Decentralization of Forest Administration in Indonesia, Implications ...

Ida Aju Pradnja Resosudarmo, Christopher Barr, Ahmad Dermawan, and John McCarthy 79
were being investigated by the District Attorney over their alleged mismanagement
of DAK-DR. This appears to have made the project leaders who replaced them
somewhat more cautious in the implementation of the rehabilitation projects. Indeed,
one of the districts above ‘failed’ to use up its entire 2002 allocation of DAK-DR by
the end of 2003; and the principal reason for this was because the project leader was
being extremely careful as a consequence of these investigations.
The formal mechanisms in place to ensure accountability in the use of the DAK-
DR and the implementation of the associated forest and land rehabilitation projects
does not necessarily affect the amount of DAK-DR flowing to the district. A senior
official in one district in Kalimantan interviewed in September 2004 emphasized
that the outcome of the project activities had, by then, not affected the continuity
of the DAK-DR annual allocation to the district. 30 Indeed since 2001, districts have
continued to receive DAK-DR allocations from the central government regardless of
the outcome of the DAK-DR funded rehabilitation projects. This suggests that there
is limited incentive for the districts to adhere to central government regulations or
guidelines as they carry out forest and land rehabilitation activities.
At least in a province in East Kalimantan, however, the provincial government
is not entirely turning a blind eye to project performance and the management of
DAK-DR on the part of district governments. In 2002, the province took steps to
improve the process through which DAK-DR are allocated and to increase the level
of supervision over how the funds are used. Specifically, the provincial government
introduced new criteria which tied the district allocation of DAK-DR to the district’s
prior performance in implementing forest and land rehabilitation projects, at least to
a limited degree. The calculation of DAK-DR allocations to districts/municipalities
within the province then became: projected revenues (48%); critical lands (20%);
degraded watershed (20%); the continuity of activities (10%); and performance
(2%). In addition, in 2003 a portion of the 40% of DAK-DR allocations for the
province was specifically earmarked for disbursement to the provincial government.
The justification for this allocation was that adequate financing is needed to enable
the provincial government to effectively carry out its coordination, control and
supervisory roles with respect to the implementation of district level rehabilitation
projects funded by the DAK-DR.
4.7 Forests as a Source of Regionally-Generated Revenues
Almost immediately after Law 25/1999 was issued in May 1999 provincial and
district governments began seeking to secure new sources of regionally-generated
revenues (commonly referred to as PAD), which they could obtain directly from
within their own jurisdictions. They did so both out of necessity and in response to
the new opportunities posed by Indonesia’s new framework for decentralization and
fiscal balancing.
On one hand the decentralization laws have required regional governments –
primarily at the district and municipality levels – to assume many of the administrative
and development functions that were previously held by the central government.
In principle, most of the added costs associated with these new expenditure needs