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Indonesia
>> Regional Overview >> Indonesia Overview ACTIVITY DATA SHEET
PROGRAM: Indonesia
TITLE AND NUMBER: Decentralized and Participatory Local Government,* 497-010
STATUS: Continuing
PLANNED FY 2001 OBLIGATION AND FUNDING SOURCE: $9,500,000 DA, $4,000,000 ESF
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $9,000,000 DA; $4,000,000 ESF
INITIAL OBLIGATION: FY 1996 ESTIMATED COMPLETION DATE: FY 2004Summary: Decentralization is dramatically changing governance and inter-government relations in Indonesia. On January 1, 2001, Indonesia formally devolved extensive authorities to local governments, moving from one of the most centralized to one of the most decentralized countries in the world. Decentralization is essential to maintaining Indonesia's unity by re-shaping political and fiscal relations across the archipelago. While the implementation regulations and policies governing decentralization are still being worked out, the nearly 400 local governments throughout Indonesia now have far more autonomy and control of local decisions than at any other time. However, local capacity to manage services and resources is generally inadequate, local governments are almost wholly dependent on the center for resources, and local civil society organizations and citizens themselves have little experience interacting effectively with their local administrations. Laws, regulations, and operating practices of local officials are rarely transparent or accountability.
This strategic objective seeks to strengthen citizen participation in and effective management of local governments within a policy environment that enables successful decentralization. USAID will work closely with local governments, key central government ministries, and independent associations of local governments. Stronger and more capable local governments, sustained by independent networks that foster innovation and improved practices, are critical to the development of local democracy and to improved delivery of all services.
Key Results: Four intermediate results are critical to achieving this objective: 1) appropriate environment established to enable effective local government; 2) local government capacity strengthened to deliver effective services; 3) participation increased in local government decision- making; and 4) associations of local governments and officials established as effective advocates.
Performance and Prospects: USAID intends to obligate a total of $13.5 million ($9.5 million in DA and $4 million in ESF) in FY 2001 to strengthen local governments in the context of decentralization by improving fiscal and administrative management skills and increasing citizen participation in local decision-making. Significant progress has been made in decentralization over the past year. The basic laws enacted in 1999 have now gone into effect. Numerous regulations have been issued that clarify the roles of the different levels of government and provide measures to enhance accountability and address local corruption. Many local governments are already demonstrating willingness to assume local leadership, analyzing their new roles and responsibilities and identifying areas where the local government does not believe it has the fiscal or technical capacity to manage. Throughout Indonesia, central government staff who work at the local level are being merged into local government structures.
USAID technical experts, working with the Government of Indonesia's Ministry of Finance and the Ministry of Home Affairs and Regional Autonomy, played a major role in the development of the basic laws and regulations needed for fiscal and administrative decentralization. USAID advisors will continue to strengthen the policy and legal environment, in a manner that enables local governments to act responsibly. Assistance will focus on clarifying and improving local authority over revenue and ensuring that new regulations clarify roles and responsibilities and enable, rather than constrain, local governments to address local problems effectively.
In FY 2001, USAID plans to obligate a total of $2.5 million (DA and ESF funds) through various buy-ins, contracts, and grants to assist the Government of Indonesia to build a system to monitor and evaluate decentralization, and to assist associations of local governments to develop innovative techniques to improve local-government management.
As the policy environment is further defined, USAID will focus on directly supporting local governments to develop participatory budget and financial management practices, including helping local governments switch from centrally-driven investment decision-making to a performance oriented budget process that associates funding with community priorities. Opening the budget and financial management process to public scrutiny is critical to addressing the issue of local corruption. USAID assistance also will help local governments prepare medium-term investment plans and reorganize to ensure the delivery of mandatory services, such as water.
In FY 2001, USAID plans to provide a total of $1 million (DA and ESF funds) for the Local Government Water Services project under a contract with the Urban Institute. This activity focuses on assisting local governments to increase citizen access to water by putting water services on a rational economic basis.
USAID will continue to support three independent associations of local governments, representing cities, provinces, and "kabupaten," the equivalent of counties. Enhancing the management and advocacy capabilities of these associations enables them to more effectively lobby for better local government, deliver a broad range of capacity-building services to members, and serve as sources of information and expertise for local governments. Such services include best practices, guidelines on budgeting and planning, model local by-laws, and analysis of local revenue opportunities. Effective associations are critical to sustaining decentralization and the development of participatory, democratic local governments. USAID's Resource Cities program is partnering twelve Indonesian local governments with twelve local governments in the U.S., including technical staff exchanges between cities.
In FY 2001, USAID plans to provide an additional $5 million (DA and ESF funds) for the PERFORM project under contract with Research Triangle Institute. This activity will support improvement of the policy environment for local government and assists local governments to build capacity to undertake participatory medium-term planning.
Also in FY 2001, USAID plans to provide an additional $5 million (DA and ESF funds) to the Building Institutions of Good Governance Project under contract with the International City/County Management Association (ICMA). This project will build the capacity of Indonesian local governments to execute budget and financial management functions, and will strengthen the new, independent associations of local governments.
