Decentralization in Indonesia: The Possible - RAND Corporation

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Preliminary draft – please do not quote without permission

Decentralization in Indonesia: The Possible Impact on Education (Schooling) and Human Resource Development for Local Regions Akhmad Bayhaqi 1. Southeast Asian Studies Programme National University of Singapore 2. Lembaga Penyelidikan Ekonomi dan Masyarakat Fakultas Ekonomi Universitas Indonesia [email protected] or [email protected]

Paper presented at The 2nd International Conference on Indonesia: Decentralization and Structural Reformation, Faculty of Social and Political Sciences, Diponegoro University, Semarang, July 7-8th,2004. The author is indebted to the Lembaga Penyelidikan Ekonomi dan Masyarakat – Fakultas Ekonomi Universitas Indonesia (LPEM-FEUI) for providing financial support to attend the conference.

Preliminary draft – please do not quote without permission

Decentralization in Indonesia: The Possible Impact on Education (Schooling) and Human Resource Development for Local Regions Decentralization in Indonesia that started in 1999 through fiscal decentralization has brought about various impact to the local and central government relationship. In terms of financing, the local government with rich natural-resources seem to have little objection for the fiscal decentralization arrangement, since their budget allocation would increase in absolute or relative term. However for local government with limited tax base (usually in the rural areas) and only small amount of natural resource available, seems to face difficulties in coping with decentralization. In the field of education, since decentralization, education will be under the responsible of Local Government, the burden of local government now is being add by the obligation to finance educational expenditures. For example, teacher’s salary would be included into the local government budget, previously handled by the central government. This paper will try to explore the impact of decentralization on the education sector in local regions and to further explore the likely impact on human resource development in the local level.

Introduction The regional decentralization started in 1999 in Indonesia occurred in the background of political and economical instability. The background of the released of Law no 22 and 25/1999 is important in understanding the context of the decentralization process. In theory, it is stated that ‘good’ decentralization process should be timely and sequenced properly1, the policy sequencing is important to make decentralization ‘work’ or effective. The tern ‘good’ and ‘workable’ decentralization refers to the ideas and goals of decentralization and the respective laws or policies to implement them. Many literatures have stated the ideal goals or objectives of decentralization. To quote one of them, the main goal of decentralization is to make government performs better, especially in the level of regional government. The main goal is to make government that is more honest, efficient, and responsive at providing basic public services to their citizens2. It assumes that the structure of government would determine the quality of governance.3 1

Bahl (2003) mention that an ideal procedure would begin with (1) a more or less clear statement of goals and objectives, (2) a substantial analytic work to evaluate how and why the present system doesn’t adequately meet the goals and objectives, (3) a written document (sometimes called a “white paper”) setting out a plan or strategy for decentralization, (4) the legislation to restructure government relationships, and (5) the implementing regulations. These steps are merely a text-book framework of standard policy making framework. 2 It is argued that decentralization can increase the efficiency and responsiveness of government (Oates 1972). According to this argument, devolving resource allocation decisions to locally elected leaders can improve the match between the mix of services produced by the public sector and the preferences of the local population. 3 Treisman (2000).

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Preliminary draft – please do not quote without permission Bahl (2003) mention several key characteristics can be used to identify countries that are likely to decentralize, which are4: 1. Geographically, they tend to be large in population as well as in land area; and they tend to be diverse in terms of culture and religion. 2. Countries that decentralize also tend to be relatively wealthy: the higher the income, the more likely a country is to decentralize. 3. A country that faces a substantial risk of civil unrest (or, alternatively, risk of war with its neighbors) will not decentralize so readily. It must be remembered though, that as we speak of ‘government’, it refers to three tiers of government in the Indonesian context, the central, the provincial and the local (kabupaten) government. As such, decentralization actually could bring different impacts to different tiers of government and society. Decentralization, on the other hand, could also be referred to many concepts. Bird (1993: 208) described decentralization as “whatever the person using the term wants to mean”5. The Law No 22/1999 and 25/1999 in Indonesia, divide decentralization into two categories, Law 22 concerns administrative decentralization, while Law 25 concerns financial administration. In terms of financing, the local government with rich natural-resources seem to have little objection for the fiscal decentralization arrangement, since their budget allocation would increase in absolute or relative term. However for local government with limited tax base (usually in the rural areas) and only small amount of natural resource available, seems to face difficulties in coping with decentralization. In the field of education or schooling, since decentralization, education will be under the responsible of Local Government, the burden of local government now is being add by the obligation to finance educational expenditures. For example, teacher’s salary would be included into the local government budget, previously handled by the central government. This paper will try to explore the impact of decentralization on the education sector in local regions and to further explore the likely impact on human resource development in the local level. 2. Decentralization in Indonesia: Good or Bad? There are many evidences that are contradictory in assessing the effect of decentralization. In theory, decentralization should bring good for the people, and also to the government. By bringing the government closer to the people, the government could be ‘forced’ to be more responsive, accountable, competitive in meetings people demand and in utilizing the people’s fund collected through taxes. 6 4

Bahl (2001). In Osoro (2003). 6 Because local officials have better knowledge of local conditions and are more accessible to their constituents, they have the means and the incentive to be responsive. Decentralization, according to this argument, may also improve the management of public services since, through sheer proximity, local officials can be held more accountable for their performance (Ostrom, Schroeder, and Wynne 1993). 5

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Preliminary draft – please do not quote without permission On the other hand, decentralization could bring coordination, disintegration, and equity failures and problems.7 Decentralization even could lead to more corruption as additional rules and regulations set at the local government could increase the costs of doing business and also as the elusiveness of responsibilities among different levels of government could reduced accountability.8 It is obvious that the final result of decentralization would be highly dependant on the way decentralization was structured and planned9, and the way it was implemented by the government and the way it is perceived by the people. The outcome of decentralization is highly dependent on the political settings in which it is implemented. Successful implementation of decentralization is mostly a function of the existing institutions. Institutional development aimed at better governance, better implementation for fiscal decentralization and other policies, will take years if not decades, to complete.10 To add more complexity to the matter, such institutions cannot be imported and must be built domestically.11 To partially conclude, what are crucial in decentralization are two things. It is the importance of accountability: the need to clearly differentiate who is responsible for what. But accountability is not enough. Those who are accountable must also have the needed authority to deliver results. This means not only the legal authority to make decisions, but also the financial and human resources to carry them out. Indonesia has a wide variety of religions, ethnic groups and languages. Decentralization had often been considered as a means of governing this diversity in Indonesia. The next section will try to describe the nature of policy environment in Indonesia and the role of the state in Indonesia’s development experience. 2.1. The Policy Actors and Environment Public Policies are not made in a vacuum, it is made in some sort of policy subsystems consisting of actors dealing with a public problems. How some policy is actually chosen and implemented is a complicated process involving many actors, in which some of them have more roles to play while others are only marginally involved. The 7

There are downside risks to decentralization. First, of course, is the risk that service delivery could decline. Granting political autonomy to local governments does not guarantee an improvement in public services. There is, to start with, a risk of capture by local political elites. Transferring decision-making power from central government administrators to local elites may worsen the quality of services, at least for the majority of constituents. Questions have also been raised about the technical capabilities of local government staff. 8 While the evidence to date does not point definitively in either direction, it is clear that there has been an increase in the variance of public service performance. Centralized ministries were capable of delivering a fairly standardized level of services nationwide. Decentralization has improved services in some jurisdictions and worsened it in others. 9 Concern with these risks has prompted some Latin American and Caribbean countries to favor slow, incremental, or partial decentralization. This has taken the form of micromonitored earmarking (as for example, in the Mexican approach to sector decentralization or the Colombian government’s requirement that provincial and local governments be “certified” before assuming responsibility for education or health). 10 Ginting and Ananda (….). 11 Osoro (2003).

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Preliminary draft – please do not quote without permission relationships between these actors in policy making arena largely depend on their institutional basis and setting, their interests and efforts. This policy arena, or sometimes refer to as ‘policy subsystems’ are forums where actors discuss policy issues, persuade and bargain in pursuit of their interests; and during the course of their interaction with the other actors, they often give up or modify their objectives in return for concessions from other members of the subsystem. Howlett describes the actors and institutions in the policy process as follows. As figure 1 suggest, the policy process is a complicated and non-linear in nature. Many actors and various issues are involved in the policy making process. Sutton (1999) provides a more detailed description of the policy process in Figure 2. Figure 1 Actors and Institutions in the Policy Process

Source: Howlett, M. (1995).

