Decentralization of Forest Administration in Indonesia, Implications ...

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Origins and Scope of Indonesia’s Decentralization Laws
laws emphasize the decentralization of authority to the district and municipal levels,
rather than to the province.
In the early months of the post-Soeharto period, the national government issued
a series of regulations aimed at transferring some aspects of forest administration
to Indonesia’s provincial and district governments. 3 Perhaps most significantly, this
included the authority for district governments to issue small-scale timber extraction
and forest conversion permits. From a legal-regulatory perspective, however, these
initial steps towards decentralized forest administration proved to be short-lived. In
September 1999, the Habibie administration introduced Law 41/1999 on Forestry
which was structured, in important respects, to reaffirm the MoF’s dominant role
in administering the nation’s forests. 4 This was taken several steps further with the
issuance of Government Regulation 34/2002 – the principal implementing regulation
for Law 41/1999 – by the Megawati government in June 2002. Among other
things, Regulation 34/2002 has effectively recentralized regulatory control over the
harvesting, processing, and marketing of forest products, particularly timber.
This chapter traces the historical factors that set in motion Indonesia’s
decentralization process, and analyzes the political context within which the nation’s
decentralization laws were formulated. It examines in some detail Law 22/1999 on
Regional Governance and its main implementing code, Government Regulation
25/2000. It then discusses how administrative authority in the forestry sector has
effectively been recentralized with the enactment of Law 41/1999 and Regulation
34/2002. The chapter concludes with a discussion of the Megawati government’s
ratification of a revised law on regional autonomy, Law 32/2004, to promote a broader
recentralization process, at the end of the administration’s tenure in October 2004.
3.2 Momentum for Decentralization
The economic and political crises of 1997-1998 generated a new openness in
Indonesia’s policy arena, prompting frank discussion of problems deemed too sensitive
for public dialogue under the New Order regime. After student demonstrations in
Jakarta and other urban centers forced Soeharto to resign, the process of reformasi
at the national level focused on the formation of new political parties, the rewriting
of key laws and regulations, and the investigation of Soeharto family wealth. In the
‘regions’ (daerah), especially in natural resource-rich provinces outside Java, the
fervour for political transformation emphasised other issues.
In many parts of Indonesia, the New Order regime had left a legacy of bitterness
towards Jakarta and the Javanese-dominated bureaucracy. Local figures complained
that, as most decisions of any significance had been made in Jakarta, government
officials and business groups with influence at the center had become rich while
local communities had been deprived of their land and natural resources. District and
provincial actors wanted a greater role in running their own affairs, particularly with
respect to the administration of timber harvesting, mining, and other forms of natural
resource extraction within their jurisdictions. Coupled with this, they demanded that
a greater proportion of the profits generated from local natural resources stay within
the region (Cohen 1998). It was widely held that leaders representing local interests