Is decentralisation shifting corruption to local level in Indonesia?

The shift from ‘central corruption’ towards ‘local corruption’ has been enormously discussed since the decentralisation has been initiated during the Habibie administration.

Since then, we are witnessing the emergence of ‘raja kecil’ (a little king) to quote the corruption practices done by the local officials.

In principle, the essence of a decentralised government system is bringing the government closer to the people. By doing so, this would make the process of identification and the supply of public services easier.

Are these phenomena in Indonesia reflected as euphoria of freedom obtaining from the new order regime?

It is obvious that for some people concerned that there was lack of law enforcement in the former law of regional autonomy (Law 25 of 1999). The law has mandated powers to local governments whilst the power to monitor the mandated authorities was blur.

Some embezzlements committed by former governors, mayors, or even members of legislative members in some regions have reminded us of how these ‘new’ powers are fragile.

The Committee Corruption Eradication reported that corruption practices have been done by DPRD and executive in 49 regions since the reformation era. (Tempo interaktif /2 March 2006)

One may ask what might be the cause and to what extent this corruption practices have been done in local levels?

I believe it is because of a considerable amount of money transferred to local government has become the roots of the problem. Such allegation might work well since there was at about 60% increase of money allocated to local government during 2001 to 2006 in term of intergovernmental transfers.

Having had lack of well-prepared local officials, particularly at the lower line, then the embezzlement’s practise becomes unavoidable.

In principle, the provision of public services will fringe the willingness to pay from the people. This has been believed as the essential means of decentralisation, that is, a commitment between local government and the people.

Local governments need money to finance the budget, whereas the people need provision of services from local government due to the merits of the goods or services. When the two have mutual understanding, this would ideally lead to an effective provision of goods or services.

However, power tends to corrupt.

Corruption could take place anywhere and could be committed by anyone. It could occur in government institution, parliament, and business centre, even in school or parking lot.

Olken, a junior fellow at Harvard Society of Fellows, conducted a study on decentralization in Indonesia. The study suggests that grassroots monitoring in the missing expenditures in over 600 village road projects might be prone to capture by local elites. Thus, the study estimates that on average 28% of the fund for road village projects went missing, purportedly because the road builders skimped on materials.

This kind of practices is clearly not something unique in developing world.

If we look at the experience in Tanzania, one of the poorest countries in the world and where their economy depends heavily on agriculture, it is observed that fiscal administrations are highly corrupt during 1996-2003.

Such corruption practise was partly due to the high degree of discretionary fiscal power held by local officials and poor monitoring from the higher level of government.

The forms of fraud include the types of taxes, methods of tax collection, and the embezzlement of revenues by tax collectors and administrators. From this standpoint, giving a greater authority on taxing power evidently poses a problem in Tanzania. This condition is worsened by inadequate control from central government.

Having considered this, giving greater discretion to lower level of government is purportedly given a greater opportunity of corruption at the local level.

In balance, there are also studies which have revealed a negative correlation between decentralisation and the level of corruption. One study mentioned that decentralisation will support greater accountability in the public sector, and reduce corruption. The other found a significantly positive effect of expenditure decentralisation on per capita infrastructure deliveries.

From these studies, I can drop the line that decentralisation has been followed by a shift of corruption from the central level to local level.

The captured of revenue resources by local elites has influenced political accountability of the country, both by the local executives and legislatives.

Embezzlement of taxpayers’ money has been allegedly occurred in many countries. Some studies in relation to this have been revealed the same notion. In addition, greater degree of local discretion towards revenue-raising power in some cases has caused fraud in local level.

This particular case is worsened by either the absence or lesser monitoring from central government.

Having said this, it is substantially difficult to eliminate corruption from elsewhere in the world. A democratic decentralised system itself cannot guarantee that the provision of goods or services would be more effective and efficient.

What matters are the needs of consistency and sustainability of political will throughout the countries. Hence, whoever provides the merit goods or services, it requires a political back up and monitoring from the people.

Political back up and monitoring includes commitment in central-local relations as well as the empowerment of local democracy