Blockchain Papers

Prayote Songklin

No abstract is available for this record.

Deni Ramdani

Indonesia’s fiscal decentralization framework has evolved substantially since the 1998 Reformasi era; however, its capacity to ensure equitable and sustainable development remains debatable. This study analyzes the intricate dynamics of fiscal decentralization within Indonesia’s development financi

Indira Devi Prasain

This study analyzes Kautilya’s Saptanga theory of the state as delineated in the Arthasastra, a seminal work in Eastern political philosophy by applying secondary data. Kautilya's Arthasastra is widely regarded as a cornerstone of Eastern political science due to its comprehensive examination of various aspects of governance, ranging from statecraft and warfare to diplomacy, ethics, and geopolitics. The text portrays a realistic governance portrayal, depicting a complex administrative structure, taxation systems, and an advanced intelligence apparatus. Kautilya advocated a strong state with a combination of seven limbs; every element is equally important for successive states. Kautilya posits that the state's primary objective is to elevate humanity from its natural state, allowing individuals to practice their religion and maintain private property rights. In Kautilya's conception, the king assumes the role of a moral guardian, ensuring his subjects' justice and welfare. Moreover, Arthasastra advocates for a decentralized governance model, wherein the state exercises control over autonomous organizations, and prevents absolute authority.

Februati Trimurni

Deconcentration is simply defined as the delegation of administrative authorities of the central government to the lower level of governments along with the transfer of funds to finance the implementation of the authorities. Deconcentration, in the perspective of public administration, is the transfer of administrative responsibility for specified functions to lower levels within the central government bureaucracy, generally on some spatial basis (Ferguson and Chandrasekharan, 2004). The policy and important decision still lays on the central government and the lower governments or units are merely the implementer of the policy and decision. The practice of the deconcentration in Indonesia has obviously been implementing since the independence of the country with some dynamism and adjustments particularly with the national interest, strategies, economic or even politic. The political reform of Indonesia in the year of 1998 is mainly generated by the demands of some provinces and regions to separate from the country for instance those of demands from Aceh, Papua and Maluku. To respond the demands, central government issued decentralization law notably by the Law No.22/1999 which the revision to the previous Law No.5/1974.

Amaliah Fitriah

This study contributes to the existing literature on decentralization by exploring the relationship between decentralization, identity construction and conflict in the context of decentralization reform in Indonesia. Using the concept of bottom-up autonomy as its theoretical lens, this study explores the impact of political decentralization on the autonomy of Aceh and examines the notion that autonomy can contribute to peaceful management of intra-state conflict. The study involves research into education stakeholders in the two districts of Aceh and uses the qualitative methods of pairwise ranking, semi-structured interviews, observation, and document analysis.
\nMore specifically, the impact of decentralization on the autonomy of Aceh is investigated through perceived changes in three areas of education: the curriculum, the structure, and the financing of education. The results demonstrate that the autonomy agreed between Aceh and the Indonesian government has contributed to extensive bottom-up autonomy for Aceh by accommodating the distinct identity of the Acehnese and by providing a political framework for local empowerment. Through providing frameworks for the accommodation of local identity and for local empowerment, the form of bottom-up autonomy resulting from political decentralization has offered negotiated avenues for managing intra-state conflict peacefully. These frameworks have hopefully created common ground for both parties to sustain peace.
\nHowever, this study also revealed that there is potential for internal discontent within Aceh society as a result of perceived unequal access to resources. This study does not, therefore, emphatically conclude that political decentralization necessarily reduces conflict. Instead, this research suggests that political decentralization which results in extensive bottom-up autonomy may be a tool for promoting a more peaceful management of conflict between regions and the central state than would otherwise be possible.

Jean-Jacques Dethier

"Trash, Cities, and Politics" describes Indonesia's ADIPURA, an environmental program begun in the mid 1980s to focus on waste management, cleanliness and sanitation, and green spaces. The paper discusses the program within the larger context of Indonesia's urbanization and its environmental consequences, from the time of the New Order up to today's decentralization era. The essay describes ADIPURA's continuity and evolution, with respect to central and local governments, law enforcement, financing, and community and private sector participation. It also provides specific data from more than 300 cities, and presents statistics to reveal trends and disconnects and to examine the program's successes and failures. For example, the study found that the program's incentives are inadequate, given Indonesia's regional autonomy and decentralization; that government ministers' credibility may be too weak to encourage municipalities' participation and compliance; and that the program comprises an unmanageable number of targets and is excessively expensive to administer, especially the inspections. The study concludes that ADIPURA is potentially useful to clean up cities, but needs to be overhauled, modernized, and coordinated with other government policies, and further transformed to eliminate actual and potential corruption and manipulation.

Yudhi Rachman

This article attempts to capture the power developed in an area aftermath of reformation era in 1998 marked by implementing autonomous region or decentralized. Power in The New Order Regime, that was The Centralistic changed with the emergence of the local political elite that affirming their power by various sources of capital. By having a more open space for local figures to snatch the seat of power at the local level in the county, political competition then became closer in social community base level. Those who have a culture of social capital, networks and other social networking might be easier to perform. No exception figure of “Kiai” head of Islamiccommunity originating from habitus religious activities and education in boarding school and other community social activities. In Bangkalan regency Habitus-based Political Elite Kiai boils down to descendants of the BaniKholildiasporic in various organizations either initiating Community-Social Organizations, political parties and legislative Institutions and Executive. The method used in this research is descriptive-qualitative structure of Agency Bourdieu's approach with data mining using in-depth interviews and technical documentation. The end result of this thesis was to see that the political and Dynastic Politics Breeds successfully built by RKH Fuad Amin during his leadership in two periods, ten years later continued by the winning of his son MakmunIbnuFuad with a majority of votes 93,47 percent. After his main rival who is also a descendant of BaniKholil, namely KH Imam BuchoriKholil failed to follow the contestation elections directly. In contestation elections in Bangkalan Regency, the ability of the group or Political Actor in using sources of capital and symbolic power in a society is still very effective in managing their Paternalistic room practices.In the analysis of Structure-Agency Bourdieu's perspective, social space and social groups who control it are the products of a historical struggle continuously updated for contested or won as well as establish dominance in power.