Figure 2. Interests in the policy formation process

Source: Sutton (1999) from Keeley (1997 )adapted from Meier (1991).

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Preliminary draft – please do not quote without permission In Indonesian context, we could spells out the three most important policy actors that have a large say in how the policies were shaped. Firstly of course, is the President. The Presidential system in Indonesia has provided the President with a large political resources that determine the final outcome of the policy process. The executive branch in Indonesia, especially the president, monopolized power, leading to arbitrary conduct of politics. The second is the policy elites. By policy elites we refer to the ministers or technocrats that were involved in designing the policy structures and alternatives. The third actor is the so-called indigenous, or the public at large. However, since it would be difficult to capture and to determine the cohesive position of the general public, we would instead use the middle-class to represent the general public. In effect we actually have imposed a strong assumption that the views and opinions of the middle-class will always resemble those in the public sphere. This limitation is acknowledged, but to the extent that the middle class is ‘partially’ autonomous, the public opinion is more likely to be represented by this group instead of the two other actors (the president and the policy elites). Actually there are two other main actors that have significant role to play in the policy process. One is the international actors, such as the World Bank, IMF, etc. The other one is Business Interest Group, either the indigenous business group (usually represented by The Indonesian Chambers of Commerce-KADIN) or the Chinese faction (represented by Liem Sioe Liong in the 1990s). But the interests of these groups actually have been embedded in the domestic policy actors, either represented by the technocrats or by the bureaucrats. 2.2. Policy Making Ideology in Indonesia As a relatively young country that gain independence in 1945 (most European or western countries would say that Indonesian gain independence only in 1950), the national government is faced by the high poverty level that is being felt mostly by indigenous people of Indonesia. In its preamble of the 1945 constitution indeed the goals of the Indonesian Nation is stated as: …to form a government of the state of Indonesia which shall protect all the people of Indonesia and their entire native land, and in order to improve the public welfare, to advance the intellectual life of the people and to contribute to the establishment of a world order…12

So the goal of ‘public welfare’ has been embedded in the nation’s ideology and the government should have pursued this goal accordingly. The goal of public welfare is stated more specifically in Article 33 (under Chapter XIV: Social Welfare) item 2 and 3 that stated: 2. Sectors of production which are important for the country and affect the life of the people shall be controlled by the state. 3. The land, the waters and the natural riches contained therein shall be controlled by the State and exploited to the greatest benefit of the people.

12

Department of Asian Studies, http://inic.utexas.edu/asnic/countries/indonesia/ConstIndonesia.html

University

of

Texas,

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Preliminary draft – please do not quote without permission In addition, Article 34 stated that the poor and destitute children shall be cared for by the State. The article 33 clearly mention that any sectors of production that are important for the country and affecting the lives of the general public should be controlled by the state and to be exploited to the greatest benefit of the people. This is actually the legal foundation for establishing PERTAMINA13, the Indonesian State Oil Company that manage the oil resources of Indonesia. With a vast oil resources and a supported by the increase of oil prices, PERTAMINA actually provided Soeharto with vast amount of capital that cold have been invested to further accelerate economic growth.14 The basic ideology of the Indonesian economy is supposedly ‘family system’ as it mention in the 1945 constitution15 in Article 33 item 1: The economy shall be organized as a common endeavor based upon the principles of the family system16.

The capitalist development path that is being taken by Indonesia is actually not even mentioned in the Indonesian constitution. On the contrary, the 1945 Indonesian constitution actually opposes the notion of capitalism (by proposing a system called “Economic Democracy”) as Swasono (1995) states “The welfare of the society should be emphasized, and not individual welfare. As such the economy should be built as a joint effort based on ‘azas kekeluargaan’(family system). The structure of company that suitable then is cooperative (koperasi).” 17 The reason why capitalism was chosen is probably because it could satisfy the state interest more. The ideology of policy making in Indonesia is basically state-driven, providing the state with a massive control over the country’s resources and over its society. As such there is a tendency that some kind of a ‘centralized’ system is likely to occur, pushed by the need to maintain independence and integration or national unity, and also by some ‘predatory’ instinct of the state (political elites) to gain individual benefits over the country’s resources. This tendency also happened in other Southeast Asian countries. In the next section we will provide a broad overview on the paradigm of developmental state in Asia and the benefits and shortcomings that comes with it. 13

Pertamina was established in 1968 as a merger of Permina and two other firms. Its director, General Ibnu Sutowo, a hardy survivor of the transition from Guided Democracy to New Order who had been director of Permina, embarked on an ambitious investment program that included purchase of oil tankers and construction of P.T. Krakatau, a steel complex. In the mid-1970s, however, it was discovered that he had brought the firm to the brink of bankruptcy and accrued a debt totaling US$10 billion. In 1976 he was forced to resign, but his activities had severely damaged the credibility of Indonesian economic policy in the eyes of foreign creditors. (The Library of Congress, Country Studies Data as of November 1992) 14 Sangkoyo (2003). 15 The 1945 Constitution was a product of nationalist who had hard fought for independence from the Dutch colonization. This historical background made it the symbol of independence of the Indonesian nation (Kawamura, 2003). 16 After rejecting individualism and liberal democracy as a basis of Western democratic regime, founding fathers adopted family principle (kekeluargaan) as a philosophical base for constructing original political institutions in Indonesia. 17 Swasono (1995) p.84.

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‘The Developmental State’ The dramatic (and not-so-dramatic) growth experiences of East Asian countries after the World War II have received much attention. Basically the ‘successful’ experience of Japan, Taiwan and South Korea has contributed to the term “Asian Model” of economic development. Noland and Pack18 noted that for a period of roughly thirty-five years, Japan, the Republic of Korea, and Taiwan have implemented industrial policies aimed at altering the sectoral structure of production toward sectors believed to offer greater prospects for accelerated growth than a typical process of industrial evolution would generate. This ‘typical process of industrial evolution’ could be assumed refers to the type of industrial evolution that comes under the free-market or capitalistic system from the developed countries experience in the west. Powell (2003) describes the model, as a model that “maintains some international market forces, but also involves heavy direction of the economy by state industrial development planning agencies”.19 The term “industrial policy”20 evokes the image of Japanese bureaucrats of the 1960s or 1970s vintage picking high growth sectors (“winners”) and guiding industrial firms into those sectors through financial incentives and an appeal to their sense of obligation to society.21 Chalmers Johnson22, also uses the term ‘miracle’ in his book, used the term “effective” to describe the involvement of the Japanese state in the economy. The model seems to be considered a form of ‘best practice’ that other Southeast Asian countries eagerly tries to mimic the model. Singapore for example launched a “learn from Japan” campaign in 1978 while Malaysia began a “Look East” policy in 1982.23 These attempts of generalization in ‘best-practices’ are not without critics. Haggard (1990) considers country-specific conditions and circumstances to be the main determinants of policy outcomes and any attempts to generalize then would be disappointing and fruitless. Autonomy of the Developmental State means that there is public-private cooperation and relationship in which the state (and the developmental or policy elites) independently (or autonomously) develop national goals and translate these broad national goals into an effective policy action. 24 Leftwich (1995) who bases his characterization of seven successful developmental states (South Korea, Taiwan, China, Indonesia, Malaysia, Thailand and Bostwana) identifies six key features25: 1. A determined developmental elite, in: 18

in Loayza and Soto (2002). Powell (2003). 20 Bora, Llyod and Pangestu contend that at the outset that industrial policy is not a well-defined term. “It is ill-defined in relation to the objectives, the industries which are covered and the instruments that are used. The World Bank (1993) has provided a working definition of industrial policy as "government efforts to alter industrial structure to promote productivity based growth." This definition is useful as it focuses on the objective of economy-wide factor productivity growth rather than merely changing the structure of industrial outputs.” (Bora, Lyyod, Pangestu (1999)). 21 Mody (1999), pp.4-5. 22 Johnson (1982), pp. 21. 23 Lee (2000). 24 Karagiannis (2002). 25 Auty and Gelp (2001). 19

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Preliminary draft – please do not quote without permission 2. 3. 4. 5. 6.

