In the Indonesian constitutional Autonomous Region is an elaboration of territorial decentralization. Realization in the form of the rights, powers and obligations of the region to regulate and manage its own internal affairs are based on the aspirations of the people in accordance with the legislation in force. One of the objectives scrolling regional autonomy policy in Indonesia is Democratization, empowerment and public participation. To achieve this, then the government has a policy of decentralization in stages, namely the provinces given limited autonomy, greater autonomy to the district / city and country are given genuine autonomy. Community participation is a process activities performed by individuals or in groups or communities. To unify their interest or relevance to the organization or people who join in order to achieve the objectives of society itself. This study uses descriptive qualitative research methods From the results of this study, researchers found that community participation in Jatimulya village influenced by the leadership, communication and education. The result showed that the head of the village has been carrying out its role as the leader of a well, the village government communication with the public is well established and low education affects people’s participation in development planning in the Jatimulya Villa. Dalam ketatanegaraan Indonesia Otonomi Daerah merupakan penjabaran dari desentralisasi teritorial. Realisasinya dalam bentuk hak, wewenang dan kewajiban daerah untuk mengatur dan mengurus urusan rumah tangga sendiri yang berdasarkan atas aspirasi masyarakat sesuai dengan peraturan perundang-undangan yang berlaku. Salah satu tujuan pengguliran kebijakan Otonomi Daerah di Indonesia adalah Demokratisasi, Pemberdayaan dan Partisipasi publik. Untuk mencapai hal tersebut maka pemerintah menggulirkan kebijakan desentralisasi secara bertingkat, yakni kepada provinsi diberikan otonomi terbatas, otonomi luas kepada daerah kabupaten/kota dan Desa diberikan otonomi asli. Partisipasi masyarakat merupakan suatu proses kegiatan yang dilakukan oleh perorangan maupun secara berkelompok atau masyarakat. Untuk menyatukan kepentingan atau keterkaitan mereka terhadap organisasi atau masyarakat yang bergabung dalam rangka pencapaian tujuan masyarakat itu sendiri. Penelitian ini menggunakan metode penelitian deskriptif kualitatif. Dari hasil penelitian di dapatkan bahwa partisipasi masyarakat di Desa Jatimulya di pengaruhi oleh kepemimpinan, komunikasi dan pendidikan. Dari hasil penelitian diperoleh bahwa kepala Desa telah melaksanakan perannya sebagai pemimpin dengan baik, komunikasi pemerintah Desa dengan masyarakat terjalin dengan baik dan rendahnya pendidikan masyarakat mempengaruhi partisipasi dalam perencanaan pembangunan di Desa Jatimulya
The decentralized system of the Indonesian government to give jobs to the region to carry out development in the area in response to the various regional development policy. Offend public policy perspective the role of government and stakeholders. The focus of the stakeholders in this research is student organizations. This study aims to investigate the model student political movement in advocating for policies in the autonomous region in the province of North Sumatera. The method of investigation used to answer research questions using a mixed methods design sequential exploratory through collaboration grounded theory approach and surveys. Data gathering using depth interview and survey techniques used to test the hypothesis that emerged from the research results at the earliest. The study population is groups of student movement organizations in the province of North Sumatra with a set of samples of the four groups of organizations active student movement at the University of Sumatera Utara. The findings of this study describe a group of student movement organizations in conducting policy advocacy stages tend stalled at the stage of political socialization in advocating policies and limitations in order to maximize the level of policy advocacy in the parliament lobby.
Formation of new autonomous regions are meant to promote effective governance, by reducing the span of control of the previous more extensive area, improving the quality of public services, increasing the wealth of the local people, setting the fiscal balance between central and local government, increasing employment and capital inflow. However, the formation process of North MusiRawas as a new autonomous region took 11 years since proposed in 2002 until signed by the central government in 2013. This paper argues that the factors behind the long delay were mainly political factors, instead of administrative. Administrate, the region is eligible to be established as a new autonomous region. This study uses the NVivo Program as a tool for conducting primary and secondary data analyzed from direct interviews, meeting results and statements from related parties. From the research results obtained that the political process, however, involves a series of events in its history that generated constraints for establishing North MusiRawas as a new autonomous region. The historical facts include leadership contest between Governor of South Sumatera and Regent of MusiRawas, conflict over control of the natural gas resource in Suban 4, central government's moratorium policy to new autonomous region formation, leadership change, and internal conflict within the social movement to demand autonomy among local people. It argued in this paper that absence of political network and lack of organization of social mobility to demand freedom allows the recurring events that created constraints to the political process of establishing North MusiRawas as a new regency. The absence of political network to elites in the regional and national levels complicate the political communication to pursue autonomy. It explains why the conflict between Governor and Regent can halt the proposal. Weak organization of social movement allowed internal strife and complicated the resource mobilization to achieve the political goal.
