Municipal Development Policy Effectivity on Welfare Distribution to its Surroundings Regencies in

Indonesia

After the Indonesian Reformation Movement in 1998, there has been a drastic change in Indonesias
development policy. The previously centralized/top down driven development has become more
decentralized. One of the pressing issues that have led to the decentralization is the failure of the
centralized policy in distributing welfare for the entire nation. Developments tend to be focused in
big cities and metropolitan areas. This has left the regencies rural area under developed and far less
prospers than the developed area.
Decentralization process and mechanism began with the enactment of the Law Number 22 Year 1999
regarding Local Government which has been replaced by the Law Number 32 Year 2004 and
Government Law Number 25 regarding Revenue Sharing of Central and Local Government which has
been replaced by the Law Number 33 Year 2004. According to Hoessein in Mungkasa (2013) those
laws has given a drastic impact in local government authority and organization, such as:
1. Local democracy implementation (local mayor election and flexible government structure)
from previously uniformed local government structure;
2. Coordinating function of Provincial government from previously supervising function
towards municipal/regency government; and
3. Autonomous management of local government budgeting by local legislative from previously
central supervised budgeting by appointed ministries.
Mungkasa (2013) stated that decentralization was supposed to encourage local efficiency in civic
services provision and promote inter-regional competition which may improve innovation. Contrary
to that, YAPPIKA (2006) has stated that with the decentralization, there are occurrences of local
oligarchy which may threat the nation as an entity; also Tarmansyah (2011) has stated that in order
to acquire local revenues rapidly, local government has a tendency to utilize its natural resources in
an unsustainable manner. As an impact of those phenomena, Keban (2012) has stated that after 10
years of its implementation, decentralization policy has yet to accomplish its goals in distributing
welfare for local people.
Anticipating the disparity issue in Indonesia, the government has enacted the Government
Regulation Number 26 Year 2008 regarding the National Spatial Plan of Indonesia. Through the
regulation, up to 52 municipalities has been stated as the national center, and 36 municipalities were
stated as regional center from 94 municipalities totally. Those centers were designed to become the
growth pole which will trickle welfare to its surroundings.
However, the disparity between regions has a tendency to rise as described by the increasing gini
ratio of Indonesia from 0.355 in 1996 to 0.413 in 2013. Disparity is relatively high in the least
developed region (Papua and Papua Barat Province) but also at the most developed region (Jakarta).
The data indicate that municipalities have not yet optimally distribute welfare to its surroundings.
Another fact that indicates the failure of municipalities as growth pole is the increasing number of
underdeveloped villages/rural area, which has increase from 12% in 2005 to 26% in 2011. The
percentage of underdeveloped villages is at the highest in the eastern region of the nation reaching
almost 90% (Papua and Papua Barat Province).
To accurately address the problems, a thorough study regarding the interactions of municipality and
its surrounding regencies needs to be done. The cause of the failure in welfare distribution from
municipality as regional center to regencies as hinterlands needs to be carefully examined. By
understanding the pattern of interactions between them, the policy can then be evaluated. Whether
it was the inaccurate policy formulation or the ineffective implementation process of the policy.
In understanding inter-regional interactions, one of the aspects that need to be observed is the
input-output flow of commodities. The flow of commodities can shows effects of each region
(municipality/regency) to others respectively. To understand the regional interactions more
accurately, information can also be gathered from key stakeholders in the region. By interviewing
some stakeholders, if possible some experienced expert in the policy implementation processes, we
can analyze some of the key cause for the problem more effectively.
In 2015, the Government Regulation Number 26 Year 2008 regarding the National Spatial Plan will be
officially reviewed. This study is hoped to be able to contribute in the review process significantly,
especially regarding the positioning and function assignment of each National/Regional center in
each municipality. With this study, it is hoped that those municipality assigned as development
centers can effectively manage its role as the welfare distributors to its surrounding regencies.
References
1. Director of Urban and Rural Development. Medium Term National Development Plan 2015-2019,
Urban and Rural Development Field. Jakarta: Bappenas, 2014.
2. Keban, Philipus, Airlangga University. Decentralization Reorientation Policy. 2012.
http://philipus-k-s-fisip.web.unair.ac.id/artikel_detail-68325-Umum-
Reorientasi%20Kebijakan%20Desentralisasi.html (accessed 2014-07-13)
3. Mungkasa, Oswar. Decentralization and Regional Autonomy in Indonesia: Concept, Achievement
and Future Agenda. Jakarta: Bappenas, 2013. E-Book.
4. Tarmansyah, Umar, Research and Development Body, Ministry of Defence Republic of Indonesia.
Negative Impact of Regional Autonomy and the Ministry of Defence Role in Natural Resources
Utilization for the National Defence Interest. 2011.
http://www.balitbang.kemhan.go.id/?q=content/dampak-negatif-otonomi-daerah-dan-peran-
dephan-dalam-pendayagunaan-sumber-daya-nasional-untu (accessed 2014-07-13)
5. YAPPIKA. Historical Context of the Regional Government Law (Government Law Number 22 Year
1999 revised by Government Law Number 32 Year 2004). Jakarta: Partnership Kemitraan. 2006.
E-Book.