A weak and subordinated civil society, which confers: Relative autonomy, that is deployed by: A powerful, competent, insulated economic bureaucracy, in: The effective management of non-state economic interests, while: Political legitimacy is conferred by repression, and then, performance. Responding to the miraculous growth performance, the World Bank (1993) has written down a special report about the rapid growth of eight East Asian Economies titled “The East Asian Miracle” (World Bank, 1993). The report (p. 367) listed six lessons that they claimed to be a ‘mantra’ that countries need to follow, namely: keep the macroeconomy stable, focus on early education, do not neglect agriculture, use banks to build a sound financial system, be open to foreign ideas and technology, and let relative prices reflect economic scarcities. This study also found that a successful export push, whether an outcome of open economic policies or of ingenious policy interventions, offers large economic dividends.26 The East Asian financial crisis of the late 1990s have produce mixed effect regarding the effectiveness of the ‘developmental state’ or the so called ‘Asian or East Asian model of growth’. Wade (1998, 2000) attributes much of the blame for the crises to departures from the state directed model. “Had the governments not abandoned some basic principles of the East Asian model – above all, the principle of strategic rather than open-ended integration into world financial markets – the economies would probably not have experienced a serious crisis, although they would have grown more slowly” (2000: 107).27 Nevertheless, East Asia’s corporate structure and governance mechanism that has acted as the engine of growth for the rapid industrialization in the past are under scrutiny in the wake of the 1997’s financial crisis. The close relationships between government and business, heavy reliance on bank debt, and the emerged conglomerate firms are under criticism for “cronyism” and wasteful investments in real estate and currency speculation.28 Peter Evans (1992, 1996) describes the state in East Asia as possessing an “embedded autonomy.” Moody stated that: “The autonomy permits the government to set national goals and to discipline private sector behavior. However, the state is also embedded in the broader social and economic milieu through personal ties between government officials and leaders of the private sector. This delicate balance between personal relationships, which foster information flows and create trust, and autonomy which allows the government to pursue a broad-based social agenda is, according to Evans, the key to East Asian success. East Asia is thus distinguished not only from predatory states such as Zaire (where the state is rapaciously autonomous) but also from intermediate states, such as India and Brazil, where neither autonomy nor embeddedness prevail.”29 26

Quibria (2002). Quoted in Powell (2003). 28 Mody (1999). 29 Mody (1999), p.18. 27

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The World Bank report actually could not be interpreted without considering the type of political and or government regimes in East Asia. Most, if not all East Asian governments and state could not be classified as ‘democracy’, as it being labeled as “Soft Authoritarianism” (in Malaysia and Singapore)30 or “Authoritarian” in Indonesia.31 As such it is sufficient to say that the Government in East Asia, has a massive control over its society and development path, notwithstanding the fact that the dichotomy of ‘strong’ and ‘weak’ state exist. In retrospect, the state-led development model could be seen as a ‘third way’ in a bipolar space between free-market capitalism and socialist state. 2.3. The Beginning of Decentralization in Indonesia The decision for ‘decentralization’ in Indonesia comes about in the background of an unstable political and economical landscape. The financial crisis that hit Thailand in the beginning of 1997 take its toll in Indonesia on July 1997 when Rupiahs drastically loss its values to US Dollars. President Soeharto then resign on May 1998, being replaced by B.J. Habibie. Decentralization became a national policy only five months after Habibie assumed the presidency.32 Here, again, we see the dominant role of the President in the decision making process for public policy. Some has argued that the ‘success’ of the enactment of the decentralization laws after President Soeharto resign, was made possible by Habibie’s ambition to show the general public as well as Indonesia’s foreign counterparts that he is in favor of ‘democracy’ and would not take the same path as with his predecessor President Soeharto (which he often referred to as his ‘political guru’). As such the transition towards decentralization was made possible by the strong political support of the President. In the first years of independence, Indonesia has chosen to take a centralized form of governance. The rationale was that a centralized system was necessary for national unity and stability. However, in the late 1990s, once again the argument of national unity and stability was used but for favoring a decentralized system instead. The reason is that because of the pressures from the local regions (that could arise because of the growing middle-class) to become more independent of their own fate and to manage their own people and resources. Despite the agreement to decentralize, the central government seems to be still having considerable control towards the local government. Firstly, the choice of ‘Kabupaten’ (third tier of government, after ‘Province’) though it is correct theoretically (because it represent the government that is ‘closer’ to the people), it is chosen mostly because with more than 300 kabupatens, each kabupaten will have a lower bargaining position compared with the provincial government level. Again, the importance of ‘national unity’ is the main consideration here (the DPR that drafted the decentralization laws was basically ‘centralized’ as well, with low representation from the local government representatives). Secondly, the fact that the decentralization laws is 30

Means (1996). Liddle (1996). 32 JICA (2001). 31

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Preliminary draft – please do not quote without permission ambiguous, would require additional regulation infrastructure, either in the form of Government Regulation or Presidential Decree. As such, the central government and the President would still able to control the decentralization process considerably. The drafting for the bills regarding decentralization was initiated by the Ministry of Home Affairs (MOHA) in December 1998 and January 1999, and took around five months before it was approved in May 1999. These two Laws, Law No. 22/1999 on the framework of local government and Law No. 25/1999 on the framework for a fiscal balance between central and local governments, were basic acts concerning regional autonomy, including the fiscal framework in the post-Suharto era.33 As of January 2001, based on Law No 22/1999 and Law No 25/1999, the Indonesia’s government must have already implemented the new policy of regional autonomy, the Laws provided the framework for decentralizing authorities once held by central government and gave local governments new responsibilities to manage their own regions34. These Decentralization and Special Autonomy Laws also devolved from Central Government to Local Governments the authority and corresponding responsibility for the delivery of most basic services35, including education36. 2.4. Prospects and Problems with decentralization37 The policy reform on decentralization in Indonesia in 1999 is often said to follow some sort of ‘big bang’ theory, in a sense that it is ambitious38 (directly decentralised down to the Kabupaten level), shortly prepared (only 2 years transition period) and it is enacted during a period of a larger political reform in 1998. Kimura (1999)39 stated that many had the impression that the law was formulated hastily as a part of making Habibie administration appear reformist before the general election on 7 June; because even though two years were set for preparation before its implementation, no concrete devolution is determined by the central government departments to local governments and from provincial government to district (Kabupaten)/city (Kotamadya) governments.

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JICA (2001). Abidin (2002). 35 Introducing Good Local Governance, The Indonesian Experience UNDP, in http://www.undp.or.id/programme/governance/intro_glg.pdf 36 It is literally represent an autonomous system of local government, and leaving central government only limited powers like foreign policy, defense, peace and order, judicature, monetary and fiscal policies, religion and others (Article 7). Included in “others” are national planning, national administration, human resources development, usage of natural resources and high technology, conservation of nature and making national standard. (Kimura, 1999) 37 Becker (2001). 38 The first of the two decentralization laws (UU 22) decentralized all functions of government except defense, religion, justice, foreign affairs, debt and financial management. This is very different from the usual approach. Most countries have specified the assignment to the subnational governments, reserving the remainder to the center. (Bahl, 2003) 39 Kimura (1999). 34

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Preliminary draft – please do not quote without permission Asia Foundation (2002)40 in assessing the Indonesia’s process of decentralization stated five general themes that describe the current status and directions of decentralization: • There is an increasing awareness and appreciation of the importance of people’s participation in local governance. • Local government agencies are committed to improving service delivery and are feeling the pressure to do so from citizens. • Local governments have coped with the immediate problem of integrating large numbers of staff by reorganizing and restructuring agencies and units, without downsizing. • Though largely dependent on central government transfers, local governments are seeking ways to increase their own sources of income in the form of taxes and retributions. Citizens are also demanding more open dialogue and consultation about budget allocations. • Local governments are cooperating and sharing information with one another and with provincial governments to solve a variety of shared problems. One of the main problems of decentralization, from the perspective of the society, is that it could affect public service delivery, like education and health, especially in the local regions that only have limited resources. It is also because the central government has not made clear regulations regarding the Minimum Standard of Service (Standar Pelayanan Minimum-SPM) for public services. The second problem, from the perspective of business, is that decentralization could increase the cost of doing business. Because the local government (LG) is being pushed to increase their PAD (local owned revenues), the LGs are reacting by increasing their taxes and levies. This reaction could deter investment that could further hindered the development of the LGs in the long run. The reaction is understandable, since LGs (including the Local Parliament) are mostly myopic in their policy preference. The third problem, from the viewpoint of policy implementation, it is worried that the LGs do not have adequate human resources to implement their policies. LGs are having more preference towards its indigenous staffs (putra daerah), which are valid reason. The solution is then how to increase the capacity of the ‘putra daerah’ in order to increase the capacity of the LG. In fact, most of the LGs officials are already coming from inside the LGs itself.