Takashi Shiraishi

Indonesia underwent enormous political and institutional changes in the wake of the 1997–98 economic crisis and the collapse of Soeharto's authoritarian regime. Yet something curious happened under President Yudhoyono: a politics of economic growth has returned in post-crisis decentralized, democratic Indonesia. The politics of economic growth is politics that transforms political issues of redistribution into problems of output and attempts to neutralize social conflict in favor of a consensus on growth. Under Soeharto, this politics provided ideological legitimation to his authoritarian regime. The new politics of economic growth in post-Soeharto Indonesia works differently. Decentralized democracy created a new set of conditions for doing politics: social divisions along ethnic and religious lines are no longer suppressed but are contained locally. A new institutional framework was also created for the economic policy-making. The 1999 Central Bank Law guarantees the independence of the Bank Indonesia (BI) from the government. The Law on State Finance requires the government to keep the annual budget deficit below 3% of the GDP while also expanding the powers of the Ministry of Finance (MOF) at the expense of National Development Planning Agency. No longer insulated in a state of political demobilization as under Soeharto, Indonesian technocracy depends for its performance on who runs these institutions and the complex political processes that inform their decisions and operations.

S. J. Tambiah

Previous article FreeThe galactic polity in Southeast AsiaStanley Jeyaraja TAMBIAHStanley Jeyaraja TAMBIAHHarvard University Search for more articles by this author Harvard UniversityPDFPDF PLUSFull TextEPUBMOBI Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinked InRedditEmailQR Code SectionsMoreI have coined the label galactic polity to represent the design of traditional Southeast Asian kingdoms, a design that coded in a composite way cosmological, topographical, and politico-economic features. The label itself is derived from the concept of mandala, which according to a common Indo-Tibetan tradition is composed of two elements—a core (manda) and a container or enclosing element (la). Mandala designs, both simple and complex of satellites arranged around a center, occur with such insistence at various levels of Hindu-Buddhist thought and practice that one is invited to probe their representational efficacy.Mandala as cosmological topographyCosmological schemes of various sorts in Tantric Hinduism and Buddhism have been referred to as mandala—for example, the cosmos as constituted of Mount Meru in the center surrounded by oceans and mountain ranges. At a philosophical and doctrinal level, the Buddhist Sarvastivadin school represented the relation between consciousness (citta) and its associated mental phenomena (caitta) in terms of the law of satellites, wherein consciousness placed in the center is surrounded by ten caitta, each of which again is surrounded by four laksana, or satellites (Stcherbatsky 1923; Conze 1970). The design and arrangement of the magnificent architectural monuments like Borobodur and Angkor Vat have been called mandala (Mus 1935, 1936).At quite a different level, Kautilya in his Arthashastra used mandala as a geopolitical concept to discuss the spatial configuration of friendly and enemy states from the perspective of a particular kingdom (Shamasastry 1960). The human body is likened to a mandala (Tucci 1971), a description that finds its resonances in ritual and medical practices. Finally, mandala designs are printed on textiles or are reproduced in the transitory designs drawn with powdered colors on numerous occasions.My primary interest in this paper is the traditional Southeast Asian kingdoms that are described as conforming to the mandala scheme in their arrangement at various levels. Mandala as geometrical, topographical, cosmological, and societal blueprints are not a distinctive feature of complex kingdoms and polities only. The evidence is quite clear that simpler mandala designs appear in tribal lineage-based segmentary societies practicing slash-and-burn agriculture, and that the most elaborate designs are manifest in the more complex centralized polities of valley-based sedentary rice cultivators (for example, see Mus 1935; Heine-Geldern 1942; de Jong 1952; Schrieke 1955; Shorto 1963; Moertono 1968; Wheatley 1971). But this is a simplification. There are indeed expressions both simple and complex found in phenomena standing between these poles—at the level of tribal polities and local communities. An excellent case in point are the Atoni of Timor. They have named patrilineal descent groups, live in villages, grow maize and rice by shifting agriculture on mountainous terrain, and at the same time belong to princedoms. Their village houses are made to a complex center-oriented design wherein con-cepts of inner and outer, right and left, four major mother posts, twelve peripheral chicken posts, and so on build up a scheme that simultaneously has cosmological, ritual, sexual, and practical ramifications (Cunningham 1973). And, as may be expected, the wider encompassing polity as such is constituted according to an ela-borate design of center and satellites and of successive bipartitions of various kinds (Nordholt 1971).Examples of the elementary geometric designs are the five-unit (quinary) and nine-unit samples. The first consists of four units deployed around a central one, and the second is composed of a center, four places in the major cardinal positions, and four more placed in between at the lesser cardinal points (Figures 1 and 2). In Indonesia, for example, the quinary formula called mantjapat ("five-four") had various usages: it denoted the arrangement of four village tracts around a fifth cen-tral one; it represented the rotational location of village markets in a five-day cycle; it made its appearance in the settlement of Minangkabau land-ownership disputes in that the unanimous testimony of the heads of families owning the four surrounding plots was required (de Jong 1952); it described the headman's council at the village level (in the same sense as that of the panchayat in village India); and it appears (Schrieke 1955) to have been the underlying pattern of the Mataram king-dom during the second quarter of the eighteenth century, arrived at by successive bipartitions (Figure 1, upper right).Similarly, the nine-unit design appears in stereotyped accounts of the king and his ministers arranged in two concentric circles. It also appears in the territorial design of the traditional Negrisembilan polity (Figure 2), with the domain of Sri Menanti in the center, immediately surrounded by four "verandah" (serambi tracts and these again being flanked by four major districts (de Jong 1952). Figure 1: Upper left: The mantjapat. Upper right: The Mataram state—a five-unit system through successive bipartitions (after Schrieke 1955) Lower left: Nine-unit system, showing a radical pattern. Lower right: The king's council, showing two concentric circles.View Large ImageDownload PowerPointHere is the first problem posed by these facts: because these geometrical and radial constructs, traditionally conceived as cosmological designs, occur in slash-and-burn and wet-rice economies, occur at the level of local community and the widest conception of polity, and occur in simpler and more complex societies, there are no prima facie grounds for explaining their manifestation as immediate and direct projections of ecological considerations or the logistical constraints of sociopolitical organization. The logic of their use cannot be reduced to a simple causal explanation. It is clear that if we approached these center-oriented constructs or models as a form of classification, we could start with an initial pentadic or quinary system and progressively build up an expanding series of mandala circles comprising seventeen, thirty-three, and still larger clusters of units.Perhaps the most famous of these complex schemes was realized in the Hindu-Buddhist polities of Southeast Asia that employed the thirty-three-unit scheme to express and