Abstract This study aims at identifying the main obstacles to optimizing the provision of public services to the districts in the island areas and to discussing the prototype model of asymmetric decentralization in providing public services to the island areas. This study was conducted in three districts of small islands at the Tual city of Maluku province namely the districts of Kur Island, South Kur Island, and Tayando Tam island. The data were collected through triangulation of sources and methods. The informants were selected based on consideration of the position and competence of the required information. The methods were the in-depth interview, observation, documentation, and the Focus Group Discussion (FGD). The results showed that there were three main obstacles in providing public services to the districts in the island areas. Firstly, the partial authority of Mayor of Tual city had not given yet to the Head of Districts based on the Article 226 of Law No. 23 in 2014 about Regional Government. Secondly, the transportation for the islands was inadequacy and the natural conditions were challenging that obstructed the mobility of citizens to access the service center and it was difficult for officers to reach people who want to be served. Thirdly, the lack of resources (human resources, funds, and facilities) in some districts at the island areas. To overcome those problems, specific autonomous was required by island province that concerned different treatment settings to the districts within the island areas namely the expansion of authority, the increase in the position, and the development of resources and the organizational capacity and districts management.
This paper gives an overview of the implementation of the constitution laws such as the embodiment of the political will of the Central Government, but in practice occur various obstacles. The model has become divided in 3 (three), namely: the bottleneck in the autonomous region, of good Governance and capacity building in implementing Regional Autonomy. The Government of the provinces, counties and cities should implement the values of good Governance, such as strategic vision, transparency, responsiveness, fairness, consensus, effectiveness and efficiency, accountability, freedom of Assembly and participation, rule of law, democracy, in cooperation with community organizations, our commitment to the market, and commitment to environment and decentralization. Some elements of capacity development in order to realize a good Governance can be seen from some of the items, the first development of the vision and mission of regional and provincial government institutions/district/city. Second, the institutional development of the Government of the province/district/city. Third, the development of a network of Government provincial/district/city. And fourth, the development and utilization of the environment of the Government of the province/district/city.
Radical decentralization reform works or does not work for reducing communal conflict is still debatable. This study examines the linkage between decentralization policy and communal conflict in Indonesia. Two measurement of decentralization: administrative decentralization, and fiscal decentralization is examined. Data come from the Village National Census (Podes) 2003-2014 (N=301.974). Results of twolevel logit regression show that fiscal decentralization not significantly associated with reducing communal conflict. The findings suggest that decentralization work for reducing communal conflict through better capacity of local bureaucrats rather than through financing capacity in delivering public services and district proliferation policy
AbstractSince the enactment of Law No. 12 Year 2008 on the second Amendment to the Law Number 32 Year 2004 on Regional Government, as an interpretation of Article 18 , to bring new changes in governance in the region. This law has fundamentally changed the practices of government, one of which is related to the position, duties and functions of the District. The main changes was in the definition of the township itself besides the other changes such as the shape of the organization, financing, personnel appointments, logistics fulfillments and accountability,. Previously, the District was an administrative region in the context of the work environment that organizes the implementation of tasks in the area of public administration. While according to the Law No. 12 of 2008, Article 126 Section 3, the District is the district/city in the context of the principle of decentralization. That is, if used within the framework of the principle of deconcentration district, it is one of the administrative area, in addition to national, provincial, district and municipality, as well as administrative city. At the present time the Districts is the working area of the districts of the region. However, districts are not a territory, it is a service areas.Keywords: Delegation of authority, Head of District, Regional Government
Abstrac : In order to implement regional autonomy based on Law No. 22 of 1999, that the granting of autonomy to the local city / county is based on the principle of decentralization in the form of autonomy, real, and responsible. Granting authority on the basis of the principle of decentralization, causing all fields are left to local governments in the implementation of an autonomous basically become the authority and responsibility of local city and county governments fully, both concerning the determination of policy, planning, implementation, monitoring, control, and evaluation. This study aimed to describe the factors that affect the implementation of regional autonomy and decen-tralization in the provision of recommendations for the implementation of decentralization in au-tonomy. The results showed that there are four variables that can explain the performance of the implementation of decentralization in the regional autonomy in the city / county, namely managerial aspects, aspects of Human Resources organization, aspects of bureaucratic culture, and ethics of public service. Keyword: decentralization, regional autonomy
This paper examines decentralisation and distribution of access to primary school in Indonesia. Data come from Indonesia National Socio Economic Survey 2014, and statistic reports from Ministry of education, Ministry Of Finance, and General Election Commision. Descriptive statistic is used to describe spatial distribution of decentralization in primary education system and distribution of primary education access. The results show there are districts disparities in decentralization of primary education system and primary education access especially between district within Java islands and Papua islands. The results highlight the need to improving decentralization performance to achieve universal primary education in Indonesia, particularly within districts outside Java islands. Improving bureaucracy capacity particularly teachers is important to improve decentralization performance in primary school access.