40

Abidin (2002).

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Preliminary draft – please do not quote without permission Table 1 LG Officials in selected Provinces No

PROVINCES

TOTAL

Central Government Officials

Local Government Officials

1

North Sumatera

23,379

524

22855

2

Central Jawa

14,923

572

14351

3

West Kalimantan

8,250

348

7902

4

South Sulawesi

15,053

371

14682

5

East Nusa Tenggara

15,325

140

15185

All Provinces

480,186 Source: LPEM.

7,878

472,308

Fourthly, as it mentioned before, the central government (CG) is still having vested interests in controlling the LGs. The fact that most LGs are still dependant on the transfer from central government (either in the form of DAU, DAK or Revenue Sharing), during transitional period most LG policies would still be ‘centralized’ to some extent.41 3.1. Education Sector in Indonesia Indeed in ASEAN countries, Malaysia constantly has the highest public education expenditures with a share of above 4% followed by Singapore. While on the other hand, the government expenditure for education in Indonesia is low (only slightly above 1%) compared with Malaysia, and even with other countries as shown in table 2. In terms of total government expenditures, Malaysia ranked 3rd, after Singapore and Philippines, with a percentage of 15.4% in 1996. Indonesia probably ranked the lowest among other Southeast Asian countries; with only 8% of total government expenditures spent on education in 1996 (refer to table 3). The Ministry of Education in Indonesia actually does not hold an important role in the new order’s development strategy. Other ministries holds more important role in development planning. Rosser (2002, p.43) noted that: During the 1980s, it was the State Secretariat and the Ministry for Research and Technology that were to emerge as the most influential politico-bureaucratic players in the policy-making process. The former was to be granted control over the allocation of 41

Under 1997 law, provincial governments are assigned revenue from the motor vehicles’ transfer tax, motor vehicles’ registration tax, and fuel tax. Districts get most revenue from land and property taxes, but they have no control over rates, and it is administered by and shared with the CG. As of Fiscal Balance Law 25/1999, for onshore (up to 12 miles of the coast) oil, 15% of non tax revenues are shared with subnational governments: 3% to the producing province, 6% to the producing district, and 6% to other non-producing districts in the producing province. Proportionate shares distributed are twice that for gas. This arrangement is hardly ideal – it is complex, fully exposes districts to international price fluctuations, is virtually certain to widen regional disparities, will create local administration problems, since volatile oil prices will lead to divergence between budgeted and realized revenues; and could possibly provide more revenues to non-producing districts in a producing province than to producing districts. (Becker, 2001)

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Preliminary draft – please do not quote without permission government supply and construction contracts in 1980, a power that it retained until 1988. With two strongly nationalist politicians, Sudarmono and Ginanjar Kartasasmita, in charge of the Secretariat, this power was used to promote the cause of numerous indigenous business groups (Winters 1996:123-139; Pangaribuan 1995:51-73).

Table 2 Government Expenditure: Public education expenditure as a % of GDP 1960 1965 1970 1975 1980-85 1986-90 1991-95 1996-98 Brunei Darussalam .. .. .. 2.0 1.7 4.7 3.9 4.4 Cambodia 3.4 3.7 5.8 .. 4.2 Indonesia .. .. 2.6 2.7 1.8 0.9 1.3 1.4 Lao People's Dem Rep .. .. .. .. 0.4 0.9 2.4 2.3 Malaysia .. 4.1 4.0 5.7 6.2 5.9 4.8 4.8 Myanmar 2.2 2.7 3.1 1.7 1.9 2.0 1.2 Philippines 2.2 2.4 2.7 2.0 1.7 2.5 2.7 3.4 Singapore 3.1 4.4 3.2 2.9 3.9 3.5 3.3 Thailand .. 2.4 3.2 3.5 3.7 3.4 3.8 4.7 Viet Nam .. .. .. .. 2.0 2.4 2.9 Asia (excluding Middle East) .. 3.9 3.6 4.9 4.9 4.3 3.4 3.5 Central America & Caribbean .. 2.6 3.1 4.1 4.2 3.4 4.1 Developed Countries .. 5.0 5.6 6.1 5.7 5.2 4.9 4.8 Developing Countries .. .. 2.8 .. 3.5 3.2 3.4 High Income Countries .. 5.0 5.5 6.0 5.7 5.1 4.8 4.7 Low Income Countries .. 2.6 3.2 2.8 3.2 3.4 3.3 3.2 Middle East & North Africa .. 4.0 3.8 .. 4.9 4.8 4.7 Middle Income Countries .. .. .. .. 3.7 World .. 3.5 3.7 3.8 4.1 3.9 4.4 4.6 Source: World Development Indicators, World Bank. http://earthtrends.wri.org/text/ECN/variables/643.htm

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Table 3 Educational expenditures in Southeast Asia

Source: UNESCO, in Sjöholm (2002).

The high expenditures on education, however, should be interpreted carefully. The dynamics of the employment supply and demand process in developing countries tends to expand educational spending beyond the socially optimum level. In most developing countries wages in the modern sector are much higher in the traditional sector, which creates a very strong demand for jobs in the former. Entry into the modern sector depends initially on the level of completed education, creating, in turn, an equally strong demand for education. At the same time rapid population growth over a long period produces more workers that can be absorbed by the economy. Under such conditions, employers tend to select by educational level, with, for example, workers who have completed primary education filling jobs that can be performed satisfactorily by those with no primary schooling. Individual workers safeguard their positions by acquiring a higher level of education, which increases the demand for each level of education (Lee, 1996 : pp.149-150). The goal of ‘national unity’ or ‘nationalism’, is also attached to the Indonesian education system. After independence, the education system in Indonesia is govern by the Law no 4/1950 about the School Teaching and Learning, Law no 2/1989 regarding the National Education System that would later on being revised in 2003. 42 The goals of the education system, as it stated in the Law no 4 and no 2 is surprisingly similar with the Malaysian goal. The only difference with Malaysia is that education is to be considered as one of the rights of Indonesian citizen as it being stated in article 29 of Indonesian 1945 constitution and also in the constitution preamble.43 Also the local 42 43

H.A.R. Tilaar, 2003. Kekuasaan dan Pendidikan, Magelang: Indeonesiatera. Tilaar (2003), p.42.

15

Preliminary draft – please do not quote without permission content in Indonesia’s system of national education is low. Not until 1990s that the central government allows some local content in the education system as it being described in table 4. Table 4 Indonesia: National Curriculum versus Local Content Curriculum in the 1990s

Source: Ibrahim (1998) in Yeom, et.al. (2002).