Possible Adjustments to Plans: Increased demand by local governments for direct capacity-building technical assistance, a decrease in the political will to decentralize, or changes in the security situation in Indonesia may warrant adjustments to the program.
Other Donor Programs: USAID is a principal donor and coordinates closely with other donors on decentralization assistance, including the World Bank, the Asian Development Bank (ADB), the United Nations Development Program, and bilateral donors such as Germany. USAID's recognized comparative advantages are in local government finance, service delivery, urban management practices, association development, and local government investment planning. USAID assistance to local governments on investment planning will help leverage planned lending programs of the World Bank and ADB, both of which will support local government development by linking donor investment to the priorities established by local governments.
Principal Contractors, Grantees, or Agencies: The principal contractor for fiscal and administrative decentralization and medium-term investment planning is the Research Triangle Institute. The Urban Institute manages the local government water services program. The principal contractor for budget and financial management and organizational restructuring assistance to local governments is the ICMA.
* Previously reported as "Urban Environment and Energy Management Strengthened."
FY 2002 Performance Table
Indonesia: 497-010
Performance Measures:
Indicator FY97 (Actual) FY98 (Actual) FY99 (Actual) FY00 (Actual) FY00 (Plan) FY01 (Plan) FY02 (Plan) Indicator 1: Composite matrix value demonstrating progress made by GOI in creating a policy framework for local governments to be effective NA NA 20 30 NA 40 50 Indicator 2: : Number of local governments using improved management tools and practices NA NA 0 0 0 12 24 Indicator 3: Composite score of progress made by associations on demonstrating improved management services (based on ICMA's Municipal Association Viability Milestone Index model) NA NA 0 0 0 25 50 Indicator 4: Number of local governments using participatory medium-term planning NA NA 0 9 NA 21 39 Indicator Information:
Indicator Level (S) or (IR) Unit of Measure Source Indicator Description Indicator 1: IR Policy Reform Index (Point score 1 to 100) Provided by Monitoring, Evaluation and Management Information team in consultation with DLG team contractors, and counterparts Four distinct categories will be monitored to indicate progress at the policy level: administrative decentralization, fiscal decentralization, streamlined central government, and transparency in decentralization process. Along each category, five levels of progress have been determined which indicate stages of decentralization ranging from one (centralized) to five (decentralized). Five points are assigned to the accomplishment of each stage; incremental points may be awarded. The baseline value is 20; the goal is 100. Indicator 2: IR Number of local governments Provide by Core Management and Budget Skills Activity (ICMA); Monitoring, Evaluation and Management Information team The number of local governments in targeted areas which have incorporated one or more of the following such practices: capital and operating budgets are separate and distinct, performance-based budgeting practices are utilized, zero-based budgeting is utilized, local fiscal policies are developed through the budget process, and cost-recovery is applied to all city services and investment. Indicator 3: IR Association viability index Provide by Local Government Support and Partnership Program Activity (ICMA). The index value from ICMA's Municipal Association Viability Milestone Index model will be applied to each of the associations with which USAID is working. A numerical value will be assigned to each, based on an assessment completed by ICMA, and the average value of all associations will serve as the value for this indicator. Indicator 4: S Number of local governments Provided by the Performance-Oriented Regional Management (PERFORM) project (RTI); Monitoring, Evaluation and Management Information team; local government associations The number of local governments in which the process for developing and approving medium-term plans (2-8 years) include one or more of the following participatory aspects: budget is made available to public in written and/or electronic form; public hearings are conducted on planning and budgeting issues; city council includes citizen-at-large position; feedback is routinely provided to local officials by citizens on local matters; records of official meetings on city plan and budget are available to public. U.S. Financing
(In thousands of dollars)
Obligations Expenditures Unliquidated Through September 30, 1999 48,704 DA 35,286 DA 13,418 DA 0 CSD 0 CSD 0 CSD 0 ESF 0 ESF 0 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA Fiscal Year 2000 9,700 DA 11,668 DA 0 CSD 0 CSD 0 ESF 0 ESF 0 SEED 0 SEED 0 FSA 0 FSA 0 DFA 0 DFA Through September 30, 2000 58,404 DA 46,954 DA 11,450 DA 0 CSD 0 CSD 0 CSD 0 ESF 0 ESF 0 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA Prior Year Unobligated Funds 0 DA 0 CSD 0 ESF 0 SEED 0 FSA 0 DFA Planned Fiscal Year 2001 NOA 9,500 DA 0 CSD 4,000 ESF 0 SEED 0 FSA 0 DFA Total Planned Fiscal Year 2001 9,500 DA 0 CSD 4,000 ESF 0 SEED 0 FSA 0 DFA Future Obligations Est. Total Cost Proposed Fiscal Year 2002 NOA 9,000 DA 19,504 DA 96,408 DA 0 CSD 0 CSD 0 CSD 4,000 ESF 9,500 ESF 17,500 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA
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Last Updated on: May 29, 2002 |
