Guidebook to local governments in Indonesia. by Ade Cahyat (M.PA)

Transcription

1 Guidebook to local governments in Indonesia by Ade Cahyat (M.PA) Draft September 2011

2 Guidebook to local governments in Indonesia Draft September 2011 ii Preface This guidebook has been prepared to support the work of integrated experts deployed by GIZ Entwicklungsdienst to work with and within local governments in Indonesia. By providing knowledge on relevant structures and procedures its intention is to ease the pain every newcomer to Indonesia usually endures, when trying to figure out the logic behind the structures and procedures he observes. The first chapter briefly describes the general framework (history, levels, revenue, expenditure, legitimation and legislation of local governments). The general structures and key players are being outlined in the second chapter (local parliament (DPRD), heads of local governments, local government working units (SPKD), and internal structure of SKPD). The third chapter then gives an overview of selected procedures of external services (land titels and boundary demarcation, community empowerment, natural resources management) while the fourth chapter focuses on key internal procedures (planning-budgeting-reporting, human resources management and capacity building, salary and forms of employment). One special chapter village government briefly highlights the question of local governance on subdistrict level (structures, planning and budgeting, traditional forms of governance). The last chapter then opens the room to give a more analytical account of underlying processes (relationship between national and local governments, political decision making in Indonesia, legal product hierarchy, etc.). Please also notice the glossary at the end of the document. The guidebook has been written by Mr. Ade Cahyat (M.PA) with guiding questions from Dr. Oliver Kögler under commission of GIZ Entwicklungsdienst. Considering the very limited resources that have been made available for the project, the content is already far beyond the expectations. Still many issues could only be covered briefly or have been left out completely. The document also does not yet comply with the standards of an official publication as no professional proofreading has been carried out. It is none-the-less easy to read and extremely rich in information. We very much hope that in a second step you - the readers will contribute to further elaborating and improving this guidebook. If you have any comments, additions, corrections or additional questions, please send them to oliver.koegler@giz.de. Depending on your feedback GIZ will then consider how to further proceed with the project.

3 Guidebook to local governments in Indonesia Draft September 2011 iii Contents The framework (Very) short history of local governments in Indonesia Levels of government in Indonesia Revenue structure Expenditure structure Legitimation of local governments Legislation by local governments 4 2 Structure and key players of local governments DPRD Local government working units Typical internal structure and functions of an LG agency The size and structure of local governments 10 3 Selected procedures of external services Land titles and boundary demarcation Community empowerment Natural resources management 12 4 Selected procedures of internal organization Planning, budgeting and reporting Human resources management and capacity building Salary and benefits of local government officials Forms of employment by local governments DPPKA and asset management 29 5 Village government Desa government structure Planning and financial system at village level Revenues Adat structures 31 6 The broader framework Working relationship between the national and local level Local government budget structure Political decision making - veto structure 38

4 Guidebook to local governments in Indonesia Draft September 2011 iv 6.4 The role of the state in society Rentier state Quality of work-tender issues Selected state institutions in national level Legal products hierarchy Elections in Indonesia 43 7 References 45 8 Glossary 51 9 Annexes Annex-1: Organization Structure of Dinas Kehutanan in the Province of Jawa Tengah Annex 2: Organization Structure of Sekretariat Daerah Kabuapaten Lombok Tengah 56

5 Guidebook to local governments in Indonesia Draft September 2011 The framework 1.1 (Very) short history of local governments in Indonesia Archipelago (nusantara) of Indonesia was the home of kingdoms before and during the colonial era. Wikipedia mentions 67 monarchic states spread out from Sumatera to Ternate. They often were dissolved or just remained by name when the Dutch conquered their territory. Some of the kingdoms were survived by exercising indirect rule in smaller territories under colonial government. Meanwhile, some others, for example Yogyakarta, were fighting the colonial rule and are well-known as a great supporter of the independence and republic movement (Kershaw 2011: 73). The extent of the Dutch colonial rule defined the territory of what later became Indonesia. During the independence movement, the Indonesian nationalists allowed no role of the constitutional monarchs because they considered the monarchs as colonial puppets. Thus the independent Indonesia formally became a republic state with some of the former kingdoms' name and territories still remaining in the form of local governments either on province level (e.g. Aceh and Banten ) or district/municipality level (e.g. Pontianak and Ubud). While political power was highly centralized under the authoritarian regime, the new democratic rule brought a quick and drastic decentralization of political power after 1999, mainly to the benefit of the district and municipality level bypassing the provincial level. Thus power relationship among national and local governments have been changing over time, from a moderate decentralized during Soekarno era known as "old order", , heavily centralized during Soeharto era known as "new order", , and profoundly decentralized during reformasi era, 2001 onwards (Marbun 2010). In reformasi era, the law on local governments has been revised two times. The first one was drafted in 1999 and was enacted since January 2001, was revised in The 2004 local government laws are still valid until now. They are Law 32/2004 about local government and Law 33/2004 about fiscal decentralization among the three government tiers. One major difference between the two is that the 2004 provide more power and roles to the province government on monitoring and supervising the kabupaten/kota. The World Bank called the 2001 decentralization a 'big bang'. That refers to the significant changes that happened since then. For example, two third of the central government workforce and more than 16,000 service facilities were transferred to the responsibility of the regions (Hofman & Kaiser 2002: 1-2). About one third of the total state expenditures is transferred to local governments under decentralization scheme (Departemen Keuangan n.d.). In addition, about half of all public investments are managed by the local governments (World Bank 2010a: 2) 1.2 Levels of government in Indonesia Indonesia has three government tiers: (1) the national level, (2) the provincial level and (3) the district (kabupaten) in rural regions or municipality (kota) level in urban regions. All sub-national levels two and three are generally called local governments. This usually causes some confusion as there are many similarities but also many differences between the provinces and the districts/municipalities in terms of their authorities, functional assignments, and organizational structure. By August 2011 there were 524 local governments, comprised of 33 provinces, 398