In Indonesia the education policy is also being subverted by the political motives of the Government. To ease some demands in the rural and other regional government, the Central Government has provided some off-budget measures to help local governments in handling the poverty problems in the form of INPRES Grants; it was a funding mechanism system which allowed direct grants to be made by the central government to the local government in two important fields: education (SD INPRES, the expansion of primary school) and health services (PUSKESMAS). The criteria for receiving the grants, however, is arbitrary such that it is being abused for political reasons to encourage endorsement for the ruling party. Other political motives in the education policy is also apparent when the post of Minister of Education and Culture in Indonesia in 1984 was being headed by Dr Nugroho Notosusanto, a historian and a military general previously headed the Army History Center in 196544. Previously when Notosusanto headed the Army History Center he has written about the G30S/PKI coup (Nugroho Notosusanto, The Coup Attemp of the September in Indonesia. Jakarta: Dept. Defence and Security, 1970). Having received my primary and secondary education in the 1980s I recall how the curriculum is being bombarded by history lessons about the G30S coup (based on the Government version at that time), under different classes title yet similar content of materials. The alternative version of the G30S coup was never being told, not until recently. In 1983, a four hour movie about G30S was made that endorse the intervention of Soeharto in taking over the power from Soekarno, the 1st president of Indonesia. During its premier show, every elementary students –including myself- were required to watch the movie during school time. Since then, every year at the 30th of September, the movie would be aired on all national TV. This tradition has only being halted after Soeharto’s resignation in 1998. 44

http://mkb.kerjabudaya.org/mkb-092002/ed-092002.htm

16

Preliminary draft – please do not quote without permission Indonesia has provided free education in elementary education. Malaysia provides for 11 years of free schooling (6 primary and 5 secondary) but it is not compulsory. Though it is provided ‘free’, in terms of no tuition fee is required, parents would still have to spend some money for books, uniforms, transportation and other non-tuition expenditures.45 The situation was similar in Indonesia. Even though primary education in Indonesia has been compulsory and free since 1977/78, Pangestu and Oey-Gardiner (1992) stressed that there are children who still cannot afford to go to school. The reason is that their parents cannot afford to purchase the needed uniforms, school supplies and other contributions. Other reasons for nonattendance are that parents still do not see the necessity for education, the distance to school being too far and that the parents need their children to help out in their work. The rate of school drop-outs by educational level has also increased since 1984. The high percentage of drop-outs has been due to lack of funds. While growth in terms of the number of schools and the wide coverage in is impressive in Indonesia, less priority has been given to the quality of education, especially educational performance and standards. In general, the performance of pupils in the rural areas of Indonesia is poorer than that of urban pupils, indicating the difference in the quality of instruction (Pangestu and Oey-Gardiner, 1992 : p.62). There was also a mismatch between education and work in Indonesia for the period of 1989-94; there appears to be an excess demand at the primary and lower secondary school levels and an oversupply at the secondary and tertiary education levels (Pangestu and Oey-Gardiner, 1992 : p.68). Indeed, Indonesia had actually experiencing a surplus of labor, with 1.2 million excess of labor in 1995. While some of its neighboring countries such as Malaysia had been able to avoid this problem and even experiencing a 60 thousand shortage of labor (table 5).

45

Musa (2003), p.69.

17

Preliminary draft – please do not quote without permission

Table 5 Estimated Excess supply of Labor in selected APEC members (thousands)

Despite the fact that parents have still to borne some cost of schooling, Indonesia have succeeded in increasing its primary enrollment ratio (please refer to the next table). However in terms of secondary education enrolment, Indonesia is still lagging behind the more industrialized countries of East Asia, such as Singapore and Korea (table 6). This could represent the fact that as students become older, the ‘opportunity cost’ for them to go to school went up, because during secondary school the students actually could get a job which could help their family for additional income, especially for the poor family. The gross enrollment ratio, however, only mention half of the story. It does not take into account the drop-out rate.

18

Preliminary draft – please do not quote without permission

Table 6 School enrollment, (% gross) Countries Indonesia

Korea

Malaysia

Philippines

Singapore

Thai

Series Name

1960-1965

1970-1975

1980-1985

1986-1990

1991-1996

Primary

71.5

83.0

113.7

116.0

114.5

Secondary

9.0

18.0

35.3

46.4

45.3

Tertiary

1.0

na

5.3

9.2

10.5

Primary

97.5

105.0

104.3

100.6

99.3

Secondary

31.0

49.0

84.2

92.0

96.0

Tertiary

6.0

na

24.3

38.6

48.1

Primary

93.0

89.0

97.2

95.8

100.5

Secondary

23.5

38.0

50.5

57.2

58.2

Tertiary

2.0

na

5.0

7.2

10.0

Primary

104.0

107.5

109.2

110.4

111.5

Secondary

33.5

50.0

65.3

70.6

76.8

Tertiary

19.0

na

24.6

27.4

28.6

Primary

108.0

107.5

108.8

104.4

102.7

Secondary

38.5

49.0

57.5

68.8

67.0

Tertiary

10.0

na

10.7

18.6

28.7

Primary

80.5

83.0

97.7

98.0

92.5

Secondary

13.5

21.5

30.2

28.6

45.0

Tertiary

2.0

na

16.8

16.2

19.3

Source: WDI CD-ROM, calculated by author.

Despite the relatively comparable GER in Indonesia with its neighbors, looking at other indicator of education, mean years of schooling, the level of education in Indonesia is sadly low. In 2000, Indonesia’s mean years of schooling (5 years) constitute only half of Malaysia’s figure (table 7). Table 7 Literacy rates and mean years of schooling in Southeast Asia

Source: UNESCO, in Sjöholm (2002).

While in Indonesia’s local regions, the enrolment rate is actually varied. North Sumatra province for example, has higher education enrollment compared with central java. 19

Preliminary draft – please do not quote without permission Table 8 Selected Education Enrollment figures for Local Government in Indonesia

Province District

Life Expectancya) (years) 1996 1999

Adult literacy rate (%) 1996 1999

Mean years of schooling (years) 1996 1999

Adjusted real per capita expenditure (thousand Rupiah) 1996 1999

HDI 1996 1999

HDI Rank 1996 1999

1

North Sumatra

65.7

67.1

94.6

95.8

7.5

8.0

576.9

568.7

70.5

66.6

7

8

-

Nias

65.0

66.4

73.3

85.7

4.6

5.7

476.8

413.7

55.5

50.4

283

288

-

Labuhan Batu

64.1

65.5

96.1

96.5

6.4

7.3

562.6

550.9

68.0

64.0

119

150

-

Karo

70.3

70.6

95.8

95.5

7.5

7.9

574.6

576.2

73.2

69.1

29

36

-

Medan

67.8

69.2

98.7

98.8

9.6

9.9

579.5

579.8

74.3

70.8

16

19

33

Central Java

64.8

68.3

81.3

84.8

5.5

6.0

594.5

583.8

67.0

64.6

17

14

-

Grobogan Semarang Brebes Surakarta

64.3

67.8

81.9

85.6

5.1

5.6

584.3

585.0

65.7

64.2

175

146

67.6

70.6

87.3

89.4

6.3

6.6

588.4

591.0

69.9

67.9

70

61

59.8

63.3

72.8

83.0

4.3

4.8

583.1

580.2

60.5

60.2

262

251

70.3

70.9

92.6

92.9

8.7

8.8

587.2

591.9

74.3

70.5

15

22

East Nusa Tenggara

62.2

63.6

78.9

81.2

5.2

5.7

544.3

576.9

60.9

60.4

24

24

West Sumba

60.3

61.7

68.0

69.0

4.6

5.0

547.1

437.6

57.2

45.4

280

293

-

East Sumba

57.6

59.0

73.7

77.2

4.7

5.4

561.1

563.0

58.1

55.7

276

273

-

Ngada

63.3

64.7

86.4

92.3

5.7

6.3

552.3

566.5

64.2

63.2

215

177

-

Kupang

-

63.4

94.6

-

9.6

53 -

61

-

-

-

-

66.6

80

West Kalimantan

62.9

64.1

80.4

83.2

5.2

5.6

570.7

571.2

63.6

60.6

23

23

-

Sambas

55.7

56.8

79.0

82.0

4.5

5.1

552.9

569.5

57.4

55.8

278

271

-

Sanggau

65.3

66.5

77.4

81.8

4.4

5.1

539.9

567.6

61.3

61.0

254

234

-

Ketapang

63.8

64.9

82.4

84.0

4.8

5.1

564.8

569.6

63.8

60.8

225

243

-

Pontianak

64.6

65.1

87.0

88.9

7.5

7.9

583.0

578.6

68.7

64.7

94

133

South Sulawesi

65.0

68.3

79.6

83.2

6.1

6.5

580.6

571.0

66.0

63.6

21

17

73 -

Jeneponto

60.4

63.9

62.9

68.8

4.7

4.9

572.3

573.0

58.1

56.9

276

267

-

Sinjai

66.2

69.5

73.3

78.5

5.2

5.4

533.9

571.8

61.0

62.5

258

199

-

Luwu

68.1

71.4

87.3

92.0

6.3

7.1

569.5

574.6

68.8

68.0

92

56

-

Ujungpandang

67.9

71.4

93.0

95.2

9.5

9.9

582.8

582.3

73.3

71.4

28

13

64.57

66.21

86.67

89.24

6.4

6.9

582

576.1

67.72

64.4

INDONESIA

Source: UNDP.