organize cosmogonies and pantheons as well as religio-political groupings. In this scheme the king as wielder of dharma (the moral law), as the chakra-vartin (universal emperor) and bodhisattva (buddha-to-be), was seen as the pivot of the polity and as the mediating link between the upper regions of the cosmos, composed of the gods and their heavens, and the lower plane of humans and lesser beings.1Figure 2: Negrisembilan (after de Jong 1952). Bottom: Schematic design of the Negrisembilan polity as a nine-unit system.View Large ImageDownload PowerPointThe best expression of this scheme is the thirty-two myos of the medieval Mon kingdom and the thirty-seven nats of the subsequent Burmese pantheon so well elucidated for us by Heine-Geldern (1942) and Shorto (1963); both these schemes derive from the paradigmatic heavenly scheme of the god Indra, flanked by the four guardians of the world (lokapala) and twenty-eight lesser devatas as retinue. For example, Thaton, the Mon kingdom overrun by Anawrahta in 1057, had thirty-two myos or provinces, each the seat of a subordinate prince, ringing the capital. All these political and territorial units were further linked together by the Buddhist cetiya cult of relic pagodas, also thirty-three in number. Similarly, the kingdom of Pegu in 1650 and the Mon kingdom of Rammanadesa of Lower Burma had their own permutations and variations of these schemes (Shorto 1963).All these Buddhist courts also provided prolix examples of such mandala schemes as the king surrounded by thirty-three queens and thirty-three lineages into which they married, and the like.Following is the second problem of interpretation. The classical descriptions of these Southeast Asian polities arranged in center-oriented galactic schemes were and are accompanied by a certain interpretation of their raison d'etre, which I shall label as the cosmological mode. It is best exemplified by the writings of Eliade and Heine-Geldern (among others), and repeated by Shorto and Wheatley; surprisingly, it is also espoused by Riggs (1967) in his characterization of the traditional Siamese polity. Even Geertz's (1973) trinitarian formulation of the traditional Javanese and Balinese polities in terms of the doctrines of exemplary center, graded spirituality, and theater state resonates with a "cosmological" ontology, which provides the impulsion for the politics in these traditional kingdoms to be the enactment of ritual.The doyen of contemporary cosmological interpreters is Eliade, who for instance in his Cosmos and history: The myth of the eternal return (1959) argues that Archaic Man, as opposed to Modern Man, constantly enacted archetypes or exemplary models in his rituals (as well as other activities), of which the symbolism of the center as the axis mundi is the most celebrated. For Eliade, these center-oriented cosmologies are enacted and implemented by the archaic mentality, not because of any rational or practical considerations but because they constitute a prior ontology and therefore an absolute reality for the actors. in other words, the "sacred" orientation provides the impulsions and guidelines for the "profane" activities of traditional man. Thus, in Eliade's vision, archaic man's "reality is a function of the imitation of a celestial archetype [and this] reality is conferred through participation in the 'symbolism of the center': cities, temples, houses become real by the fact of being assimilated to the 'centre of the world.'"Again, more recently, Wheatley, the author of a large work, The pivot of the four quarters (1971), repeats in his inaugural lecture the same interpretive perspective: "in these religions which held that human order was brought into being at the creation of the world there was a pervasive tendency to dramatize the cosmogony by constructing on earth a reduced version of the cosmos, usually in the form of a state capital. in other words, Reality was achieved through the imitation of a celestial archetype by giving material expression to that parallelism between macrocosmos and microcosmos without which there could be no prosperity in the world of men" (1969: 10).Let me be clear about what i am questioning in the received wisdom so persuasively purveyed by these eminent scholars. My own stand is far from a vulgar utilitarianism or pragmatism in terms of which the schemes in question ought to be explained. one must grant the validity of the galactic model as a collective representation. But what i question is seeing the rationale for this model in a cosmo-logical mode of thought as an ontological priority, which is so interpreted as to constitute a sociological anteriority as well, such that for the imputed "traditional" or "archaic" mentality a notion of the "sacred" is alleged to engulf the "secular" and to serve as the ground of reality.Apart from the limitation that such a cosmological mode of explanation is static and cannot account for either variations between the schemes employed by societies or polities or dynamic changes in the schemes over time, there is the major objection that in these examples of traditional thought and practice, the sacred as such cannot be persuasively distinguished from a profane domain, and that the cosmological, religious, political, economic dimensions cannot be disaggregated. What the Western analytical tradition separates and identifies as religion, economy, politics may have either been combined differently, or more likely constituted a single interpenetrating totality. If, as I believe, these entities under scrutiny were total social phenomena in the Maussian sense, then one has to employ a different analytical strategy from those already cited so as to recover something of their con-tours and relations.My approach, which I shall call "totalization," aims to give an integrated account that is, as far as possible, a true representation of the traditional Southeast Asian kingdoms as extant actualities. But the task is not easy, least of all the problem of translation of indigenous concepts and their elucidation in terms of the analyst's concepts and vocabulary.My thesis is that the kingdoms in question were arranged according to a galactic scheme, and that this scheme was conceptualized and actualized in ways that are best elucidated in terms of certain key indigenous concepts. The most central of these concepts is mandala (Thai: monthon), standing for an arrangement of a center and its surrounding satellites and employed in multiple contexts to describe, for example: the structure of a pantheon of gods; the deployment spatially of a capital region and its provinces; the arrangement socially of a ruler, princes, nobles, and their respective retinues; and the devolution of graduated power on a scale of decreasing autonomies. Other key concepts in the Thai language (which have th eir counterpar ts in other Southeast Asian languages as well) are: muang, which in a politico-territorial sense signifies kingdom/principality in terms of center-oriented space, and of central and satellite domains; and krom, which represents the radial mapping of an administrative system of departments and their subdivisions, as well as the constitution of successively expanding circles of leaders and followers or factions.The range of meanings of these and other concepts will emerge in due course. Here I shall note certain features integral to the notion of totalization. First, there is a semantic overlap and a certain amount of redundancy in the meanings attributable to the Thai concepts cited, although they are not identical and do not occupy equal semantic space. Second, these (and other similar) concepts are polyvalent, and if their meanings are mapped onto a Western conceptual grid of "levels," they are revealed to be, in varying degrees of overlap, at once cosmological, territorial, politico-economic, administrative, and so on.Thus, from the standpoint of the integrity of these traditional polities, it would be a mistake to disaggregate them into the above-mentioned Western conceptual levels and to treat them as analytically adequate and exegetically sufficient. Although not committing this error, I, as translator and analyst, can only