Decentralizing Indonesia : the problem of creating new local government units

Abstract

This thesis studies one particular aspect of Indonesian decentralization, the creation of new units of sub-national government (known as ‘pemekaran’) and attempts to identify whether it strengthens or weakens the decentralization process. Since decentralization began in 1999, over 150 new districts have been created and these have come under increasing scrutiny for their alleged failure to contribute any significant improvement either governance or service delivery. These criticisms have also been used as to argue for a recentralization of certain powers, thus undermining the decentralization process. This paper identifies the underlying motivations behind the creation of new units in North Sumatra, Papua and West Irian Jaya provinces and analyzes the ability of new districts in the above provinces to efficiently deliver two key services, health and education. The research is based upon secondary sources, primarily book and internet research. The findings suggest that the new districts do not appear to suffer from a lack of spending or service availability in comparison with the old districts and can actually enhance health and education services. Any service improvements though must be weighed against the costs of the new districts as they exacerbate existing inefficiencies in both the health and education systems and represent a significant financial and administrative burden upon the central government. The new districts can therefore be said to have both positive and negative impacts, and their overall contribution to the process will become more evident as the process of decentralization continues to develop in Indonesia.