The education skills of the population actually represent a valuable input for economic and industrialization development. As a country becomes industrialized, it would need an upgraded skills and education from its workers. Laal (1998) provided the direct linkage between human capital and industrial development patterns in the next table.

20

Preliminary draft – please do not quote without permission

Table 9 Human Capital and Industrial Development Patterns Level/Pattern of Industrial Development Skills

Low levels, mainly simple assembly and processing activity for domestic market

Human Capital Profiles Technological Capabilities

Ability to master assembly Literacy simple technical and technologies copy simple managerial traning practically no designs repair machines, but in-firm traning exept informal on many activites operate well job learning. below world best practice levels of technical efficiency.

World-class assembly, layout, process engineering and maintenance in export oriented industries. In others, capability to undertake minor adaptations to processes and products. Little or no design/development capabilities. Technology institutions weak.

Intermedite level, with export-oriented activities in light industry, some local linkages in low-tech products

Good secondary & technical schooling and management financial traning. Low base of engineering and scientific skills. In-house training mainly by export-oriented enterprises SMEs have low skill levels.

Deep industrial structure but mainly imward-oriented, technological lags in many activities

Broad but often low quality schooling, vocational and industrial training. Broad engineering base In-house training lapping. Training institute de-linked from industry. Management and marketing skills weak. SMEs have some modern skills.

Process mastery of capital and skill intensive technologies, but with ineffiencies. Considerable backward linkages, significant adaptation of imported technologies. Little innovation, low linkages with universities and technology institutions

Advanced and deep industrial structure, with many worldclass activities, own design & technology base

Excellent quality schooling and Industrial Training. High levels of university trained managers, engineers and scientists. Training institutes responsive to industrial needs. Large investments in formal and informal in-firm training SMEs have high skill levels and competence.

Ability to monitor, import and adapt state of art advanced technologies. Good design and development capabilities in sophisticated technologies. Deep local linkages with suppliers, buyers, consultants, universities and technology institutions.

Source: Lall (1998).

The human capital factor becomes much more important as the economic growth in Indonesia is actually foreign-investment driven as it liberalize and perform a massive deregulation effort in the 1980s. As Monge-Naranjo noted that there is a strong, positive relationship between the schooling (general human capital) of the countries with the amount of FDI that the country ends up attracting.46 To further assess the impact of education on economic growth in Indonesia, it is necessary to look at the changes in employment structure and poverty. A smoother transition from rural to industrial structure would require a concurrent transformation in the education and skills of labor inputs. Although education increases skills, but the impact on the income of the poor depends on whether their particular skills are valued within the economy47. A concurrent transformation both in the industrial and employment structure would ensure a more equitable growth. 46 47

Monge-Naranjo (2002). Hunter (1994).

21

Preliminary draft – please do not quote without permission For employment transformation, despite the shift towards manufacturing and labor intensive industries, agriculture still remained a vital source of employment in Indonesia (refer to chart 3). Throughout the 1980s agriculture continued to employ over 50% of the population. Only by the end of the 1980s, that agriculture's share began to fall – from 55% in 1985 to 50% in 1990 and to 44% by the late 1990s – supported with the rise of labor-intensive manufacturing industry.48 Figure 3. Indonesia: Employment by sector

Source: Irawan et al (2000) in UNDP (2001).

3.2. Reform and Decentralization in Education Reforms in the education sector have, in many cases, decentralized financial responsibility and decision-making from central to local government or school levels. This decentralization has undoubtedly provided possibilities for broadening public participation, by establishing community and other partnerships, as well as greater flexibility and improved access to educational services; however, it has often been accompanied by declining resources at the municipal level, as well as changing working conditions and patterns of social dialogue. In decentralized systems, challenges include the capacity to finance and manage at local levels and to build linkages and effective partnerships between the various institutions concerned and at different governance levels. 49

48 49

Indonesia Human Development Report 2001, Chapter 3, UNDP. International Labour Organization, Sectoral Activities Programme, The Impact of Decentralization

22

Preliminary draft – please do not quote without permission In 2003, a new law on the national education system was passed. The new law, despite one of its mission to ‘empower society participation in the provision of education based on the autonomy principle’50 however, remain vague and do not specifically address issues on education decentralization issues. The law does refer to Law no. 22/1999 and 25/1999 with respect to regional autonomy. The law does not explicitly state the division of rights and responsibilities between the central and local government. In chapter 4, article 11, only refers to ‘shared responsibilities’ between central and local government to provide education services and to guarantee education provisions for citizens aged 7 to 15 years old. While article 10 mention the ‘shared rights’ between central and local government in directing, guiding, assisting, and controlling the education provisions according with the existing regulations. But the law does not point to any particular regulations. As it commons with any laws (Undang-Undang) in Indonesia, the law is usually only represent a very general policy direction, and need further regulations to be effectively implemented. The implementing regulations usually take the form of Government Regulation (Peraturan Pemerintah) or Presidential Decree (Keputusan Presiden) that is being drafted by the Government without needing any approval from the Parliament (DPR). As such, considerable discretion and policy space is still available for central government for making its maneuver and authority. In article 11 Law 22/1999, the local government is said to be responsible for education policy in its own localities. With Local Government being subjected to education provisions, the financing of education, especially primary and secondary education, would be dependent on the ability of local government in generating its own revenue besides the revenues their entitled to from the central government. Looking at the condition before decentralization in year 1996, Provincial Governments’ PAD varied between 6 to 60% with an average of 25%. Almost 70% of revenues were coming from central government in the form of shared revenues and grants.

and Privatization on Municipal Services, Report for discussion at the Joint Meeting on the Impact of Decentralization and Privatization on Municipal Services Geneva, 15-19 October 2001 International Labour Office Geneva. 50 Law 20/2003, explanation chapter.

23

Preliminary draft – please do not quote without permission

Table 10 The Composition of Provincial Revenues in 1996 (in %) Province

Local Owned Tax and Aids and Revenues/ Non-Tax Grants Pndapatan Shared Asli Revenues/B Daerah(PAD) agi Hasil Pajak dan Bukan Pajak DI Aceh 17,82 10,45 62,37 Sumatera Utara 25,52 6,29 63,05 Sumatera Barat 36,12 8,38 44,14 Riau 34,63 24,06 24,81 Jambi 25,54 11,31 50,02 Sumatera Selatan 32,32 19,36 36,10 Bengkulu 20,50 5,41 65,17 Lampung 36,93 5,15 49,69 DKI Jakarta 60,13 13,04 12,93 Jawa Barat 32,94 3,57 58,54 Jawa Tengah 21,93 2,15 71,63 DI Yogyakarta 25,07 2,36 66,91 Jawa Timur 29,72 2,97 59,76 Kalimantan Barat 23,57 15,61 56,01 Kalimantan Tengah 6,49 23,09 65,29 Kalimantan Selatan 24,43 21,42 48,28 Kalimantan Timur 24,81 34,55 29,06 Sulawesi Utara 20,96 10,81 66,08 Sulawesi Tengah 9,51 4,68 83,64 Sulawesi Selatan 38,74 13,08 37,29 Sulawesi Tenggara 12,64 10,45 72,35 Bali 52,30 4,55 27,84 Nusa Tenggara Barat 23,91 5,24 64,59 Nusa Tenggara Timur 24,02 4,94 65,52 Maluku 12,47 15,39 66,91 Irian Jaya 7,48 32,36 42,15 Timor Timur 8,96 4,68 82,40 Rata-rata 25,53 11,67 54,54 Source: LPEM-FEUI in Simanjuntak (2000) in Ismail (2001).51

Others

Total

9,36 5,14 11,36 16,50 13,14 12,22 8,92 8,23 13,90 4,95 4,29 5,66 7,73 4,81 5,13 5,87 11,57 2,16 2,17 10,89 4,56 15,31 6,25 5,51 5,23 18,01 3,95 8,26

100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00

Looking from the central government budget (APBN) point of view, in 2002 more than 25% of APBN has been transferred to local government. This figure is actually quite reasonable, as Bahl (2003) stated that the predicted level of fiscal decentralization for Indonesia is around 25%.

