GOLD Report I - UCLG

ASIA-PACIFIC56United Cities and Local GovernmentsWithin theAsia-Pacific region,there has been awide rangeof driversof decentralizationand of obstacles tosuch changes, butdecentralizationhas generally beendriven from the topIndonesia provides the most dramaticexample of major legislative reform forenhanced local government autonomy. The‘big bang’ decentralization took place on thebasis of Regional Government Law 22 of1999, which eliminated the hierarchical relationshipbetween provincial and municipalgovernments. This significantly shifted resourcesand responsibilities from the centraland provincial levels to urban (kotamadya)and rural (kabupaten) municipalities.Under Regional Autonomy Law 32 of 2004these district governments were assigned 11obligatory functions while provincial governmentswere given a secondary role. In linewith these expanded responsibilities a majorshift of staff resources (about 2.5 million civilservants, of whom about three-quarterswere teachers or health workers) took placefrom the central and provincial governmentsto the districts during a short transitionperiod (2000-2001). Law 33 on Fiscal Balancebetween Central and Regional Governmentin 1999 (later amended by Law 25 of 2004)provided a new intergovernmental fiscalframework for general allocation grants (DAU),which represent block grants to finance theadministrative and other costs associatedwith newly decentralized functions (ratherthan the earmarked grants of the past).Under the previous centralized system,social and public service indicators of somemajor resource-producing regions wereweak, and to redress this imbalance, theseregions were now provided with a share ofthe revenues generated. Local governmentswere also granted the power to levy theirown taxes supported by regulations on thetype of taxes and service charges permissibleand maximum tariffs (ADB 2006b).However, to date the legal framework anddivision of responsibilities among levels ofgovernment remains unclear.II.3. Evolution of Local GovernmentStructuresA great variety of historical experience hasinfluenced the evolution of local governmentstructures in the Asia-Pacific region, rangingfrom the intermarriage of longstanding localtraditions of self-governance to organizationalforms imported through the colonialexperience and Marxist-Leninism. Traditionsof community or grassroots self-governancehave long existed in the region, though notnecessarily in the more sophisticated organizationalforms of local government thatexist today. For example, in Korea, localgovernment was founded on the basis ofinformal, voluntary organizations for thepurpose of promoting mutual assistanceamong citizens as well as the strengtheningof community ethics (Sproats 2003). InJapan traditional customary institutions arestill functioning today in the form of anextensive network of voluntary neighborhoodassociations that in practice operate assubcontractors of local government. In thosecountries that came under foreign rule,these old systems underwent a process ofcolonization that subsequently shaped theforms of local administration that are in operationtoday. However, national independenceencouraged countries such as India and thePhilippines to restore their traditional systemsof governance, respectively known aspanchayats and barangays, and to integratethem into the formal system of localgovernment. During the immediate post-independenceperiod in many countries, centralizationwas considered to be the mostefficient way of achieving the goals of rebuildingnational identity and attaining rapideconomic growth. Notwithstanding, most ofthese countries subsequently initiated localgovernment reforms as part of wider processesof improving public sector efficiency anddemocratization (Sproats 2003).Within the Asia-Pacific region, there hasbeen a wide range of drivers of decentralizationand of obstacles to such changes. Insome parts of the world, notably in LatinAmerica during the 1980s and 1990s and inCentral and Eastern Europe following thecollapse of the Soviet Union, there was awidespread demand from citizens for localdemocracy and for greater citizen controlover local affairs. This has not generallybeen the case in Asia, where decentralizationhas more often been driven from the