give some idea of the totality by showing that the key concepts do resonate with the polyvalent implications that we attribute to these levels. Therefore, I shall adopt the descriptive strategy of showing that the galactic scheme was characterized by certain structured relations, which were reflected at various levels that I disaggregate or deal with in succession only so that later I can reconstitute the totality.My descriptive strategy has two implications, which are paradoxically the two sides of the same coin. On the one hand, because the levels—cosmological, territorial, politico-economic, and so on—have no true analytical validity, it follows as a corollary that we cannot assign a deterministic and privileged role to any of them. on the other hand, because the key polyvalent concepts are totalistic and simultaneously carry those significances which we descriptively disaggregate (as cosmo-logical, political, economic), we have to see the galactic scheme as encoding all the impulsions that we customarily attribute to each level. Thus, in requiring us not to assign priority to any one level or to ignore its impulsion—cosmological or logis-tical—the approach makes it possible to integrate the claims of a cosmological imperative with other imperatives without contradiction. Finally, the approach also makes it possible to relate the model of the galactic polity to certain parameters that define the outer limits of its existence and explain processual oscillations within those limits.From cosmology to political processThe so-called cosmological schemes can be seen dynamically as serving as frames for political processes and outcomes of a pulsating kind. Furthermore, and this is i hope a novel argument, the cosmological idiom together with its grandeur and imagery, if read correctly, can be shown to be a realistic reflection of the political pulls and pushes of these center-oriented but centrifugally fragmenting polities. in this instance myth and reality are closer than we think.Before I enumerate its salient political and economic features, let me provide some factual illustrations of the galactic polity.The kingdom of SukhothaiThe kingdom of Sukhothai, which historically marked the first political emergence and realization of a Thai polity in the thirteenth century (in what is now Thailand), bore the unmistakable marks of a galactic polity (principal sources here are Wales 1934; Griswold 1967).The concept of muang (the Mon parallel is dun) had a range of meanings signifying kingdom, country, province, town, capital, and The most for that concept is that it referred to or as opposed to space, and for a capital, town, or settlement with the surrounding over which it At the widest it was the case that the of a kingdom was with the of the capital The Javanese was that of a with its with decreasing the power of the center the range of its conception of as a space, over which as power from a center, is integral to the characterization of the traditional polity as a mandala composed of concentric usually in number. concentric system, the relations, was in the center was the king's capital and the region of its direct which was surrounded by a of by or by the and these again were surrounded by polities more or that the capital itself was an architectural representation of a Thus, the capital had in the inner core of the the king's and the major and standing by this center was surrounded by circles of with four at the cardinal points is cited by Wales as giving this description of the territorial and administrative of Sukhothai, it had itself from and had in and within a of two its At the center was the capital or by the muang or this domain, the king was in his capital and within it again in his At the four cardinal points were the muang, each by a of the king (and their in by the as kingdoms, were as the of with to the capital province, as by the expression muang The were received from the king and on the same as the capital, the being to with the for and on of of a of units that one in that they of finds expression also those units as the of the structure of a muang, capital or of these are the of the village at the level, the the of the of The outer the concentric the four provinces, was the region of kingdoms, brought under were in a is, in a relation of than direct political as of his kingdom various polities of the and the kingdom of Sri in the and the kingdom of Pegu to the was at best this give evidence of the social of the (and are of the Mon concepts cited the nobles, of the the of the the for the who was also called of the who were lesser to the capital muang and who as of the body of which the of his capital and the immediately the king in of up other examples of the galactic polity, I shall a the constitution of the central or capital region of the king and its provinces, and the between them. On the one hand, there is a on a reduced scale of the center in its on the the satellites the of and in of we constantly in the expanding and of the political under we can the central reality that although the political units in each lesser was a and imitation of the What is a galactic of a central surrounded by satellites, which are more or entities held in and within the of of the we at the other central and their satellites, we shall be to the logic of a system that as a of central points is to the of and of is clear that the of the and with to territorial Although of his of Thai who a a that was on the of had first to for his and then to as of the states as The problem of territorial was to the of of the of was the kingdom of further to the was in the was to the and far to the The under and under were example, and between and in the of the Furthermore, the of and and the of the polities that the capital of the its Thai a of around first to from there to and for up in and there for to Thus, a of ought to us that we must the of the capital as the exemplary center with the fact of a center of and of the king on the or on the of was and to or with the of The of was reduced to a of in and by the were and into the kingdom of polity have in a a description of the design of the kingdom of and the pattern of its political and administrative at certain points in its Here I shall give a of the polity around the quarter of the century so as to the point that although more the underlying of territorial and administrative to the scheme of the galactic polity. Figure Schematic representation of the polity The represents the domain of 1 by of the by of the up the Large ImageDownload is at this time with the of his The pattern was as follows Figure the capital of and its core region or domain, which was into later called lesser were in by to the ministers in the In these were the by the king's of of the of of a later they were called of The that this description were in fact the muang that composed the major of the now kingdoms of and of the same as muang but with a of local and of more or were the of in the in the and most famous of in the provide the best evidence of the and in the capital All and of and their own 1 and were the muang by the of the by of the second these were the central domain from the large At the were the polities, such as the kingdoms of and and the states of and all these in a to there were the and Burmese the the were of enemy and of galactic in their own still more complex mandala model the design of the kingdom was in the century in time were now into four there were two of the first of the second of the and of the under the of the capital. The and also had subordinate to them than to the capital. It was this that was into the and the of and of which was reproduced in the law by I in It is most to note of this in the were to a of and those of the capital, and had the same of but positions, and all of these were by the the from the capital. The such local and in were by the in the capital, with for terms reality from the but that us into the political of the galactic center-oriented concentric of the polity was pervasive in Southeast The Javanese called which various features of the kingdom in the century, most evidence thesis of the galactic polity An of the read in

