination in

drafting the future of facet and takes into

decentralization while the decentralization process should be multi account other ministries interests. So far, MOHA is gaining the

power while to take over issues.

MOF some

is weakening, and currently, there is power over the intergovernmental

a tendency that MOHA is trying transfer and other local finance

FISCAL DECENTRALIZATION AND REGIONAL DEVELOPMENT In addition to the democratization process, the slow economic recovery process is another circumstance that accompanied the decentralization process since 2001. While focus of the national budget (APBN) should be to overcome the crisis and maintain economic stability, at the same time APBN has to dedicate some amount for new scheme of fiscal

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