The implementation of regional autonomy within the framework of decentralization is a complex and continuous work . In the early stages of decentralization , there is a transfer of various types of authority from the center to the various institutions , especially institutions subnational governments . After the transfer of authority will then be followed by the transfer of financing , documents and facilities . After the completion stages passed , does not mean the work has been completed . It appears a series of new challenges related to the ability of isntitusi who obtained the transfer of authority to manage it properly . Without good management , decentralization is precisely that for democracy , effectiveness , efficiency and fairness can not be achieved . It would appear the sources of inefficiency , ineffectiveness and new injustices in areas that can be a trigger for a second series of multidimensional crisis
As a fiscal policy within the framework of regional autonomy, the allocation of DAU is an act that very important. It was meant to address financing capability gap between regions. The reason is because the DAU is the largest component of balance funds, namely the lack of 26% of the net domestic income in the state budget the amount of DAU scheme is not limiting, because it can only grow with the size of the authority delegated to the regions. DAU legal standing as a regional income in the financial relationship between the center and the regions based on the principle of autonomy is as a subsidy coming from the state revenue in the state budget that is allocated to local revenue in the budget based on fiscal decentralization. Keywords: General Allocation Fund, autonomy, regional autonomy
This research aims to understand the effect of policy implementation through Law No. 18 of /997 to the performance of local government finance. The case study is Pemalang regency. Contrary to the assumed policy goals, this research shovrs that during 2 years of its implementation in Pemalang the local original income (PAD) has virtually decreased. Although the nominal budget of the local government has increased, the PAD has contributed less. In effect, the policy has resulted in the decline of local government income from local taxation and charges, the overall fiscal effort and the degree of fiscal decentralization. It is recommended that the current policy problem should be addressed by determining the target of local taxes and charges with the real local potentials. The local government has to focus on the effective and efficient taxes that are linked to the local development budgets and the local gross domestic product.
<p class="Bodytext50"><em>Regional autonomy that has long been the aspiration of the people had been executed after successfully fought for reform. After implemented, which should be considered is whether the regional autonomy that has been running for 4 yaers really can fullfil people's needs and create welfare for the people. We all know that the purpose of the existence of local government is creating public service. Public services must be created with the creative way through many aspect include regional financial management strategies. By using four independent variables: financing ability, mobilize funds ability, regional government independence, level of fiscal decentralization, and the level of flaypa per effect, researcher tested the role of regional autonomy by linking it to the influence of these four independent variables on the variable of public service expenditure allocation. By using a chow test resulted in a finding that the local government system and the personnel in the four years of implementation of regional autonomy tend looks not ready in achieving the vision of regional autonomy. Anotherfinding is that in general, regional autonomy has a role in improving the influence of financial management aspects on the allocation of expenditure on public services.</em>
As a country where the economic system still depend on financing of the public sector, the expectation that decentralization policy in Indonesia can improve significantly society welfare has not been fulfilled yet. Happened in Yogyakarta which has special authority in control government affairs. Constitution no 13 years 2012 about DIY privileges consist of 5 things like filling the positions, seat, job and authorities governor and vice governor, institutional affairs, culture affairs, land affairs, and spatial affairs. With the constitution expected DIY government can guarantee right of society to live in prosperity. However, the expectation still can not fulfilled either. This study aims to identify and explain the policy configuration of DIY Privileged Funds and determine the contribution of the DIY privileged funds in public welfare acceleration. The research type used is a qualitative approach. Data collection methods technique is dept interview and elite interviews, and documentation.