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Because Soeharto’s authoritarian New Order regime (1966-98) was highly centralized, political observers focused their attention almost exclusively on the political centre, where more than 70 per cent of the money of the national economy circulated. Developments in the regions, often depicted as a passive periphery, were by and large ignored. However, after the fall of President Soeharto the relationship between the centre and regions changed fundamentally. From 1999 onwards a transition from authoritarian rule to electoral democracy was accompanied by administrative decentralization. These changes did not come out of the blue nor were they unique for Indonesia. Since the1980s centralized states across the world were seriously undermined by both neoliberalism and the fall of the Berlin Wall. In the western world a belief in the welfare state had given way to the acceptance of privatization while the end of the Cold War meant an end to the socialist state and the necessity to support authoritarian regimes in the so-called Third World. The assault on the centralized state was supported by an unlikely alliance of agencies including the World Bank, which believed that less state would result in more and better markets, and by NGO activists who considered the state as a repressive institution which had to be counterbalanced by democratic forces based in civil society. In Eastern Europe and throughout Africa processes of administrative decentralization resultedin various degrees of regional autonomy. In Indonesia both regional autonomy and democracy were also at the heart of political change and were expected to enhance good governance and strengthen the role of civil society. This chapter aims to evaluate these optimistic expectations and investigate the extent to which local elites were able to capture and harness the local state.Because Indonesia suffered seriously from the monetary crisis in Asia which haunted the region from 1997 onwards, it had to accept the terms under which the International Monetary Fund (IMF) was willing to provide a loan of US$43 billion. Decentralization was a key demand because the IMF wanted to dismantle the centralized authoritarian state and the obstacles to markets embedded in it. There were, however, also domestic motivations to move quickly towards regional autonomy. After Soeharto’s demise the ruling (state-sponsored) Golkar party had become the target of widespread criticism. This was, in particular, the case in Java where themonetary crisis had a serious impact on living standards and the new political party of Megawati Sukarnoputri, PDI-P, appealing to popular sentiment, rapidly gained ground. Thus, in order to survive the 1999 elections Golkar had to consolidate its position in the so-called Outer Islands. Outside Java the effects of the crisis were less serious but resentment against Javanese domination was widespread. In order to harness these sentiments Golkar overnight turned into an enthusiastic supporter of decentralization (Schulte Nordholt and van Klinken 2007). Between April 1999 and January 2001 reforms aimed at regional autonomy were imple-mented with remarkable speed and without major disturbances. Ironically, it was from the outset a top-down operation. The plan was designed by a small group of high-level bureaucrats who were trained in public administration at American universities and maintained close links with international agencies ideologically committed to decentralization. In April 1999 the national parliament, still populated with old New Order politicians, accepted Law 22/1999 on Regional Autonomy without much discussion, even though the regions had not been consulted. The centre itself had made an end to more than three decades of centralized rule (Schulte Nordholt and van Klinken 2007). Decentralization in Indonesia involved a process of administritive devolution, which involvedthe actual transfer of extensive formal administrative and political authority to lower levels of government. From now on elected parliaments in provinces, districts and municipalities would choose their own administrator and decide their own budgets. Districts and municipalities were primarily responsible for a wide range of administrative tasks. Strictly speaking, the central government was only responsible for national security and defence, foreign policy, fiscal and monetary matters, macroeconomic policy, justice and religion. Districts and municipalities were responsible for infrastructure, healthcare, trade, agriculture, industry, investment, environmental and land issues, education and culture.1 Because the new autonomy was located at the district level, the power of provinces, a larger administrative unit, was dismantled, apparently to exclude the possibility of separatism based on various ethnic or historical allegiances. Yet regional autonomy was not accompanied by the rise of local political parties. The law onpolitical parties from that same year allowed only national parties to participate in the election, which initially gave national party bosses a considerable say in regional affairs. Seen from this perspective, decentralization was a divide-and-rule strategy, permitting administrative fragmentation, but guaranteeing ultimate control by the centre. While Law 22/1999 was drafted by the Ministry of Interior, the accompanying RevenueSharing Law (25/1999) was made by the Ministry of Finance and revealed the extent to which regional autonomy would still depend on the centre. The law stipulated that 25 per cent of the net domestic revenue would be channelled to the regions, 90 per cent of which had to be allocated to districts and municipalities. This implied that the central state would remain in control of 75 per cent of the state revenues. The central government maintained its grip on 80 per cent of the income tax, the value-added tax, import and export duties, and foreign aid. Budgets of districts and municipalities consisted of a lump sum (the so-called Dana AlokasiUmum, DAU) which accounted on average for 80 per cent of the total revenue at the district level. Apart from these funds the government could allocate special funds, which accounted for 10 per cent of the said DAU. Regions were allowed to raise their own income in the form of special taxation but theseremained on the whole minor revenue sources. Only resource-rich regions profited considerably from the new law because they were allowed to keep 15 per cent of oil, 30 per cent of gas and 80 per cent of logging, mining and fishing revenues. This also implies that the central state kept 85 per cent of the oil and 70 per cent of the gas revenues. Only a few districts like Badung in South Bali (income from tourism) and Kutai Kertanegara in East Kalimantan (oil, gasand mining revenues) were, in financial terms, autonomous. Although decentralization had reduced the imbalance between centre and region as a whole, imbalances between rich and poor regions increased, because the richest regions now had access to fifty times more revenue than the poorest. Fiscal decentralization was therefore by and large synonymous with an uneven subsidized autonomy.2

