Title: The practices of decentralization in Indonesia and its implication on local competitiveness
Abstract: Indonesia has been undergoing a reform process. One of its features is the introduction of new decentralization guidance in 2001 under Law 22/1999 on regional governments and Law 25/1999 on fiscal balance between the central and regional governments and in 2004, they were replaced by Law 32/2004 and Law 33/2004. This thesis scrutinizes the practices of decentralization in Indonesia, which is commonly known as ‘regional autonomy’ under this new legal framework. Besides looking at the practices, it also attempts to reveal the impacts of decentralization practices on intraregional economic competitiveness, as it is becoming one of the objectives of decentralization policy in Indonesia. A conceptual framework is made by exploring most recent development of the concept of decentralization and intraregional competitiveness to help analyse the practices of decentralization under the new laws and their subsequent. The general analysis suggests that decentralization in Indonesia is still undermined by various problems stemming from the design of legal framework and poor implementation such as poor institutional arrangement, lack of local finance and low human resource capacity. Furthermore, a comparative case study is arranged to reveal the impacts of decentralization to intraregional competitiveness in two cities in Indonesia, Semarang and Surabaya. Because of some technical constraints to collect primary data needed, the analysis is based on secondary sources only. The objective of the case study to reveal the factors behind the difference investment growth trends between Semarang and Surabaya, especially related to the introduction of decentralization, could not be achieved here. However, the analysis may provide tentative answers to describe the impacts of decentralization on local competitiveness. Several general implications can be drawn from the results: First, decentralization here is seen as an instrument to improve the performance of local governments in providing public services, including the services to business communities. Thus, the impacts of decentralization on local competitiveness, either positive or negative, depend on how decentralization is practiced. Second, in line with the problematic practices in Indonesia, the analysis found that decentralization –under the most recent lawshas not yet provide an appropriate level of support to improve local
Publication Year: 2008
Publication Date: 2008-01-01
Language: en
Type: dissertation
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Cited By Count: 14
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