6 Guidebook to local governments in Indonesia Draft September /55 kabupaten, and 93 kota. There have been 205 new local governments since the 1999 decentralization law, comprised of 7 provinces, 164 kabupaten, and 34 kota (Yudhoyono 2011). Districts and municipalities have administration support units called kecamatan. Furthermore, kecamatan may comprise villages (desa, sometimes also called kampung) or urban neighborhoods (kelurahan). Although desa and kelurahan are at the same level, both differ in terms of autonomy. More about this are elaborated in Section 5. Under desa and kelurahan, there are two neighborhood administration support units. The first level is hamlet (dusun) in kabupaten or community units called Rukun Warga (RW)) in kota. The second level, either in kota or in kabupaten, is called Rukun Tetangga (RT). National (central) government Province goverrnment Kabupaten (district) government (rural region) Kota (municipality) government (urban regions) Kecamatan (adm support) Kecamatan (adm support) Desa government Kelurahan (adm support) Dusun (adm support) Rukun Warga (adm support) Rukun Tetangga (adm support) Rukun Tetangga (adm support) 1.3 Revenue structure The main components of local government revenues are the own-source revenues called Pendapatan Asli Daerah (PAD) and the transfer from central government called Dana Perimbangan. The former comes mainly from taxes and levies in service activities and vehicles ownership and is collected by local governments directly, whereas the latter come from taxes and levies in natural resource extraction activities and personal income tax and is collected by central government which then partly shared with the local governments. Therefore, resource rich regions, such as East Kalimantan, could claim that they transfer a significant amount of their income to the national level and other regions although they are still remain significantly better off than their poor neighbors. The proportion of PAD to the total income can be used as an indicator of the independency of local government revenue. Local governments with high proportion of PAD have a better control over their cash flow management compared to them who rely mostly on the national transfer. It is often the transfer from national government does not go smoothly and has been causing delayed payments (BPK 2008b). In the last five years, the proportion of PAD to the total local governments' revenues is 17 per cent (Departemen Keuangan 2011a) The transfers of the national government can then make up by far the biggest part, around threequarter, of the total local governments' revenue (Departemen Keuangan 2011a). Regions with high

7 Guidebook to local governments in Indonesia Draft September /55 population and plenty of service sector economic activities, such as all the provinces in Java, generate high PAD. Region with plenty of high value natural resources but low service sector economic activities, e.g. kabupaten Kutai in East Kalimantan, generate high income from national government transfer but low PAD. The transfers come in three forms. They are the general allocation fund (Dana Alokasi Umum = DAU), the special allocation fund (Dana Allokasi Khusus = DAK), and the shared revenues fund (Dana Bagi Hasil = DBH). While the DAU is generally being used for covering the salary of all public servants (PNS) in the region which commonly called "apparatus expenditure" (belanja aparatur), the DAK and DBH are generally providing funds for so called development activities (kegiatan pembangunan). The difference of the two is that while DAK is earmarked budget, DBH is not. Therefore, regions are in favor with DBH than DAK to allow them greater flexibility in spending their budget. Yet, it is only the resource rich regions and the regions with many people paying income tax who could earn significant amount of DBH. 1.4 Expenditure structure The expenditure structure consists of two big categories, direct and indirect expenditures. The direct expenditure comprises three components, i.e. personnel, goods and services, and capital expenditures, which mainly about expenditures related to all local government activities either implemented directly or are contracted to the third parties. The personnel costs under the direct expenditure category are for paying honorarium of PNS and others when they do activities. Meanwhile, there are eight components under the indirect expenditures. Most of them are usually allocated for the regular salary of the permanent public servant (pegawai negeri sipil/pns), while others are expenditures related to the outside parties of the entities which are not need tendering such as subsidies, social aid, and shared revenues to the lower administration entities such as to kabupaten/kota by province or to desa by kabupaten. Thus, we can see that PNS got two sources of legal income, the regular salary and the honorarium. In some regions, such as Gorontalo, the honorarium payments are replaced by performance incentives. Another way to read the expenditure structure is to group the expenses data by local government functions. There are nine local government functions; they are: general administration, orderly and security, economic development, environment, housing, health, culture and tourism, education, and social protection. The General administration includes all internal services such as the secretariat, planning, and personnel management. Expenses in general administration do not directly create benefit to the people. The proportion of general administration to the total expenditures is a good indicator of efficiency; the higher the number, the lower the efficiency. The average of indirect expenditures from the last five years, , is 53 per cent of the total local government expenditures. Interestingly, the average personnel expenditures at the same period, which are the sum of that in the direct and indirect expenditures, are 46 per cent. That is considerably a lot especially when compared to the capital expenditures which is only 25 per cent 1. By government function categories, the highest proportion has been spent for the general 1 However, the problem is not merely about the allocation of expenditures, rather it is about the low government expenditures which caused by the low revenue. The salaries for all police officers, for example, were more than three quarter of the total Police Department expenditures in Yet, highest paid officer was only around Rp.5 million per month while the number of police officers was only 0.2 per cent of the total population (World Bank 2003: 85). That means it is not the employee costs that might be the issue, rather it is the total expenditure is too low, whereas the low expenditures caused by the low revenues.