Nicholas Newman

Jakarta—Muhammad Nazaruddin, a bright 32-year-old, was an up and coming national politician destined for high office, perhaps even president. He was one of the new political tigers that won office as the result of Indonesian President Susilo Bambang Yudhoyono’s election victory in 2004. By 2010, Nazaruddin was already treasurer of the ruling Democratic Party and a member of the House of Representatives Budget Committee, which oversees government projects.Nazaruddin’s downfall came last May when local newspapers reported he received bribes totalling 25 billion rupiahs ($2.8 million) for a construction contract to build athletes’ housing at the Jakarta 2011 Southeast Asian Games. In late September, two members of the project consortium were convicted of involvement in the bribery scandal and were sentenced to only two and two-and-a-half years in prison and a fine of Rp 200 million ($22,300). “If that’s all they get, there won’t be any deterrent effect,” says Indonesia Corruption Watch chairman Danang Widoyoko.Shortly after these charges first surfaced, the Corruption Eradication Commission (kpk) formally accused Nazaruddin of accepting bribes involving the project. Subsequent charges included two cases that totalled Rp 2.3 trillion ($256.5 million) in bribes. In August, Nazaruddin’s lawyer revealed a letter from his client suggesting he’d keep mum about crimes committed by the Democrats if Yudhoyono would guarantee his family’s safety, leading to the obvious, if unproven, conclusion that the party’s leaders are culpable in as-of-yet-undisclosed offenses. Then in September 2010, the chief of the Constitutional Court alleged Nazaruddin had offered an unsolicited payment of $120,000 to the court’s secretary-general. Nazaruddin resigned hastily, launching a series of stinging attacks accusing high-ranking government figures, including the Sports Minister Andi Mallarangeng and the secretary of the Democratic Party’s ethics committee, Amir Syamsuddin, of crooked deals. After implicating powerful former associates, he fled to neighboring Singapore for what he claimed was a medical appointment. However, he never bothered to return—at least not for three months. That is when Indonesian authorities discovered him, living under an assumed name in Cartagena, a plush Caribbean beach resort in Colombia. The Indonesian government sent a specially chartered executive plane at a cost of Rp 4 billion ($468,000) to collect him. That too provoked a few raised eyebrows, until the kpk pointed out that a previous whistle-blower who returned on a commercial flight had been poisoned.“Corruption in Indonesia is just like Coca-Cola,” says Widoyoko. And indeed the problem has permeated far beyond the billion rupiah bribes that prop up the already rich and powerful. It has become a deeply embedded feature of Indonesian society and everyday life. Corruption is sapping the growth and undermining the foundations of the world’s third largest democracy.In the time of Indonesia’s long-time leader, Suharto, life was a lot simpler for the foreign investor. Suharto ran a one-stop shop. You paid your money to one person, and everything was arranged. Today, in the wake of regional power-sharing, you not only have to bribe officials at the federal level, but also at regional and local levels. This complicates matters. Today, a foreign investor often needs a professional team based in Jakarta and in the appropriate provinces to figure out all the people who need to be paid off.Corruption has trickled down to every aspect of life. It’s routine for authorities to pull over drivers—whether or not a motoring offence has actually occurred—and ask for Rp 50,000 ($5.64) to avoid being taken to court. Agung, a Jakarta property developer, explains, “You are told you have been speeding, or there is something wrong with your car. You are then asked for ‘some money for a friend.’ This is a code phrase that the officer is demanding a bribe for some sort of alleged motoring offense.”Truck drivers and transportation firms make regular payments to police, officials at weigh stations, even local thugs at checkpoints to allow their overloaded trucks to pass. Few of these tolls ever make their way into government coffers, so it’s no surprise to find major roads routinely dotted with large potholes. Hauling cargo from Jakarta to Surabaya requires payment of at least Rp 450,000 ($50) in illegal levies to officials at 14 different weigh stations along this 400-mile route, according to Indonesia’s Food and Beverage Industries Association. Truck drivers claim they must overload their trucks to cover the illegal levies. These overweight vehicles further churn up the already decaying roads. In the Indramayu region alone, there are more than 50 miles of failed roads in need of repair, and no plans to repair them. The Iskandar Agus Bandji Cirebon chapter of the Organization of Land Transportation Owners says truck owners must change their tires every two to three months instead of the normal six months because of the poor state of the roads.Indonesians resent the vicious cycle of corruption that’s become so deeply embedded in their lives. It is a constant topic of conversation, a media fixture, and the focus of countless conferences. “Indonesians have a love-hate relationship with corruption,” says Agung. Many hate paying the bribes on a daily basis to get things done, he says, “but given that public officials take home barely $200 a month in salaries, it’s hardly surprising they look for ways to supplement their incomes.”In the past, politicians have talked about halting corruption, but in the end, it has always been just that—talk. Despite years of anti-corruption rhetoric, the scale of the problem is only growing. The most recent Corruption Perception Index prepared by Transparency International ranks Indonesia as more corrupt than Egypt, Brazil, India, and China. A survey released in October found 91 percent of Indonesians believe corruption is widespread, up from 86 percent five years ago. Many Indonesian executives agree with Agung that “corruption is becoming more bureaucratic at all levels of society.” Ironically, Indonesia’s efforts to improve democracy and accountability after Suharto by building strong regional governments have only made matters worse.In 1999, Time magazine estimated that Suharto amassed a fortune of $15 billion between 1967 and 1998 in cash, shares, property, jewelery, and art. Many businesses included one of Suharto’s children on their board to protect investments from rivals and threats from low-level civil servants. Few want to return to the days of Suharto’s New Order regime when the military massacred hundreds of thousands in the 1960 s, then brutally repressed regional uprisings in Aceh and East Timor from the 1970 s to the 1990 s. Yet, the Suharto