Legal Lessons

Legal Lessons

In In d o n e s ia , R a y ( 2 0 0 3 ) stated that c o m p lia n c e to th e la w h a s s h o w n a re la tiv e g o o d in tr e n d . T h e p r o b le m w a s th e quality o f h u m a n re s o u rc e s in th e le g is la tiv e a n d e x e c u tiv e m e m b e rs a i th e lo c a l lev eh. it can b e s e e n in th e ir le g a l p ro d u c ts s u c h a s lo c al re g u la tio n f o r n e w ta x in g t e t co n cern o n ly o n b o o s tin g ta x re v e n u e . C o n s e q u e n tly , m o s t lo c a l re g u la tio n s have been d e te rio ra tin g lo c a l e c o n o m ic d e v e lo p m e n t an d

d is c o u r a g in g th e b u s in e s s environm ent a t th e lo c a l le v e l.

W o llm a n n (2 0 0 2 ) s ta te d that G e rm a n y 's fe d e ra l a n d in te rg o v e rn m e n ta l s y s te m is

c h a r a c te r iz e d b y a w id e range o f re s p o n s ib ilitie s an d fu n c tio n s a n d also b y a s ig n ific a n t p o litic a l p r o file , o n e s h o u ld be m indful, h o w e v e r, th a t /it n e e d s to b e re m in d e d th a t the s c o p e o f a u to n o m y a n d action is o ften lim ite d a n d fe tte re d b y th e leg al p ro v is io n s an d fin a n c ia l c o n d itio n s s e t b y tte “ap p er” le v e ls o f g o v e rn m e n t “ fro m a b o v e ” . T h u s , as it w a s p e r c e p tiv e ly o b s e rv e d , the rem ark ab ly s tr o n g ro le w h ic h lo cal g o v e rn m e n t h a s in p o lic y im p le m e n ta tio n in countries lik e G e rm a n y a n d th e S c a n d in a v ia n c o u n trie s g o e s

h a n d in h a n d w ith “ n atio n al system s o f ru le , fin an ce a n d p u b lic a d m in is tra tio n (th a t) s ta n d a rd iz e m u c h o f w h a t local officials c a n d o an d h o w th e y can d o ”

S o c ia l a n d C u ltu ra l Lessons

A l t h o u g h s o c i a l s t r u c t u r e s and c u ltu r e a r e r e g u l a r l y m e n t i o n e d a s d e t e r m i n i n g

f a c t o r s f o r t h e s u c c e s s o f d e c e n tra liz a tio n p r o g r a m s , t h e l i t e r a t u r e r a r e l y p r o v i d e s

c o n c r e t e e x a m p l e s o f th is . G en d er is s u e s , c u l tu r a l d e v e l o p m e n t o r th e i m p o r t a n c e o f n e t w o r k s a n d p a tr o n - c lie n t b ased r e l a t i o n s h i p s in d e c e n t r a l i z a t i o n p r o c e s s e s a n d p r a c t i c e s a r e o f t e n n e g le c te d by th e l i t e r a t u r e o n d e c e n t r a l i z a t i o n . T h e s h o r t a g e o f l e s s o n s r e f l e c t s t h i s s t a t e o fa ffa irs .

Vol. 16, No. 2 December 2007 © Centre for Indonesian Accounting and Management Research Postgraduate Program. Brawijaya University

80 A C r i s is o r C r itic a l D e v e lo p m e n t

T h e d e c e n tr a liz a tio n o f p o litic a l a u th o rity m a y ta k e p la c e a cco rd in g to

p red eterm in ed

c o n te m p o r a r y

m o d e ls ,

but

m u st incorporate

lo ca l

in d ig e n o u s pattern s o f d e c is io n -m a k in g an d au th ority.

H a ijo n o ( 2 0 0 5 ) r e v e a le d t h a t d e c e n tr a liz a tio n p o l ic y in I n d o n e s ia s till n e e d s lo n g p r o c e s s . T h e d e c e n tr a liz a tio n c a n n o t le a d im p r o v e m e n t o f life q u a lity in th e lo ca l le v e l. S o m e o th e r p r o b l e m s r is e in s o m e r e g io n s s u c h a s d is r e g a r d in g o r ig in p e o p le a n d it te n d s f in a lly to , c r e a te n e w r e g i o n s

(pemekaran). S e v e r a l d is tr ic ts h a v e s tip u la te d th a t th e d is tr ic t head (bupati/w alikota) m ust be

a p e r s o n n o t o n ly b o r n in th a t d is tric t b u t

C o n c lu s io n s a n d r e c o m m e n d a t i o n s

D e s p i t e t h e n o t i o n t h a t d e c e n t r a l i z a t i o n i s a n e w t r e n d in g o v e r n a n c e , l o c a l

g o v e r n m e n t i t s e l f is a c t u a l l y n o t a n e w i d e a . I n f a c t , “ m a n y , i f n o t a l l , s o c i e t i e s in

A f r i c a , A s i a a n d L a t i n A m e r i c a h a v e , a t o n e t i m e o r a n o t h e r in t h e i r h i s t o r y , possessed strong traditions of local and regional governance through tribal or community self-help traditions. In many countries, these traditions have long been

s u p p r e s s e d , in p a r t a s a r e s u l t o f e x t e r n a l c o l o n i a l r u l e , a n d in p a r t a s a r e s u l t o f t h e highly centralized nature of many, if not most, post-colonial political regimes and governance systems” (United Nations 1996). In recent years the international

community, and specifically international donor agencies and NGOs, have been concerned with improving these governance systems. According to the United

Nations Development Program, good governance can be defined as “participatory, t r a n s p a r e n t a n d a c c o u n t a b l e . It is a l s o e f f e c t i v e a n d e q u i t a b l e . A n d it p r o m o t e s t h e

rule of law. Good governance ensures that political, social and economic priorities are based on broad consensus in society and that the voices of the poorest and the m o s t v u l n e r a b l e a r e h e a r d in d e c i s i o n - m a k i n g o v e r t h e a l l o c a t i o n o f d e v e l o p m e n t resources” (UNDP 1997).

D e c e n t r a l i z a t i o n is a p r o c e s s t h a t is c o n s i d e r e d t o i m p r o v e g o v e r n a n c e a n d is t h e r e f o r e b e i n g i m p l e m e n t e d in m a n y c o u n t r i e s . D e c e n t r a l i z a t i o n is a p r o c e s s that involves both risks and opportunities. The opportunities include greater popular participation; the ability to design social services to meet specific community needs; the capacity to tailor solutions for local problems to local

Vol. 16, No. 2 December 2007 © Centre for Indonesian Accounting and Management Research

Postgraduate Program, Brawijaya University

The International Journal o f A cco u n tin g an d B usiness S o ciety

conditions; the opportunity for p o lic y i n n o v a t i o n s a n d th e a b i l i t y to “ s c a l e u p ” successes; the ability to

provide social services more efficiently; and the opportunity for increased

accountability t o t h e p e o p l e . D e c e n t r a l i z a t i o n is n o t w i t h o u t s i g n i f i c a n t r i s k s th a t include the possibility that inter-regional inequalities

may be wider, the risk of capture

b y lo c a l e l i t e s , a n d t h e p o s s i b i l i t y o f d i s p a r i t i e s between

governments and the r e s p o n s i b i l i t i e s t h e s e g o v e rn m e n ts m u s t f u l f i l l . F o l l o w i n g w ill b e c o n c l u d e d s o m e l e s s o n s c a n b e l e a r n t m e n tio n e d ab o v e :

the resources

available

to

sub-national