Haeruddin Haeruddin, Agus Suryono, Mujibur Rahman Khairul Muluk, Tjahjanulin Domai
The regional administration in the context of regional autonomy brought significant changes to the centralization system of local governance turned into a decentralized system. This normative phenomenon is creating administrative boundaries and functional area for each local government as an autonomous region. While empirical phenomena in the administration of public services across the region hindered administrative problems and functional boundaries of each local government, as a solution to overcome these problems required cooperation among local governments. Researchers adopting the concept of cooperation between local government approach (Smith) consisting of; 1). Legal and political approaches; 2). Inter-Organizational Politics; and 3). Political Community, to be used as a tool dialogue and analysis of the research findings. This study used a qualitative approach to research instruments; people, events and documents. Data collection techniques are interview, observation and documentation. Data analysis techniques are grounded theory. Our study focus on: 1). The processed for determining the object of cooperation; 2). Implementation of cooperation in water resources management; 3). Factors that influence the management of water resources. The results showed that 1). The process of determining the object of cooperation has met the principles of law and administration, reduce regional ego; 2). Implementation of the cooperation is not only a formality but prefers the value of togetherness, efficiency and effectiveness of service provision for drinking water has been established well characterized by the distribution of drinking water services in the three local government in Malang; 3). The most influential factor is the regional head support, coordination and less harmonized local ego; 4). Cooperation model that built up is joint service agreement in written agreements and intergovernmental agreement model (government to government = G to G).
AbstrakPeningkatan kapasitas pengelolaan keuangan daerah menjadi hal yang sangat penting di era desentralisasi. Pengelolaan pajak parkir yang sekilas terlihat sebagai ranah kebijakan prosedural administratif, tidak pernah bisa lepas dari berbagai patologi yang sangat problematik bagi pengelolaan keuangan daerah. Kecamatan Banguntapan dipilih sebagai unit analisis dalam penelitian ini untuk merepresentasikan permasalahan pengelolaan pajak parkir di wilayah sub urban Kabupaten Bantul. Hal ini dikarenakan kharakteristik kewilayahan Bantul sebagai daerah sub urban dapat dilihat dari kharakteristik peri urban yang ada di Kecamatan Banguntapan. Selain itu, Kecamatan Banguntapan merupakan satu-satunya wilayah di Kabupaten Bantul yang memiliki subyek pajak parkir bertarif self assessment dan flat sehingga dinamika problema manajerial keuangan daerah dapat diobservasi dan dianalisis lebih mendalam di Kecamatan Banguntapan ini untuk melihat komparasi 2 sistem pemungutan pajak parkirtersebut. AbstractCapacity building of local finance management becomes important on decentralizations era. Empirically this research is aim to show that the parking tax management at glance seen as an administrative- procedural policy domain cannot release from phenomena on the existence of problematic pathology for regional financial management. District of Bantul Banguntapan characteristic as its suburbs form themain attractionin the selection of research because of the generallocus in sub-urbanarea, began to metamorphose into a parking tax revenues fromregionsthat contribute to the area thoughnot as big financial contribution income tax parking tax in urban areas. The Banguntapan sub district was chosen as analysis unit in this research to represent the issue of parking tax management in sub urban area of Bantul. This was due to the characteristic of Bantul area as sub urban area that can be seen from the characteristics of sub urban in Banguntapan sub district. Moreover, the Banguntapan sub district is the only area in Bantul which has a parking tax subject that the cost is self assessment and flat thus the dynamic of local finance managing problems can be observed and in-depth analyzed in Banguntapan sub district to seek the comparison of those 2 parking tax collection systems.
Funds of district development sourced from district of earning and budgeting (APBD) constrained when source of revenue rely on district revenue (PAD) as like as taxes. An act penetration innovatory solution is needed to solve the budget deficit problem such as the potency of Sharia bonds (Sukuk). This article discusses what kinds of potency that become strengths and weaknesses then how opportunities and challenges are faced by Banten Province in an effort to take advantage of sukuk as the source of development budgeting in Banten. Furthermore, what strategis are effective to apply in an attempt to make sukuk as the source of development budgeting in Banten. An analysis of classical SWOT (SWOT Analysis-K) used to solve the problem above. First step of SWOT-K analysis is identifying the internal and external factors faced by the Banten province to take advantage of sukuk as a source of development budgeting in Banten. Second is making combination of internal and external factors. Final step is formulating appropriate strategies to be sukuk as an alternative of development funding in Banten.