system centralized the collection of bribes and established mechanisms to halt deviations from the agreed upon pattern of corruption. People who bought “permits” received guarantees that they were getting the whole package and would not face any more requests for bribes. Corruption under Suharto was compatible with high growth and inflicted minimal damage on economic development. While Suharto was president, Indonesia’s economy boomed, with over three decades of 7 percent per annum growth. The president’s wife, Tien Suharto, was widely known as Madam Ten Percent for the level of payoffs expected for approval of major contracts or development projects. At the time, Indonesia and India were about equally corrupt, according to Ari Kuncoro at Inside Indonesia magazine, but Indonesia’s economic performance was healthier. Only three groups—Suharto’s extended family, top members of the military elite, and leaders of Indonesia’s Chinese conglomerates—dominated corruption.Bribery in post-Suharto Indonesia is different. Corruption is no longer monopolized by a select few. Indonesia launched its regional decentralization program in 2001. Instead of a strong centralized state, the country’s government fragmented into a host of power centers. With this power shift, centralized corruption has been replaced by a haphazard bribe collection system. The Indonesian Chamber of Commerce (Kadin) has complained that decentralization produces additional regulations in the form of taxes, levies, and permits, which drive up corruption at the local government level. The phenomenon is called “overgrazing the commons,” because officials from all levels of government prey on the same economic activities. Today, everyone from ministers to assemblymen to local police officers demand payoffs.During this summer’s Ramadan, local officials took little time off from collecting their take. For a new passport or driver’s license, the quickest way to avoid endless queues at local government offices is to pay an intermediary. It normally costs Rp 175,000 ($20) to obtain a new driver’s license, but the application and processing is time consuming. Instead, the standard bribe for obtaining an instant driving license is Rp 500,000. For migrant workers seeking a new passport, the process routinely takes eight days, but slipping a bribe of Rp 600,000 to an intermediary means a passport can be obtained instantly.Sundah, who lives in Denpasar, Bali, decided he was going to try to snag a driver’s license by going through official procedures without paying a bribe. “I took the written test three times, and each time they failed me,” he says. “I was a couple of points short each time, but when I asked to see the test papers initially, the officials refused. The others in my exam room told me that if I just paid an extra $20, I would get my license.” In the end, Sundah managed to get his license when the police realized he was not going to pay them a dime. “Finally I asked to see the exam paper, and I spotted the question: ‘What would you do if you hit someone in an accident?’” he chuckles. “I got the question wrong, because the correct answer, according to the official exam paper, was to run away.”Effectively, this all but institutionalized system is an express fee for expedited processing—standard practice in most western nations. In Indonesia, however, instead of the government as the beneficiary, these payments go into the pockets of individuals. People have increasingly become both resigned to such fee structures and lured into efforts to see how they, too, might profit.It’s not just passing a small bribe to a public official that’s routine. Corruption has spread to the private sector. Today, Indonesia is home to more than 60,000 millionaires and 20 billionaires (in dollar terms)—figures that have doubled in the past two years, according the Indonesia’s Ministry of Finance. The financial sector is sizzling with deals—and scandals—from a bribery case involving a former governor of the Bank Indonesia that has implicated dozens of politicians, to Citibank, where an employee is charged with skimming millions from her customers. Such cases highlight fears about endemic corruption within Indonesia’s financial sector.Churchill Mining, a publicly traded London-based firm, announced in May 2008 that it had found 150 million tons of coal in Indonesian Borneo. This turned out to be a vast underestimate. The firm now believes there are 2.8 billion tons, making it the seventh-largest undeveloped reserve in the world. Unfortunately for this British firm, other investors quickly became interested. The Nusantara Group, a conglomerate backed by Prabowo Subianto, a politician and Suharto’s son-in-law, had previously controlled mining in that area. Six companies affiliated with Nusantara held licenses for six blocks in the East Kutai district of East Kalimantan province but never explored for coal. After the six licenses expired between March 2006 and March 2007, the district government began offering the area to other mining firms. Churchill entered the picture by acquiring from the Ridlatama Group, an Indonesian company, a 75 percent stake in the four new licenses awarded for the same area.In July 2008, two months after Churchill revealed its discovery, the district chief of East Kutai suddenly extended the six expired licenses that had been held by Nusantara’s affiliates, ignoring the fact that Churchill’s local partner had already been awarded licenses for the same tracts. Churchill claims that it has since been the target of a campaign to drive it out of Borneo. In May 2010, a new district chief of East Kutai revoked the Churchill-Ridlatama licenses, leaving Nusantara-affiliated companies in sole control of the 2.8 billion-ton reserve. Local courts rejected Churchill’s complaints, though it has recently appealed to Indonesia’s Supreme Court. And in the process, Churchill Mining has launched a global public relations campaign alerting the financial world that Indonesia is not a trustworthy place to invest.From the point of view of private companies, corruption is like taxation. Both take money from private business, but the need to avoid detection and punishment makes corruption less efficient than taxation. A bribe is a contract that cannot be enforced in court, increasing the chances the bribe-giver will renege or the bribe-taker will suddenly demand a higher payment. Still, there are some practices many foreign observers (and even Indonesian commentators) would call “corruption” even though it’s totally legal in Indonesia.In Indonesia, like elsewhere, golf clubs exist not only as a place to play golf, they are equally a place to conduct business—organize deals, network, and bribe officials. It is a good place for an important official to win prestige jobs for his expensively educated