Inter-regional cooperation in Indonesia : status, challenges, and ways forward

 67591 Inter-Regional Cooperation in Indonesia Status, Challenges, and Ways Forward Inter-Regional Cooperation November 2011             Inter-Regional Cooperation In Indonesia Status, Challenges, and Ways Forward     Inter-Regional Cooperation November 2011 DECENTRALIZATION SUPPORT FACILITY Indonesia Stock Exchange Building, Tower I, 9th Floor Jalan Jenderal Sudirman Kav. 52-53 Jakarta 12190 Phone: (+6221) 5299 3199 Fax: (+6221) 5299 3299 Website: www.dsfindonesia.org The Decentralization Support Facility (DSF) is a government-led multi-donor trust fund whose principal purpose is to support the decentralization agenda of the Government of Indonesia. The DSF attempts to fulfill three principal roles, which are designed to help the Government of Indonesia to: (i) improve the harmonization, alignment, and effectiveness of development assistance; (ii) inform and thereby improve policy development and implementation; and (iii) build governance capacity, particularly at sub-national levels. The institutional membership of DSF comprises the National Development Planning Agency (BAPPENAS), the Ministry of Finance, the Ministry of Home Affairs, and nine donors (ADB, AusAID, CIDA, DfID, Government of Germany, Government of the Netherlands, UNDP, USAID, and the World Bank). The principal financial donor to DSF is DFID, with AusAID and CIDA also having made financial contributions. Cover photos copyright respective owners. All rights reserved. Inter-Regional Cooperation in Indonesia: Status, Challenges, and Ways Forward is a product of consultants of the Decentralization Support Facility. The findings, interpretation, and conclusions expressed herein do not necessarily represent the views of the Decentralization Support Facility or its donors. Cover design by Harityas Wiyoga    INTER-REGIONAL COOPERATION IN INDONESIA INTER-REGIONAL COOPERATION IN INDONESIA Status, Challenges, and Ways Forward1 November 2011 1 This paper was prepared by Makhdonal Anwar for the Decentralization Support Facility (DSF). The views expressed in this paper are solely those of its author does not purport to represent the views of the DSF.  INTER-REGIONAL COOPERATION IN INDONESIA INTER-REGIONAL COOPERATION IN INDONESIA List of Contents……………………………………………………………………………………………………..………….....i Executive Summary…………………………………………………………………………………………………….…..….ii List of Abbreviations and Acronyms……………………………………………………….…………………………..iii 1. Introduction …………..…..………………………...…………………………………………………………………… 1 a. Definition of IRC …….……………………...……………………………………………………………………… 1 b. Overview of IRC …….…………………………...…………………………………………………………………. 1 c. Paper Objective …………………………………………………………………………………………………….. 2 2. International Experience …………………………………………………………………………………………. 2 a. Germany ……………………………………………...……………………………………………………………….. 2 - Examples of IRC Activities in Germany …………………………………………………………….. 3 b. Austria…………………………………………………..…………………………………………………………….. 4 - Examples of IRC Activities in Austria ………………………………………………………………. 4 3. Inter-Regional Cooperation in Indonesia ………………………………………………………………... 5 a. IRC Pre-Regional Autonomy...………………………...………………………………………………………. 5 b. IRC Post-Regional Autonomy…………...….…………………………………………………………………. 6 - Examples of IRC Post-Regional Autonomy ……………………………………………………….. 8 - The Role of the Central Government……………………………………………………………..….. 11 - The Role of Non-Governmental Stakeholders ………………………………………….……….. 11 - Regulations on IRC ………………..……………………………………………………………….………...11 - International Donors’ Support for IRC………..…………………………………………………….. 11 4. Key Issues …………………………………………………………………………………………………………………. 15 a. Local Level …………………………………………………………………………………………………...………. 15 b. Central Level ……………………………………………………………………………………………………...….17 5. Direction of IRC Development……..……………………………………………………………………………. 