51

Ismail (2001).

24

Preliminary draft – please do not quote without permission Figure 4. Central Government Budget: Transfers and Central Government Expenditures, % and Rp trillion Central Government Expenditure Transfer 100%

75% 163

259

246

81

98

2001

2002

50%

25% 34 0% 2000

Source: APBN 2000, 2001, 2002 in Sidik (2002).

Indonesian Parliament has recently reacted to the condition of low education financing by enacting a law (UU NO.20/2003 article 49) that education expenditures should be at minimum 20% from the Central and Local Government budget. Even then, according to the Finance Minister, the above objective would only be attainable in 200952. For Local Government, in 2001, from the data of 357 provincial, Kabupaten and City budgets, the percentage of education budget has reached up to 28,30 percent. In 2002, the figures has slightly decline to 27,34 percent, in 2003 the figure has reach 37,80 % from the total of routine expenditures in the local regions.53 One of the critical issues in decentralization is that the large variations in local government fiscal ability would negatively affected the quality of public service provisions in the respective local government. Some regions have allocated more than 50% from total expenditures, but others only spent 13,40 % from the total budget in 2002. That is why the notion of ‘minimum standard of service’ is very important to prevent the decay of public service quality. With respect to the Law 22 & 25/1999, the central government has issued the Government Regulation PP 105/2000 as the regulation infrastructure to implement the decentralization Laws. PP 105/2000 use the concept of ‘performance budget’ (article 8) as the guidelines for local government in structuring their budget, further, article 20 52 53

Media Indonesia, 27 January 2004. Vidyattama (2004).

25

Preliminary draft – please do not quote without permission required the local government budget to contain the expected ‘service standard’ and ‘activities’ unit cost’. However, looking at the current local government budgets, neither one of those requirement is fulfilled. One of the reason cited by local government officials was that they were still waiting for further instruction from the central government in meeting the requirements (in the form of Presidential Decree). With 171,000 public primary schools (1.4 million teachers) and 31,000 secondary schools (0.68 million teachers)54 that is now under the direct responsibility of local governments, the quality of education provisions in each local government could be expected to be directly related with the capabilities of local financing. The scheme of education financing in post-decentralization era is given below. Figure 5. Post-Decentralization Multiple Flows

MoRA

MoE

Central Gov t

Bappenas

DAU (APBD)

Prov incial Gov t DIP/DIK (APBN)

DIP/DIK (APBN)

DAU (APBD)

DBO

Scholarship

Local Gov t

Public schools

Madrasah Source: WB Education Sector Review 2004 in Kaiser (2004).

Preliminary report from the Ministry of Education (MOE) in 2003 stated that the fiscal imbalance for primary education is estimated to reach around Rp 25 billion p.a., or an increase of 20% from the previous year’s budget on education. While for Junior Secondary School (SLTP) the same level of Rp 25 billion p.a. is also expected, or a two-fold increase in expenditure for junior secondary education expenditures. 55 It must be remembered that education outcomes are determined by more than the availability and quality of schooling. Many factors determine outcomes on both the demand and the supply side, linked at many levels. The demand for education is determined by individuals and households weighing the benefits and costs of their choices and the constraints they face. The supply of services that affect education 54 55

Kaiser (2004). Depdiknas (2003).

26

Preliminary draft – please do not quote without permission outcomes starts with global technological knowledge and goes all the way to whether teachers report for work.56 Figure 6. The determinants of demand and supply operate through many channels

Policies, capacity, technical know-how, politics Global knowledge National macro-, sector-, and microlevel policies Technical capacity to implement policies Governance; politics and patronage; political capacity and incentives to implement policies

Education Sectors - Service price, accessibility, and quality - Financing arrangements

Related sectors Availability, prices, and accessibility and Infrastructure

Local context - Local government and politics - Community institutions - Cultural norms (including exclusion: gender, ethnic,…) - Social capital

Supply

Households and individuals Behaviors and actions Education: enrollment and school participation, learning outside of school, … Constraints -Income -Wealth -Education and knowledge

Outcomes School completion / Learning achievement

Demand

Source: Adapted from Filmer (2003).

To further analyze the likely impact of decentrazlization on human resource condition in Local Regions, in the next section we will look at the quality of education in

56

Filmer (2003).

27

Preliminary draft – please do not quote without permission various regions by using the data from IFLS57, followed by the description of costs and expenses for education. 3.3. IFLS Data Analysis The EBTANAS score (total and score on math) will be used to assess the quality of education in the provinces covered by the IFLS survey for primary (SD), juniorsecondary (SMP), and senior-secondary (SMU) level. One apparent tendency is that the score on Math tend to decreased as the level of education increases. The highest score result occurred in Yogyakarta (Central Java) and the lowest is in Palembang (Sumatra). In general, the EBTANAS score is higher in the Java region, compared with Sumatra and Eastern region. Table 11 EBTANAS Score Sumatra (west)

Java (central)

Eastern Mathematics SD score 5.505 6.184 5.415 Total score 30.515 32.546 29.575 Mathematics SMP score 4.58 5.096 4.2325 Total score 32.21 34.776 32.07 Mathematics SMU score 4.2825 4.588 3.7625 Total score 32.1925 32.858 31.1825 Source: Calculated from IFLS by the author.

In terms of education expense incurred by students in primary level, registration fees and tuition fees (SPP) are the two main components of cost of schooling. In terms of education expenses, again Java region has the highest level of education expenses. A complete description of the school costs in the elementary and secondary schooling is given in the following tables.

57

Please refer to the appendix on the short description of IFLS data.

28

Preliminary draft – please do not quote without permission

Table 12 EDUCATION EXPENSE INCURRED BY STUDENTS 1997, SD Sumatra (west) 461,025

Java (central) 493,931

Sum of income Principal New student fees: Registration 11,077 24,174 New student fees: SPP/POMG etc 23,264 33,456 New student fees: Tests 1,203 4,511 Continue student fees: Registration 1,019 883 Continue student fees: SPP/POMG etc 24,103 1,698,906 Continue student fees: Tests 1,796 4,962 Supplies: Books, writing materials 20,822 42,592 Supplies: Uniforms 17,404 27,685 EBTANAS 4,347 12,185 Extra-curricular activities 2,519 2,055 Magazines 557 1,408 Other 669 856 Irregular contribution (field trips, pic 10,000 68,397 Source: Calculated from IFLS by the author.

Eastern 506,031 11,666 18,784 3,651 52 18,817 4,512 16,207 11,765 2,186 4,918 433 2 608

Table 13 EDUCATION EXPENSE INCURRED BY STUDENTS 1997, SMP Sumatra (west) 445,059

Java (central) 480,246

Sum of income Principal New student fees: Registration 17,128 64,932 New student fees: SPP/POMG etc 41,615 75,408 New student fees: Tests 5,545 10,853 Continue student fees: Registration 2,967 5,279 Continue student fees: SPP/POMG etc 39,986 2,073,914 Continue student fees: Tests 6,124 11,207 Supplies: Books, writing materials 50,910 74,957 Supplies: Uniforms 30,896 50,609 EBTANAS 12,169 2,104,239 Extra-curricular activities 4,945 4,580 Magazines 2,761 1,214 Other 366 389 Irregular contribution (field trips, pic 2,433 20,462,712 Source: Calculated from IFLS by the author.