children. It is also a good place to receive bribes. A top civil servant is invited to play a round of golf and discuss business. The official has conveniently forgotten his bag of golf clubs. His business friends lend him a set; they play a round of golf, with the prize being the golf clubs. The government official wins, and he decides to them at the golf professional since he has a of clubs at The paid by the is always the agreed as the bribe for the the official has made with the executives that This is not is it when a like Indonesia it has given some million to police and Indonesian military officers as a fee to their mining Many private however, these payments as bribery and the legal system is a vast of must be in the The state to the in a In 2010, police two in a for they had in were accused by police of the for without in Indonesia and being in of the for which had not been as a Many found such to the by the police given that for years many of had not been for the same In a Jakarta the to are more by a corrupt than companies to their and Such companies must a of their to Corruption when licenses have to be so businesses often without them since a firm need up to to be At least of all drivers in Jakarta have licenses, says a local one means drivers have not taken an official driving hardly a given the driving that on in For without a license, it means a police It would take at least at to the cost of obtaining an official license, the bribes to up the some for business in recent years, Indonesia’s and legal many foreign and companies to avoid the system It is not surprising that investors are often by to through because the system and The local business the and system as corrupt with many Ironically, many of these regulations have been in an to efforts to a the a Bank found that some percent of investments in Indonesia because of the high costs to corruption. The problem has become so that it Indonesia’s of becoming a India, Indonesia, and have which will make it increasingly for foreign investors to in Indonesia’s corrupt A from the found that a third of British and a of companies would avoid to avoid the of being at At least for the of this not Asian without anti-corruption regulations from in such payments to win business in Indonesians the of corruption has to do with its and Indonesia has of a of regional and at It is not surprising since the has been by of often members of the public as as of the Agung says when he is paying a he he is to a their to of For many up in such a the offering of a bribe is not as corruption but as of the way of life. In many local who have widely in the little between a politician to government contracts in Jakarta and a to change a in the it’s called widely that corruption has out of control in Indonesia because of the high costs of a of over million people some legal and in a regime with no established of by members and Rp billion million) paid in to all in Indonesia’s is hardly to run a professional political the vast of members pay no the small state to were by percent in and politicians try to from companies and state to the of or development through procedures have often been the of political in both and Indonesian Corruption Watch the political in the federal their financial in with the which that have their and to do so from further government Only three political Despite over many to the Corruption Watch as of the six had failed to be a to Indonesia’s as one of the world’s largest a political four have been in Indonesia since the of Suharto’s years of in an increasing of Indonesians question the of given the run of reported by the country’s by the rich not And the Indonesian government is too to make this corruption has not Indonesia’s percent growth since 2007, and there are other for as For the first time since Indonesia won its from the in and some from the political elite, the legal system to have a a surprising of people are being and official a official who by both and foreign companies or their amassed a small fortune of Rp billion was sentenced to years in prison in August, extended to He a to in the the Indonesian media and to their into the within the in the Indonesia’s anti-corruption has for and and of the country’s and corrupt police a to Jakarta last August, official the kpk was a it as and are their For a they have a The kpk has convicted 150 high-ranking including members of more than government four and a of high-ranking chief executive officers and according to its It has also received more than of percent a little too good in any legal system and there needs to be a look at how cases are in the first new drive to corruption has been by from investors to up the and from a new of Indonesian executives and politicians to the economy into the global The in their way of from the country’s economic growth and that in many of Indonesia, a lot of government have a about how to government money in an so need to them and them what practices are the in Indonesia, corruption even the to the is a of have made anti-corruption their The problem the leading anti-corruption up by officials to the of the needs to a of and to corruption. These down and increasing pay levels for civil and officials. have been in Indonesia without the state must become a more powerful and like the kpk have on a corruption, it is all but to build a or power without to pay bribes to win the and the and and the legal foreign investors often and they are in an Indonesian of they often take their business

Ehtisham Ahmad, Ali Mansoor

The Indonesian authorities are exploring options for the establishment of subnational government endowment funds and the Ministry of Finance (MoF) has drafted regulations in that context. However, the motivations and objective for establishing an endowment fund at the subnational level diverge across various stakeholders. Clarity of the objectives and purpose of the endowment fund will be critical for informing features of its architecture, and the endowment fund should be aligned with the national fiscal policy objectives. Establishing such funds at a time of fiscal deficit entails a “borrowing-to-save” approach which is not optimal from a fiscal policy perspective. Currently, there is a misalignment between the design of inflow and outflow rules, the endowment fund’s objectives, and the fiscal/economic context. In addition, the current draft MoF regulations restrict the investment policy to conform with the law on decentralization enacted in 2022. This report emphasizes that regardless of the structure of the endowment fund, it needs to be fully integrated within the budget. The report also provides recommendations on assessing the full cost of the subnational government endowment fund, its design and implementation, and provides suggestions to improve the draft MoF regulations.