Decentralization of Forest Administration in Indonesia, Implications ...

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Chapter 7 Decentralization and Recentralization in Indonesia’s Forestry Sector: Summary and Recommendations Christopher Barr, Ahmad Dermawan, John McCarthy, Moira Moeliono and Ida Aju Pradnja Resosudarmo 7.1 Introduction Over the last two decades, a growing number of countries have implemented processes of decentralization, shifting significant elements of administrative authority and responsibility away from highly centralized states. Few countries, however, have implemented decentralization as rapidly or with as far-reaching transfers of authority to regional and local governments as Indonesia has since the late-1990s. Indonesia’s decentralization process gained momentum in the months following the collapse of Soeharto’s New Order regime in May 1998. It was driven, to no small degree, by the demands of stakeholders in the nation’s natural resource-rich regions, who vociferously called for a greater share of the oil, gas, and timber revenues generated within their districts and provinces. After 32 years of highly centralized control during the New Order period, national policymakers recognized that during the post-Soeharto period the central government would need to allow for a process of decentralization or as it is known in Indonesia, regional autonomy. This was necessary to ensure that decisions more closely reflected the aspirations of regional populations, to guarantee a more evenhanded distribution of resources, and, in the face of strident calls for selfgovernment, to maintain Indonesia’s integrity as a unified republic. Law 22/1999 on Regional Governance, issued in May 1999, defined the nation’s provinces and districts as ‘autonomous regions’; and the central government transferred far-reaching administrative authority to district governments, in particular. Law 25/1999 established a new system for fiscal balancing between the central and regional governments, which involved a far more equitable sharing of natural resource revenues than had theretofore occurred. Following the onset of decentralization in 1999, district governments gained enhanced powers to issue some licenses and permits in the forestry sector, most significantly the power to issue small scale concessions. While powers over spatial planning and the setting of forest boundaries remained the preserve of higher levels of government, district governments in forest-rich regions across Indonesia moved quickly to establish administrative control over timber production within their regions. Between 1999 and 2002, Bupatis issued large numbers of small-scale logging and forest conversion licenses, and district governments imposed new taxes and regulatory restrictions on HPH timber concessions operating within their boundaries. These measures generated substantial flows of regionally generated revenues, which had not been formally accessible to district governments prior to decentralization. The allocation of smallscale district timber permits also provided lucrative income-earning opportunities for regionally-based entrepreneurs, forest communities, and government officials. In this
122 Decentralization and Recentralization in Indonesia’s Forestry Sector way, the decentralization process moved towards a far more equitable sharing of the economic rents associated with timber production among local and regional stakeholders than occurred during the New Order period. Such benefits, however, have generally been concentrated in regions with rich forest resources; and the distribution of timber rents among stakeholders at the district level has often been dominated by local elites. The implementation of decentralization in Indonesia’s forestry sector has been a highly contested process, with the MoF and district governments engaged in an intense struggle over timber rents. From the outset of the decentralization process, the Ministry has taken steps to halt the allocation by district governments of timber and forest conversion permits within the Forest Estate. These efforts intensified in 2002 with the issuance of Regulation 34/2002, which effectively reconsolidated the Ministry’s administrative control over timber harvesting and most other significant aspects of forest management. Since then, the Ministry has issued numerous new IUPHHK concession licenses, most of which are intended to promote industrial plantation development. The Ministry has also taken steps to review timber and forest conversion licenses issued by Governors and Bupatis, and to revoke those that do not comply with central government regulations. In this way, the political and regulatory pendulum, which swung heavily in the direction of decentralization during 1999-2002, has now swung back decisively in the direction of recentralization. The sections that follow summarize many of the key issues and challenges related to the processes of decentralization and recentralization that have occurred in Indonesia’s forestry sector over the last several years, as discussed in the preceding chapters. This summary is followed by a brief list of policy options that government policymakers at all levels of Indonesia’s state apparatus may wish to consider in order to promote more equitable and sustainable outcomes. 7.2 Legal-Regulatory Contradictions and Lack of Coordination In many fundamental respects, Indonesia’s decentralization process was poorly planned and poorly implemented. In the early months following the introduction of Law 22/1999 and Law 25/1999 in May 1999, for instance, de facto decentralization proceeded much faster than de jure decentralization. In many cases, district governments took initiatives well in advance of the laws and implementing regulations that were supposed to provide the legal basis for their newly-expanded authority. Some district officials also assumed discretionary powers that were much wider than those given to them by the nation’s decentralization and regional autonomy laws. This was seen, for instance, in many of the perda issued to impose new types of district-level taxes and fees and the widespread allocation of small-scale logging permits by Bupatis, which often had only a tenuous legal basis. In part, the rapid pace of de facto decentralization can be attributed to the general euphoria for regional autonomy that spread across Indonesia in 1999 and 2000. This sentiment was particularly strong among stakeholders in regions with rich timber assets and other natural resources, most of whom had been forced to watch from the sidelines as the central government controlled exploitation of these resources for much
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National Library of Indonesia Catal
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iv 4.5 Forest Revenue Sharing 69 4.
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Preface Indonesia is currently ente
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Acknowledgements This study is base
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Abbreviations AAC ACIAR ADEKSI APBD
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IPHHBK IPHHK IPJL IPK IPKR IPKMA IP
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Glossary Adat, customary or traditi
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Forests and Decentralization in Ind
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10 Forests and Decentralization in
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Chapter 2 Forest Administration and
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20 Forest Administration and Forest
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32 Origins and Scope of Indonesia
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Chapter 4 Fiscal Balancing and the
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60 Fiscal Balancing and the Redistr
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Since the collapse of Soeharto’s
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