8 Guidebook to local governments in Indonesia Draft September /55 administration, 35 per cent of the total expenditures, followed by education (25 per cent), economy (9 per cent), and health (8. 75 per cent) (Departemen Keuangan 2011a). 1.5 Legitimation of local governments The heads of the local governments are called gubernur in province level and bupati /walikota in district/municipality level. All of them are directly being elected by the population. Since the gubernur position is in the middle between national and kabupaten/kota, it has two functions as the head of the provincial government and as the representative of the central government as well. As the head of the province government, the gubernur is responsible for all provincial government issues. Meanwhile, as the representative of the central government, he is responsible in supervising and monitoring the kabupaten/kota. For example, the draft budget plan (RAPBD) of the kabupaten/kota will only become final after it is reviewed and approved by the gubernur. On both levels there is also an elected parliament (local legislative), the Dewan Perwakilan Rakyat Daerah (DPRD). A similar arrangement is also applied to villages (desa) where the head (kepala desa), and the members of village legislative, called Badan Permusyawaratan Desa/BPD, are directly elected by the population. In contrast, the heads of the subdistricts (Camat) and urban neighborhoods (Lurah) are appointed by the Bupati or the Walikota. These positions are therefore held by PNS that mainly fulfill administrative tasks. 1.6 Legislation by local governments Similar to national level, any local government law, called peraturan daerah (perda), can be prepared either by the head of local government or by the DPRD. If one prepares, the draft needs to be agreed by the other. Despite the growing initiative of DPRD in drafting laws, in reality, it usually is the head of the local government who initiates laws. The scope of law making at local level is limited by the functions that are assigned to local governments which is regulated by Government Regulation 38/2007. In most cases, local governments just elaborate national regulations in order to make them contextual to the local circumstances. There are only few Perda with original idea from local political actors which usually happened in regions where the head of local government and/or the DPRD members are creative and smart. The head of local government (gubernur, bupati, walikota) could issue regulation independently in the form of 'surat keputusan' (SK) or 'peraturan'. Both do not need the approval of the DPRD. The peraturan is regulating e.g. the governor regulation on service provision procedure, whereas SK is an administration decree e.g. an appointment of someone to a certain position. The heads of local government working units (SKPD) cannot issue a decree or regulation. When they have any legislation idea, they need to bring the idea to the head of local government for further discussion. It is up to the head of the local government to decide whether to take the idea to become a decree/regulation or not. Unfortunately all the laws and regulations are often not fully congruent or even contradicting. The judicial system is too weak to clarify these discrepancies, so that in effect many legal issues are not definitely regulated or even over-regulated which confuses administrations and citizens alike.

9 Guidebook to local governments in Indonesia Draft September /55 2 Structure and key players of local governments 2.1 DPRD Three functions The local legislative (dewan perwakilan rakyat Daerah=DPRD) has three functions and is equipped with six instruments plus a secretariat. The three functions are: (a) legislation, (b) budgeting, (c) monitoring. The first two are implemented together with the head of the region, while the latter is to monitor the implementation of the first two. Secretariat It is important to note that although the DPRD (legislative) is formally separated from the government (executive), the secretariat of the DPRD is part of the local government. The secretary and his/her staff are civil servants and are appointed by the head of local government. Their role is to support all the politicians in the DPRD. Instruments The daily work of the DPRD is structured around so called 'instruments' (alat kelengkapan). All DPRD members are assigned to one or more of the following six instruments : 1. Pimpinan (the chairs, who chairing the assemblies and become the DPRD speakers), 2. Komisi (regional governance thematic group, filled up with members from different political parties), 3. Badan kehormatan (overseeing the code of conducts and ethics of the members), 4. Badan musyawarah (arranging the convene agenda and timetable), 5. Badan legislasi (arranging the legislation making agenda, its timetable, and law draft preparation), 6. Badan anggaran (discussing the draft of budget plan with government). In addition to the six instruments, DPRD may create other special instruments which can be established occasionally. Among the instruments, the pimpinan (Chairs), the komisi, and the badan anggaran may be the most popular one among those instruments, as this is where political decisions are being made. The komisi discusses all the legislation drafts and does the monitoring, whereas the badan anggaran discusses the budget plan draft (RAPBD). As discussed earlier, most of the drafts are usually prepared by the government although the DPRD is entitled to initiate its own draft through its badan legislasi. DPRD chairs Unlike the heads of government, the DPRD chairs (pimpinan) do not have absolute authority. All organizational decisions of the DPRD are the decisions of all the members through various mechanisms. Since the pimpinan must come from the majority, however, they have the power to influence members' decision. But the power depends on the leadership quality of the pimpinan. If the pimpinan is not respected by the memberso the parliament (anggota dewan), it is difficult for him/her to promote any policy ideas. Political parties and fraksi In addition to represent their electorates, all DPRD members are also the representative of their political parties. As Indonesia practices a hyper multi party system, there usually are many political parties in the DPRD. Unlike in national parliament (dewan perwakilan rakyat=dpr), there is no

