Decentralization of Forest Administration in Indonesia, Implications ...

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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