19 i  INTER-REGIONAL COOPERATION IN INDONESIA EXECUTIVE SUMMARY Inter-regional cooperation (IRC) is an instrument for regional development. It is a form of collaboration between several regions aimed at achieving specific and collectively agreed outcomes. Although IRC has yet to be widely adopted in Indonesia, a few examples exist in central Java that can demonstrate the benefits of IRC to regional stakeholders. The Kartamantul Joint Secretariat in the Yogyakarta region and involves three local governments is a good example, with programs to improve waste management, drinking water distribution, road, drainage, and transport management. The Barlingmascakeb Regional Management forum works with farmers’ groups and has increased farmers’ incomes by marketing agricultural products collectively. Subosukawonosraten in Central Java has successfully collaborated with tourism and furniture producer associations to increase revenues. Since 2005, many other IRC initiatives have been set up with the support of government agencies (e.g. Ministry for the Development of Disadvantaged Regions - KPDT) and non-governmental organizations (e.g. LEKAD and GIZ). However, implementing IRC in Indonesia has proved to be challenging. While regional autonomy presented new opportunities for regions to cooperate, a lack of capacity and understanding of the IRC concept has limited meaningful cooperation. The concept is not well understood and this has led to scattershot implementation with less than satisfactory results. The rapid rotation of local government officials involved in IRC has, in particular, been an obstacle to sustainable IRC. Poor comprehension of IRC is evident not only in the regions, but also at the central level. Participation from community and business groups has not been sufficient. The central government’s role in IRC – as represented by BAPPENAS, MOHA, KPDT, and also sector ministries – is important but poorly coordinated, and this has inhibited the uptake of IRC. MOHA regulations are inconsistent and, at times hinder rather than help. KPDT has sought to support less developed regions through the establishment of a Regional Management network (a particular type of IRC) but little progress has been made. Agencies at the central level need to ensure that IRC policies and regulations are coordinated and that the concept of IRC and the steps needed to implement it successfully are better understood by regional stakeholders. This paper provides an overview of the development of IRC in Indonesia and its current status. Lessons from experiences in Europe (Germany and Austria) are drawn upon, and problems in implementation at both national and regional levels are identified. Finally, an assessment is made on aspects that need to be addressed to help ensure that IRC reaches its potential to improve service delivery and develop regions’ economies. ii  INTER-REGIONAL COOPERATION IN INDONESIA LIST OF ABBREVIATIONS AND ACRONYMS APBD Regional government budget (Anggaran Pendapatan dan Belanja Daerah) APBN National government budget (Anggaran Pendapatan dan Belanja Nasional) BAPPEDA Regional planning agency (Badan Perencanaan Pembangunan Daerah BAPPENAS National planning agency (Badan Perencanaan Pembangunan Nasional) Bakorwil Regional Coordination Agency (Badan Koordinasi Wilayah) Barlingmascakeb IRC initiative comprising Banjarnegara, Purbalingga, Banyumas, Cilacap and Kebumen districts BKSP Development Cooperation Agency (Badan Kerjasama Pembangunan) DIY Yogyakarta Special Region (Daerah Istimewa Yogyakarta) DPR House of Representatives DSF Decentralization Support Facility GIZ German International Cooperation INTERREG EU inter-regional cooperation program IRC Inter-Regional Cooperation Jabodetabekjur Metropolitan of Jakarta, Bogor Depok, Tangerang, Bekasi and Cianjur Kartamantul IRC initiative comprising Yogyakarta, Sleman and Bantul districts (Java) KPDT Ministry for the Development of Disadvantaged Regions LEKAD Organization for Empowerment and Development of Inter-Regional Cooperation (Lembaga Pengembangan dan Pemberdayaan Kerjasama antar Daerah) MOHA Ministry of Home Affairs MSME Ministry of Micro, Small and Medium Enterprises P3KT Integrated Urban Infrastructure Development Program (Program Pengembangan Prasarana Kota Terpadu) RM Regional Management RPJMD Regional Medium Term Development Plan RPKD Regional Development Work Plan (Rencana Kerja Pembangunan Daerah) SDC Swiss Development Cooperation Sekber Joint Secretariat (Sekretariat Bersama) SKPD Regional government working unit (Satuan Kerja Perangkat Daerah) SME Small and medium-sized enterprises Subosukawonosraten IRC initiative comprising Surakarta, Boyolali, Sukoharjo, Karanganyar, Wonogiri, Sragen and Klaten (Central Java) UNDP United Nations Development Program UNDIP University of Diponegoro UNSOED University of Jenderal Soedirman USAID United States Agency for International Development iii  INTER-REGIONAL COOPERATION IN INDONESIA 1. INTRODUCTION a. Definition of IRC IRC is a non-structural regional development platform. IRC is a form of collaboration between several regions aimed at achieving specific and collectively agreed outcomes. Internationally, IRC is known as “intergovernmental management