10 Guidebook to local governments in Indonesia Draft September /55 parliamentary threshold in the DPRD which means that the number of political parties in each DPRD could be more than that in DPR. In order to structure the multitude of parties, they are grouped into fractions (locally called 'fraksi'). The minimum number of fraksi members is the same as the number of komisi. In case a political party has fewer members in DPRD than there are komisi, they have to form a coalition into a fraksi so that at least each fraksi is represented in each komisi. As komisi is only one among many DPRD instruments, it is possible that one DPRD member joins more than one instrument. For example, one can be a member of a komisi but also the member of badan anggaran at the same time. Every fraksi has a secretariat and is equipped with advisors (staf ahli). But these fraksi don t necessarily form strong political coalitions when it comes to decision making. Finding majorities in local parliaments depends more on the personal relationships among the political actors at local level. 2.2 Local government working units Local government is the executive branch of local governance. Within local governments, there are the heads of local governments and the local government working units (kesatuan kerja pemerintah Daerah=SKPD). Together, their core responsibility is policy implementation. However, since Indonesia practices a presidential system, the executive branch has more roles than policy implementation only. Local governments also have the authority to make policies and to prepare activities and budget plans though some of them need to be approved by the head and deputy DPRD. All decisions related to human resources are fully under local government authority except for the regional secretary (sekda) appointment where they need approval from the higher level of government, but not from DPRD or DPR. For example, the appointment of sekda of one kabupaten must be approved by the gubernur. Heads of local governments The heads of the local governments i.e. the governor for province, the bupati for district, and walikota for municipality and its deputy (the vice wakil) are the only political positions in local government. They are directly being elected by the people. Usually the head and their deputy form one package of candidacy during the election. They manage all the carrier positions which are the permanent public servants (pegawai negeri sipil =PNS) to achieve their government's objectives and expected results which were promised during the election campaign. The head and the deputy of local governments can assign tasks to the secretary (Sekretaris Daerah Sekda), the head of SKPD (e.g. kepala dinas, kepala badan), head of local public service units as well as the director of local government enterprises, such as Bank Pembangunan Daerah (BPD) and the Local Government Water Utilities Enterprise (Perusahaan Daerah Air Minum PDAM), and monitor the process and achievements. They can set incentives for motivation. They play a significant role through the recruitment and discharge of local government employees either the PNS or the temporary workers 2. They are entitled proposing the development and budget plan (RAPBD) as well as all other local government plans to the DPRD. They are the highest authority on local government finance and asset decisions. In short, they have authority to mobilize all available resources. Although there are many national guidelines to follow, still there are many spaces for them to make decisions in order to achieve their political objectives. 2 For the discharge, governor has authority for employees with rank (golongan) up to IVb, whereas bupati/walikota entitled to sack employees with rank up to IIId.

11 Guidebook to local governments in Indonesia Draft September /55 Local government working units (SKPD) The SKPD can be categorized into three groups. (1) the secretariat with coordination function to directly assist the head of region and ensuring support and coordination to the internal and external services; (2) the external service units providing services to citizens which usually called 'dinas' and some others are in the form of Badan Layanan Umum (BLU); (3) the internal service units providing management and administration support, most of them but not all called 'badan'. In terms of hierarchy, the secretariat is higher than badan dan dinas, whereas the last two are at the same level of hierarchy. The secretariat The secretariat of local governments has a central function in coordinating the operation of the administration. It directly assists the head of local government and ensuring support and coordination to the local government units providing internal and external services. As its core function is coordination, it can be said that the secretariat is doing internal services similar to 'badan'. The difference is that while 'badan' focuses on particular functions such as planning and personnel administration, the secretariat focusing on broader themes such as public administration and people welfare which combining more than one dinas or badan. Another difference is that the secretariat is also dealing with external stakeholders more than badan. For example, the secretariat must deal with community groups in managing the assistance fund (bantuan sosial) and subsidy fund, and work with the lower governments in managing the shared revenues fund i.e province to kabupaten/kota and kabupaten to desa. The regional secretary (Sekretaris Daerah Sekda), which is the head of the secretariat, is the highest structural position in the region. S/he directly supervises assistances (Asisten). Each Asisten is responsible for one or two broader themes coordinating several SKPD. For example, the Asisten Administrasi is responsible for public administration coordinates BKD, Badan Diklat, and DPPKA. The head of dinas and badan are at the same hierarchy level of Asisten. Sometimes it spoils the coordination because the head of dinas and badan do not want to be coordinated by the Asisten as they are equal in terms of hierarchy, whereas the Sekda cannot handle all the coordination him/herself. Dinas The external service providers deliver the main function of local governments by creating public values through public services. Most of them are called 'dinas' such as dinas kesehatan for health services, dinas pendidikan for education services, and dinas pekerjaan umum for public infrastructure. Dinas provides services either by itself or by contracting external service providers. Local government can establish a Technical Implementation Unit (Unit Pelaksana Teknis Daerah UPTD). For example, an UPTD for forest fire could be formed under the Forest Service (Dinas Kehutanan). BLU In the new regulation, some public service units are autonomous in their financial administration, not managed under the dinas. They are called Public Service Unit (Badan Layanan Umum BLU). BLU is only for local government public service units who sell their product or services but not for profit purposes. For example, hospitals, community health service centers (puskesmas), or PDAM can be formed as a BLU if it meets certain quality standards. Once the public service unit qualified as BLU, it