 Result of SWOT-K anafysis in Banten Province has the power of aspects of economic resources as basic capital to make use of sukuk for regional development budgeting. Whereas there are two weakness become obstacles, there are human resources and government management. Besides, the market opportunity to make use of sukuk is widely open because Banten Province is one of the provinces that have a positive economic growth. Opportunities become greater with decentralization right in district financial management, but faced challenges are none of juridis basis for the implementation of district sukuk. The existence of UU SBSN does not yet give potency for district to take advantage of sukuk as APBD because the utilization of new sukuk is allowed for APBN. Priority strategic is improving the quality of human resources in field of Sharia finance by increasing professionalism and accountability in management. Improvement of the
 quality of human resources is accompanied by efforts to encourage the central government and the legislature to revise the constitution of governing district finances in order that accommpodate the source of society loans as instrument of district Sharia bonds (sukuk).
 Keywords: Budgeting, Bonds, Sukuk, Banten, APBD.
Abstract The election of Head of region as the democracy mechanism to the head of region that the application is based on the Law Number 23 2004 about Regional Government is still found some problems, such as the application of the head of region election gives the burden the government finance plan so that it’s not really efficient and effective, and also the head of region election results the unharmonious head and the vice head of the region (about 93.84% all over Indonesia). So that for the consequence as the lawful country, Indonesia has to revise that problem that needs to administer the law to become the ideal law in regulating the head of region election. The ideal law regulation will become the basic to the application of the head of region election with the better result as the effort to accomplish the purpose of autonomy region in boosting the society welfare of the autonomy region’s people as the implementation of people’s sovereignty through the process of political decentralization to the autonomy region. Keywords: Ideal Law, People’s welfare, People’s Sovereignty. Abstrak Pemilukada sebagai suatu mekanisme demokrasi untuk pengisian jabatan kepala daerah yang penyelenggaraannya didasari Undang-Undang Nomor 32 Tahun 2004 tentang Pemerintahan Daerah dalam penerapannya masih dijumpai berbagai persoalan, diantaranya; pelaksanaan pemilukada cukup membebani anggaran pemerintah sehingga dirasa tidak efisen dan efektif, juga pemilukada justru menghasilkan pasangan kepala daerah yang tidak harmonis (93,84 % se Indonesia). Oleh karena itu sebagai konsekuensi Indonesia negara hukum, maka untuk memperbaiki berbagai persoalan tersebut, perlu dilakukan penataan hukum menuju hukum ideal dalam pengaturan pemilukada. Pengaturan hukum ideal akan menjadi dasar untuk penyelenggaraan pemilukada dengan hasil yang lebih baik sebagai upaya untuk mewujudkan tujuan otonomi daerah dalam meningkatkan kesejahteraan masyarakat daerah otonom sekaligus perwujudan kedaulatan rakyat melalui proses desentralisasi politik kepada daerah otonom. Kata kunci: Hukum ideal, Kesejahteraan rakyat, kedaulatan rakyat.
The enactment of The act Number 2211999, about The Local Government and The Act Number 2511999, about The Balancing Financial between Central and Local Government, they have changed the centralization system to the decentraiization in form of giving the regional autonomy, which it's real, broad and responsible. One of the impacts of that policy is The Local Government's fiscal decentralization (financing the regional autonomy), which it is authorities to coiiect the local tax and local retribution in order to financing public services in local region. Based on the argument, they important reviewed, such as: (a) how the basic concept of the local tax and retribution tax; (b j What is the legal basis of the local tax and retribution tax; and (c) how the implementation of local tax and local retribution. The basics concepts of local tax and local retribution, its essentially, should be able to provide local revenue in accordance with the degree of fiscal autonomy period and clearly had an impact on the fiscal responsibility of owned the relevant owned. The legal basics of tax collecting, such as The Article Number 23A ofUndang- UndangDasar1945; The Article Number 7, Paragraph 4 of The Act Number 1012004, about The Establishment, Regional Regulation; The implementation of the tax collecting have to based on the principles or system, which it is called "closed list". Kata kunci: Desentralisasi Fiskal, Pungutan Pajak Daerah, "Closed List"
