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THREE YEARS OF FISCAL DECENTRALIZATION IN INDONESIA : ITS IMPACTS ON REGIONAL ECONOMIC DEVELOPMENT ... - page 9 / 21

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specifics has to be the first priority together with the GRDP, rather than APBD, orientation from local governments.

FISCAL SUSTAINABILITY One major complain from most of Indonesian local governments is insufficient DAU and other types of transfer to support the regional development, especially related to new

infrastructure provision. governments spent their employees salary and left a

As table 1 in the appendix indicates that most of local budget for routine expenditure, especially government little for development expenditure. With that limited amount,

it is hard to improve the

imagine that infrastructure

the local governments will do some new major projects that quality in the region. Maintenance of existing infrastructures

might be the maximum they can do Indonesia. It means that the local

but in reality, infrastructures are deteriorating all over budget is simply not enough to cover any effort to

promote could be

local some

economic growth and improvement of reasons behind this condition. First, The

public service delivery. There Indonesian government that still

works on slow economic process focuses the their routine expenses with little left for governments with limited sources of revenue

budget (APBN) on the debt payment and development. Second, most of local have not been able to manage themselves

efficiently due to current political situation that and not politically acceptable. Third, most of

makes any efficiency program unpopular line ministries at central level still have

significant power of the projects located on the authority should have been moved to the

the regions local level.

while

according

to

law

22/1999,

The last reason might reflect what local governments are always suspicious to the central government, the reluctance of the part of central governments to devolve their power to

the local level.

In other words, the old problem of the “tug of war” between

deconcentration and decentralization still exists. Although, the period since 2001 is labeled as decentralization period, it is not that easy to just change the paradigm from strong deconcentration in the past. Most of line ministries had the power in their fields during the deconcentration period, and the decentralization period basically threatens their power. Using many types of arguments such as national priority programs, national interest, people interests, and others, they are still trying to justify their authority over the execution of programs and projects at the local level. Although they are involving the local government units during the activities, the sense that the project belongs to the

center rather than local creates the impression that the

to

devolve

the

authority.

There

have

been

some

central government discussions about

does not want this issue but

whenever it comes to the initiate the policy and if

real action, the question from a other ministries will follow the

line ministry will be who policy. Other ministries

should would

argue that they do not have trust in services that they used to do it in the be “earmarked” for certain activities health, and basic infrastructure.

local government of delivering the minimum basic past. Some also proposed that part of DAU should related to basic service delivery such as education,

While the debate of deconcentration v decentralization might be endless, there is one strategic policy to gradually shift the central government paradigm and minimize the deconcentration activities. The specific purpose grant (DAK) that theoretically should be

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