12 Guidebook to local governments in Indonesia Draft September /55 can employ workers using private sector scheme by providing salary rate more than public servant's standard. In addition, it also allowed managing all of their revenues directly. By contrast, if the service unit is not qualified as BLU, it must deposit all the revenues gain from its service charge to the local government treasury. In the case of hospital, for example, all the need to pay the operational costs as well as to purchase assets or equipments must be proposed to the RAPBD through the Health Service (Dinas Kesehatan). Badan and Kantor The internal service providers are mostly called 'badan'. This includes, for example, Bappeda and BKD which can be considered as the most powerful badan. Similar to Dinas, local government could establish an UPT under 'badan'. Addition OK: For more specific functions such as managing the local government archive, a 'kantor' can be formed. Generally kantor are smaller agencies than badan and their heads are ranked lower that the heads of Badan and Dinas. Bappeda The Regional Development Planning Agency (Badan Perencanaan Pembangunan Daerah Bappeda) is the most strategic government agency at local level for any development cooperation. This is particularly true in regards to the concern of 'local ownership' and 'alignment' as promoted by the 2005 Paris Declaration. One possible strong indicator of ownership and alignment is the existence of cofinancing budget for the development cooperation activities that are allocated in the in local budgets (APBD). The job of Bappeda mainly is to coordinate the SKPD to prepare the annual workplan that after beingt discussed by the local parliaments can do. Every local government agencies must prepare their annual and mid-term work plan to be submitted to Bappeda. If the proposal is sectoral specific, it is better to talk to the sectoral agency first e.g. to the Forestry Services (Dinas Kehutanan) for reforestation program. The role of Bappeda is to coordinate all the sectoral planning. And because of that role, it has a strong power to 'control' all the planning and budgeting products including the RAPBD. Bappeda, together with the Finance and Asset Agency (Dinas Pendapatan, Pengelolaan Keuangan, dan Aset Daerah DPPKA) are the core team in the Executive Budget Team (Tim Anggaran Pemerintah Daerah TAPD) producing RAPBD. But unlike DPPKA, Bappeda control the process from the beginning 3. That makes other agencies often called Bappeda as 'tukang coret' means 'the scratcher'. Bappeda could disagree with the draft submitted by the sectoral agency and suggest for new idea. The power relationship among Bappeda and other agencies (not to include secretariat) depend on the personal power of the head of the agency, but in general Bappeda enjoy a strong position on planning and budgeting negotiation. Apart of development planning and budgeting, Bappeda has a role on providing advice on spatial planning as a member of Regional Spatial Planning Coordination Board (Badan Koordinasi Penataan Ruang Daerah BKPRD). Although the Spatial Plan Service (Dinas Tata Ruang) is the one with the role 3 There are two segments on planning and budgeting process. The first one is the work plan which then followed by second budgeting process. The first segment is entirely Bappeda area for coordination, while the second part is where Bappeda and DPPKA joint their efforts on coordinating other agencies.

13 Guidebook to local governments in Indonesia Draft September /55 on spatial plan making, Bappeda's role is essential to ensure the consistency between the spatial plan and the development and budget plan. That is why the Head of Bappeda is the secretary in BKPRD, similar to the position of the Head of Bappenas (The Planning Minister) in the National Spatial Planning Coordination Board (Badan Koordinasi Tata Ruang Nasional BKTRN). Camat and Lurah Camat and Lurah are civil servants who appointed by walikota or bupati. The position of Camat is at the same level as the secretary of dinas/badan and the 'kepala bagian' at secretariat in kabupaten/kota, while the Lurah is at the same level with 'kepala seksi' in kecamatan, 'kepala sub bidang' at dinas/badan, and 'kepala sub bagian' at secretariat (GR 41/ 2007).

14 Guidebook to local governments in Indonesia Draft September / Typical internal structure and functions of an LG agency Province Kabupaten/kota Hierarchical rank (eselon) Sekretari at Daerah Dinas/Bada n/inspektor at Others Sekretariat Daerah Dinas/Bada n/inspektor at Others Ib Secretary IIa Asisten, staf ahli Head, Inspektur Secretary IIb Head of biro Asisten, staf ahli Head, Inspektur IIIa Head of bagian Secretary, head of bidang, Inspektur pembantu Head kantor, Head UPT of of Head bagian of Secretary Camat, Head of kantor IIIb Head of bidang Sekretaris camat IVa Head of subbagian Head of sub-bidang Head of subbagian Head of sub-bidang Head of UPT, Head of Seksi in kecamatan, Lurah IVb Secretary of kelurahan, head of seksi in kelurahan Va Head of administration in public school Source: GR 41/2007 Example of organization structure of a secretariat daerah and dinas can be seen in Annex The size and structure of local governments Local governments may vary in terms of numbers of SKPD and numbers of positions within the SKPD. Their size is determined by criteria such as fiscal ability, geographical size, and number of inhabitants. Those criteria are used to calculate the score in order to figure out the class of the region. A region with high fiscal ability, huge territory, and high number of inhabitants is eligible to form the maximum size of organization. For example, in kabupaten/kota, local government with high score could have four Asistens in secretariat, while the lowest class is eligible only to have three. The guidance is just limit the maximum size which means local government could form less size of government than what they permit to do. However, most of local governments choose the maximum option instead of thinking about efficiency. Among the few local governments with a great bupati