Education was one of the sectors that was being decentralized except 6 sectors ( Defense, Security, Foreign Affair, Justice, Finance, and Religious Affair) that are still under the management of the central government, centralized. During the decentralization of education, the mechanism of education planning has become difficult and complicated. This is due to the complexity of the procedure that the plan has to go through; a long process, starting from the preparation of supporting data until the final stage of deciding the most appropriate programs and activities for the country. Besides, this process has to involve all stakeholders of education, the approval from the parliament must be obtained so that the proposed budget can be funded.<br><br>The main objectives of this research are two fold. First, to make better or to improve the education planning mechanism at the Directorate for Development of Junior Secondary Education (DDJSE). Second, through improved planning, to expand the scope of service to the citizens of the country so that every citizen in Indonesia will have an equal access to Junior Secondary Education (JSE) and to improve the quality of JSE in Indonesia. To achieve these research objectives, practitioner research was used as an umbrella of research methodology with action research as the main research method. Data were collected by using data collection methods: questionnaires, observations, interviews, and document analysis from related sources. The research was done from 2004 until 2008.<br><br>This research involved all of the staff from the DDJSE, some staff from provincial and district education office, and other stakeholders of education. The involvement of all level of education staffs was aimed to find the most appropriate plan that suitable for all three levels of education offices. Whatever happens in one of the three levels of education offices will affect the other education offices. <br><br>During this research, the following actions were conducted as part of the education planning process: creation of current and complete data (EMIS), development of evaluation criteria for effective decentralized education planning, bottom up planning, coordination and synchronization, development of clear division of labour in education planning among the layer of education bureaucracy based on government regulation number 38/2007, capacity building, participation decision making, intensive and regular monitoring and evaluation. <br><br>At the end of the research completion, the researcher concluded that effective education planning had significantly increased the access to and the quality of JSE from year to year. The increase in access to JSE is shown by the significant improvement in Gross Enrolment Rate (GER) at JSE. The improvement of the quality of JSE is shown by the constant increase in students scores at the National Examination (UN). This research does not claim to be the only reason for the success of the DDJSE, but through this Research by Project there is clear improvement in JSE in Indonesia.<br><br>In addition, the research approach, results, and strategies have been very valuable for the DDJSE in improving the access and quality of JSE in Indonesia. <br>
The background of this research is the fall of the New Order Regime which occurred in 1998, followed closely behind by the creation of local autonomy policy. This policy was issued based on Law Numer 22/1999 (Local Government) and Law Numer 25/1999 (Intergovernmental Finance). Both laws have changed the local public administration from a centralized into a decentralized system and also caused reform in some components such as planning, organization, personnel, and finance. Even though Law Number 22/1999 had been implemented for four years, the reform seemed very tardy. In fact, several regions showed a progress tendency that was the reverse of the expectation. For this reason, the question that will be formulated in this research is 'Why was there a different level of performance of local public administration reform after the local autonomy implementation in Indonesia?' The conceptual framework of this research is outlined as follows: it is presumed that the performance of Local Public Administration Reform is determinedby two major independent variables that are interrelated. These are the Central Government Role Variable and the Response of Local Government and its Environment toward the Reform. The Central Government Role consists of two variables Decentralization as an Architecture Reform Variable and the Policy Reform Variable. Both major variables interrelate with some varibles at the local level such as the Mayor/Regent's Role, the Response of Bureaucrats and Politicians to Local Public Administration Reform, and the Response of Civil Society to the Reform.
Contracting out is the practice of public sector or private firms of employing and financing an outside agent to perform some specific task rather than managing it themselves.The rationale for contracting is that public providers lack the incentive to use resources efficiently, and that private (or autonomous) providers are more efficient than public providers.Contracting out clearly separates the roles of purchaser and provider, and tightly links payment to performance of the provider.According to classical economic theory, contracting stimulates competition among providers in managed markets, induces cost awareness among providers and purchasers, and enhances transparency in negotiations.Providers are forced to minimize production cost and adjust the prices to meet the demand and requirements of purchasers.All these factors contribute to efficiency.In addition, contracting would promote decentralization managerial responsibility, a shift that would translate in efficiency gains in contrast to the old highly-centralized, bureaucratic structure, considered insensitive of the cost implications of allocative decisions.As is the case with any model, contracting out approach is not a panacea to all health problems.But in light of the limited absorptive capacity of the public sector, it is an alternative strategy worth considering for increasing the coverage and the quality of services in developing countries such as Indonesia.Monitoring and evaluation is an indispensible instrument for contracting out to exhibit its relative advantages.