15 Guidebook to local governments in Indonesia Draft September /55 whom committed to efficiency is Kabupaten Jembrana in Bali. There we can see how the limited public resources are used to maximize values for citizens. 3 Selected procedures of external services 3.1 Land titles and boundary demarcation The first impression of anyone who starts to understand land administration in Indonesia is inequity distribution and full of conflict. It is only about 16 per cent of population own 69 per cent of land There are two categories of land status in Indonesia, private and state land. Under the state land there are state forest land and state non-forest land. The state forest land, which is under the control of the Ministry of Forestry, amounts to about 70 per cent of the total land or equal to around 120 million hectares (Colchester et al. 2003: 134). The outside of the state forest land, the area where we can find private land, is administered by the National Land Agency (Badan Pertanahan Nasional-BPN). Both the Ministry of Forestry and the BPN are national government who has authority in boundary demarcation and granting land title. Local government has no authority in these assignments. Ministry of Forestry is responsible in delineating the state forest land. However, the process of delineation has been going very slow. Out of 120 million hectares of state forest land, only about 10 per cent has yet been officially delineated and decided (Colchester et al. 2003: 141). Meanwhile, in fact the 120 million hectares of state forest land is not a really a land with free of claim. There are about 33,000 villages that are located within and surrounding the state forests which most of them have been there for couple of generations (Mangkusubroto 2011). At the same time, since 1960s, government promotes extractive activities investments in state forest land. That has been creating conflicts among the state, local communities, and private sector. The land dispute has been the major challenge in any initiative to develop a sustainable forest management. Similar to the delineation of the state forest land, the land title registration has been going very slow. Out of 80 million land parcels that are estimated, only less than 30 million of them are formally registered (Heryani & Grant 2004). That has been causing a real social and economic problem in Indonesia. The slow registration happens due to the traditional methodology of registration in which each land parcel is surveyed to a high standard of accuracy by centrally deployed team. With existing procedures, the BPN would need about 100 years to register all the land parcels whereas government has a target to make it in 20 years (Heryani & Grant 2004). Therefore, there is a challenge to invent new registration methodology which still assures the accuracy but also cheap and fast. 3.2 Community empowerment Channeling Local communities' aspirations at the DPRD Local communities' aspirations could be channeled either through fraksi or the instruments (alat kelengkapan). Local communities could say they words through several ways. One of them is the community aspirations capturing session (jaring aspirasi masyarakat Jaring Asmara). Jaring Asmara is usually done during reses period; that is a break time in between convene sessions. There are three convenes sessions and three reses period in a year. Every reses period is maximum six days (GR 16/2010). During the reses period, the members of DPRD either individually or in a group suppose to visit their electorate to meet their constituents. Another way to approach DPRD is by proactively visit them. In this case, it is better knowing with whom to meet. If the aspiration is highly relevant to the position of a political party, meet the fraksi will be useful. On the other hand, if position of

16 Guidebook to local governments in Indonesia Draft September /55 political party is not clear regarding the issue (as mostly happened), approaching the komisi is much better. But then we should know which komisi is relevant with the issue or aspiration. However, if we have specific proposal to be adopted in upcoming development plan and we want to make it secured in the budget plan (APBD), meeting with Badan Anggaran is more relevant (as addition to the approach to government i.e. TAPD or Bappeda or DPPKA). Having says that, of course, the key success to talk to politicians is personal relationship. Good personal relationship will make things easy; easy to meet and easy to influence. 3.3 Natural resources management Mining Compared to the pre 1999 decentralization, a significant change of authority in local government can be found in mining sector. Bupati and walikota are entitled to permit mining exploration and exploitation operations when the mining area is within their administrative territory. In addition, they also entitled to permit small scale mining between one to ten hectares. Likewise, governor is designated to permit mining activities which the area is cross-kabupaten/kota but still within its provincial administrative territory (Law 4/2009). Forestry The situation is different in forestry sector. The head of regions have authority to issue permits mainly for non-timber forest activities. They are business licenses for area utilization (Izin Usaha Pemanfaatan Kawasan/IUPK), environmental service (Izin Usaha Pemanfaatan Jasa Lingkungan/IUPJL), utilization of non-timber forest product (Izin Usaha Pemanfaatan Hasil Hutan Bukan Kayu/IUPHHBK), and collection of non-timber forest products (Izin Pemanfaatan Hasil Hutan Bukan Kayu/IPHHBK). The authority of bupati/walikota is only for activities within the kabupaten/kota territory, whereas the authority of the governor is for cross-kabupaten/kota activities. When the activities are cross-provincial territory, the authority is then in the Minister of Forestry. For timber activities, the authority to issue permit is only for the timber collection permit (Izin Pemungutan Hasil Hutan Kayu/IPHHK) which is only for one year period. This authority was introduced since 1999 but then abolished in 2002 due the poor implementation of the policy which tended to promote unsustainable forest management (Dermawan et al. 2006). However, the latter regulation, GR 6/2007, brings the authority back though it is very hard to hear any head of regions issue IPPK. The permit of the big scale forest concession called utilization timber forest product license (Izin Usaha Pemanfaatan Hasil Hutan Kayu/IUPHHK) is only issued by the Minister. The role of the governor is to provide recommendation upon the applications to the Minister, whereas the bupati/walikota is to give technical considerations to the governor. 4 Selected procedures of internal organization 4.1 Planning, budgeting and reporting (please see also the Bappeda section under 2.2)

17 Guidebook to local governments in Indonesia Draft September /55 Planning products and their making process There are three key planning products in local government. They are development plan, budget plan, and the spatial plan. The first two are connected in one process line, but the latter is a bit separated though must be supporting one to another. Development and budget plan Every level of government has its own development and budget plan. The lower level government's plan must pay attention to, but not be guided by, the higher level one. The basis of local government's plan is its own political institution. The development and budget plans within one region are hierarchical in terms of their periodical term. The long term plan (Rencana Pembangunan Jangka Panjang RPJP) is for 20 years; the mid-term plan (Rencana Pembangunan Jangka Menengah RPJMD) is for five years; and the work plan (Rencana Kerja Pemerintah Daerah RKPD) and the local government budget plan (Anggaran Pendapatan dan Belanja Daerah APBD) are made every year. The annual plan must follow the mid-term, while mid-term must support the long term (GR 8/2008). Mid-term plan (RPJMD, Renstra-SKPD) The strongest political basis is the mid-term plan because it is fully overlapped with the period of the head of local government. It is unfortunate for the long-term plan. Although it is important, nobody cares about it, in fact. But the good thing is that the plans do not suppose to be oriented on the annual basis as what practiced in the past (though many local governments are still on annualoriented). The mid-term based plan still allows the local government to manage some meaningful changes for the real benefit of the citizens. In the mid-term plan making, the development plan and budget plan making process is connected in one process line. According to the law, the budget plan must follow the development plan (money follow strategy). RPJMD document covers both the development and the budget plan. Therefore it can be very thick consisting of hundreds of pages. The budget plan is in the form of mid-term expenditure framework. Both the development plan and the expenditure framework are just an open reference for the annual plan. The new elected head of local government must prepare and complete the RPJMD soon after they come to the office. Bappeda leads the process by preparing the preliminary draft of RPJMD with reference to RPJP. It is also important to note that the frameworks must be in line with the scope of local government authority as regulated by GR 38/2007 and meet with the functions of local government agencies as guided by GR 41/2007. Based on the preliminary draft of RPJMD, each SKPD should prepare the draft of strategic plan (Rencana Strategis SKPD Renstra SKPD) which the period is exactly the same as the RPJMD, five years. Bappeda compile and assess the Renstra-SKPD draft from agencies and at the same time fixing the preliminary draft of RPJMD to become a final draft of RPJMD. Public consultation must be implemented to the stakeholders particularly for the RPJMD, but it is also important for SKPD to consult their Renstra-SKPD to their own constituent so that the public consultation could be more specific. The final draft of RPJMD is to be submitted to DPRD by the head of local government. The RJPMD becomes official when it is approved by both the head of local government and DPRD. Annual plan (RKPD, RAPBD, Renja-SKPD, RKA-SKPD, DPA-SKPD) Unlike the mid-term development plan product, the annual plan separates the work plan and the budget plan into two documents namely RKPD and RAPBD respectively. The process of the making is

18 Guidebook to local governments in Indonesia Draft September /55 in one process line but the integration of planning and budgeting is in question. The connector of the two is the general budget policy (KUA) containing priority expenditure list, revenue prediction, financing strategy, and assumptions. Similar to RPJMD, RKPD is a result of consolidation plans among agencies (SKPD) facilitated by Bappeda. Each SKPD prepare an annual work plan (Rencana Kerja SKPD Renja-SKPD) based on its Renstra-SKPD and the preliminary draft of RKPD. Although the RKPD must includes the assessment of local government finance prospect (a rough estimation of revenue and expenditure), it does not contain a budget plan. The draft of RKPD must be discussed during development plan deliberation (Musyawarah Perencanaan Pembangunan Musrenbang) which should be conducted from desa/kelurahan up to kabupaten/kota level 4. The RKPD is a basis for the annual budget plan (RAPBD) making. The Bappeda prepares budget ceiling for each SKPD according to KUA and other relevant references such as the mid-term expenditure framework (which supposed to be available in RPJMD and Renstra-SKPD). Based on the budget ceiling, each SKPD prepares the detail work and budget plan (Rencana Kerja dan Anggaran RKA- SKPD). The process is sometimes assisted by Bappeda and DPPKA. Bappeda and DPPKA compile and assess the RKA-SKPD and then prepare RAPBD for discussion with the head of local government 5. Once the RAPBD fixed from the government side, the head of local government submit the draft to DPRD for negotiation with Badan Anggaran DPRD. If DPRD and local government agree with the draft (RAPBD), it is still need approval from the higher authority. RAPBD kabupaten/kota must be assessed and approved by the governor, whereas the province RAPBD must be approved by the Ministry of Home Affairs. Once the higher authority approve, all SKPD assisted by DPPKA and Bappeda prepare the budget implementation list (Daftar Pelaksanaan Anggaran DPA-SKPD). DPA-SKPD is a legal basis for all local government activities and expenditure during the fiscal year. What can and cannot spend during the fiscal year determined by this document. The revision of DPA- SKPD must be done through the revision of the entire APBD which usually once in a year and should be approved by DPRD. The head of local government or sekda alone is only eligible for revisions on object and detail object of expenditure within the same expenditure category in one activity (MoHA Regulation 13/2006: 160). This causes inflexibility in local government activities. It is not only problem for adapting the plan to the change in local circumstances but also encourage the public servants to do a manipulation report. The budgeting process (after Musrenbang) is highly politics and far from transparent. That is one cause of why many of activities proposed by Musrenbang participants were often just dropped without notice. The activity planning is open for discussion, but the budgeting is mostly behind the close door. That happened both in executive and DPRD process. The process of negotiation in DPRD can be highly politics. There are more interests from many more parties influence the process and the content. The lobbyists without access to high level officers in executive would use their network in DPRD. Those who were making investment during election campaign supporting politicians both in government and DPRD would collect the payback. The non-transparent budgeting process leads to a significant increase of corruption cases involving local government officials (executive and DPRD). In 2006, there were 265 corruption cases involving DPRD with 1000 suspects handled by prosecutorial offices across the country (Rinaldi et al. 2007: 5). 4 Musrenbang must be conducted at province and national level as well. The province level musrenbang is facilitated by the Ministry of Home Affairs after Musrenabng in all kabupaten/kota musrenbang are completed, whereas the national Musrenbang managed by Bappenas after the completion of Murenbang at province level. 5 The negotiation between SKPD and Bappeda can be very sensitive because Bappeda has authority to delete (coret) whatever items they do not agree. Sometimes, SKPD approach politicians in DPRD to gain support.

19 Guidebook to local governments in Indonesia Draft September /55 Many of corruption practices start from, and planned during, planning and budgeting process. There are five out of six modus operandi of local government corruptions related to planning and budgeting process; for example: mark-up budget lines, channeling government budget to fictitious institutions, and manipulation of procurement processes (Rinaldi et al. 2007: 6). Although integration of planning and budgeting process was frequently spoken by high level officers, it is not the case in the implementation. The planning and budgeting is one process line connected by KUA but the two are not integrated. It will never be integrated until the budget discussion comes into transparent since Musrebang at desa/kelurahan level. The budget ceiling must be prepared not only for SKPD but also for sub-regions e.g. desa and kecamatan. That would help Musrenbang participants to prioritize their proposal themselves by considering the available budget to be spent for their subregion. They would come with a short list proposal and ease the work of Bappeda on proposal selection. At kabupaten level, for example, every SKPD must discuss with representatives from subdistrict (and villages when possible) to decide the priority list during Musrenbang deliberation. In short, the budget and work plan must be discussed at the same time even during the musrenbang deliberation. This is one way to make the Musrenbang deliberation becomes a meaningful instrument. In summary, the current procedures on local government planning and budgeting and financial administration are very rigid with so many detail rules providing limitation to the local government to develop innovations. While the rigid rules aim to have better accountability, there is no strong evidence that it was effective reducing corruption practices. In addition, the planning and budgeting process is still far from the integration though it is the intention of the regulation. That is not only creating inefficient budget, but also providing opportunities for corruption practices. Spatial plan (RUTR, RDTR) The spatial plan is another important regional planning product. Although a spatial plan does not only cover the land but also the air and the under-ground, in practice it is only the land which commonly covered by the plan. In more specific, the spatial plan means a land use plan. One type of spatial plan is the general spatial plan (RUTR) which elaborated into a detail spatial plan (RDTR). The scope of the plan follows the administrative boundary from national down to kabupaten/kota and arranged in a hierarchical relationship. The national comes first and followed by the lower level. Similar to the legalization of RAPBD, the RUTR of kabupaten/kota must be approved by the governor after both the bupati/walikota and DPRD agree upon the draft. The same arrangement is for the province that requires approval from central government. An RUTR is made for 20 years period but the review must be conducted for every five years. Every RUTR is completed with land use guidance which valid for five years. The guidance includes land use programs plan (Law 26/ 2007). According to the law, the land use programs plan must be coordinated with the development and budget plan. However, very few of local governments, if any, make the different plan products coordinated one to another. The main reason of why the coordination is so difficult is the behavior of policy makers whom very weak on spatial perspective. They are familiar with activity plan but they do not plot the planned activities on the land, let alone space. The coordination is now even more difficult because the role of spatial planning is taken out from Bappeda to the new agency called 'Dinas Tata Ruang' or in other similar names 6. 6 In some regions, the function of spatial planning managed by the public work agency (Dinas Pekerjaan Umum dan Tata Ruang).