Eastern 460,460 18,348 39,848 4,137 786 37,394 3,883 31,201 21,417 7,823 1,501 345 0 14,535

29

Preliminary draft – please do not quote without permission

Table 14 EDUCATION EXPENSE INCURRED BY STUDENTS 1997, SMU Sumatra (west) 479,161

Java (central) 505,201

Eastern Sum of income Principal 541,956 New student fees: Registration 31,672 125,681 39,211 New student fees: SPP/POMG etc 82,782 140,158 75,028 New student fees: Tests 10,329 16,292 7,210 Continue student fees: Registration 4,202 10,244 5,952 Continue student fees: SPP/POMG etc 5,766,530 138,243 10,489,134 Continue student fees: Tests 12,613 17,442 10,681 Supplies: Books, writing materials 55,994 78,106 41,694 Supplies: Uniforms 52,222 64,296 34,410 EBTANAS 21,453 31,006 15,702 Extra-curricular activities 6,526 8,555 3,175 Magazines 776 1,287 172 Other 402 13,326 860 Irregular contribution (field trips, pic 24,334 38,802,885 15,000 Source: Calculated from IFLS by the author.

For household expenses, registration fee, school fee, and transport costs represent the main expenses for schooling. Again the Java region represents the region with the largest household expenses for schooling. Table 15 Household Expenses for Schooling, 1997 Registration fee School fee Exam fees Books/school supplies Uniform/sport fees Transport costs Housing/food costs Special course costs Other school expenses

Sumatra (west) 83,889 115,807 23,725

Java (central) 228,736 277,155 55,755

Eastern 87,304 104,044 31,432

63,094 44,492 127,901 162,590 83,900

92,465 41,079 194,857 354,048 120,518

51,902 37,889 120,725 165,500 84,827

32,699

68,355

12,397

Source: Calculated from IFLS by the author.

30

Preliminary draft – please do not quote without permission The share of household expenditure on education in Indonesia is actually quite low, with only 14% as the highest share of education expenditures. The region with the highest figure are Jakarta and Yogyakarta, while the lowest are South Sulawesi and South Kalimantan. Table 16 Share of Education Expenditures from Total Household Expenditures Region North Sumatra West Sumatra South Sumatra Lampung Jakarta West Java Central Java Yogyakarta East Java Bali West Nusa Tenggara South Kalimantan South Sulawesi

Total Expenditures 4,372,668 5,213,702 4,918,186 3,905,356 8,686,899 5,040,520 4,552,758 3,833,343 2,867,998 4,467,371 3,575,751 4,449,171 3,894,349

Education expenditures 410,231 455,441 374,603 267,517 1,170,920 461,242 360,458 429,325 248,453 298,918 295,681 273,716 197,130

% 9.38% 8.74% 7.62% 6.85% 13.48% 9.15% 7.92% 11.20% 8.66% 6.69% 8.27% 6.15% 5.06%

4. Conclusion The process of decentralization in Indonesia in the late 1990s is often said to be ‘not normal’. The process and sequencing is said to be weak and not proper. However it must be remembered that that any public policy must be viewed from the background and historical perspective of the respective country. The regional decentralization started in 1999 in Indonesia occurred in the background of political and economical instability. The background of the released of Law no 22 and 25/1999 is important in understanding the context of the decentralization process. The type of government and policy elites would also important in looking at the decentralization. With decades under the paradigm of ‘state development model’ and Soeharto regime, the role of the central government and President is still expected to remain strong in determining the result and process of decentralization. With LG capacity that is still in transition and anticipating for further guidelines and infrastructure regulations from the CG, the CG is still expected to lead the decentralization process in the future. As education has long been neglected, though it has been stated as one of the national goals in the constitution, the level of priority given to education or schooling is expected to be low. Despite recent calculation that actually the government’s financing towards education could be said to be ‘satisfactorily’, further innovation is needed to maintain and improve the education and human resource development in the local regions.

31

Preliminary draft – please do not quote without permission The discrepancy, between Java and non-Java region, is still apparent. Low education financing seems to affect education quality. Without any clear standard of service, the LG with limited financial resources is expected to suffer the most. Low quality of human resources is not only detrimental to the capacity of LG in implementing decentralization; it would also reduce the economic capacity of the local region and to slow down the growing of the middle-class society that otherwise could strengthen the decentralization process. One possible solution in securing education finance probably is by encouraging public participation. The fact that the share of education expenses is relatively low, parents could be encouraged to provide more resources in financing their children’s education. However, parents might be reluctant to do so if they feel that education (especially primary and secondary) is under the responsibility of the state. LG also could reacted negatively to increasing public participation in education financing by channeling the budget to other unproductive areas. An understanding that education is actually also some form of human capital investment would encourage parents to provide more financial resources. This could be achieved if the local region itself is being able to develop economically and socially. With sound economic growth and growing middle-class, the quality of education in local regions could be safe-guarded automatically.

32

Preliminary draft – please do not quote without permission APPENDIX A: EBTANAS SCORES SECTION DL (EDUCATION) School Level 1. Elementary 2. Junior High 3. Senior High 4. Jr. Coll./Coll./Univ. DL16d. What was your ebtanas score for the following subjects: (If the respondent shows you DANEM copy from danem. If you cannot see DANEM ask the respondent for their scores).

level SD SMP SMU

Data Mathematics score Total score Mathematics score Total score Mathematics score Total score

North Sumatra West Sumatra South Sumatra Lampung Jakarta West Java Central Java Yogyakarta East Java Bali West Nusa Tenggara South Kalimantan South Sulawesi

12 6.27 32.04 5.45 35.98 4.85 34.14

13 5.52 31.79 4.37 33.42 4.52 35.23

16 5.60 29.50 4.50 31.21 3.98 32.42

18 4.63 28.73 4.00 28.23 3.78 26.98

31 6.39 33.03 4.44 32.44 4.26 29.01

32 6.29 32.62 4.60 32.89 4.09 29.33

33 5.74 31.72 5.22 34.98 4.46 36.13

34 6.91 34.16 6.11 38.13 5.15 39.02

35 5.59 31.20 5.11 35.44 4.98 30.80

51 5.25 29.49 4.62 31.76 3.47 32.36

52 5.58 30.08 3.93 31.50 3.88 31.38

63 5.58 29.36 3.72 30.31 3.38 30.11

73 5.25 29.37 4.66 34.71 4.32 30.88

5.74 31.01 4.67 33.15 4.24 32.14

12 13 16 18 31 32 33 34 35 51 52 63 73

33

Preliminary draft – please do not quote without permission APPENDIX B: AVERAGE EXPENDITURES PER STUDENT (SD) SECTION E: AVERAGE EXPENDITURES PER STUDENT DURING 1996-1997 KOMFAS 97 (EDUCATION EXPENSE INCURRED BY STUDENTS)

A8A1 E1AA E1AB E1AC E1BA E1BB E1BC E2A E2B E3 E4 E5 E6 E7

12 435,774 10,714 16,448 495 2,778 15,608 885 5,262 2,235 2,629 3,067 0 2,625

13 514,801 15,184 19,121 1,028 111 18,823 1,585 7,119 17,488 4,111 1,807 164 0

16 519,623 16,492 48,065 1,074 0 50,847 2,077 49,738 40,624 3,825 4,704 2,063 50 10,000

18 373,903 1,916 9,421 2,213 1,188 11,134 2,637 21,167 9,267 6,822 497 0 0

Sum of income Principal New student fees: Registration New student fees: SPP/POMG etc New student fees: Tests Continue student fees: Registration Continue student fees: SPP/POMG etc Continue student fees: Tests Supplies: Books, writing materials Supplies: Uniforms EBTANAS Extra-curricular activities Magazines Other Irregular contribution (field trips, pic

31 462,512 51,186 56,696 5,861 819 46,464 6,511 29,076 28,424 23,968 3,567 125 550 312,700

A8A1 E1AA E1AB E1AC E1BA E1BB E1BC E2A E2B E3 E4 E5 E6 E7

32 500,601 50,207 47,188 6,599 1,230 47,288 7,448 57,169 38,828 11,890 1,040 615 894 9,121

33 478,926 7,601 26,272 3,827 98 8,360,039 4,447 36,596 27,343 10,905 2,544 4,011 669 8,821

34 573,572 7,080 19,269 974 1,861 21,005 1,134 49,121 18,774 3,842 1,590 2,275 2,066 3,417

North Sumatra West Sumatra South Sumatra Lampung Jakarta West Java Central Java Yogyakarta East Java Bali West Nusa Tenggara South Kalimantan South Sulawesi

35 454,046 4,795 17,857 5,293 409 19,733 5,268 41,000 25,057 10,318 1,533 16 99 7,924

51 567,889 30,713 37,888 10,784 0 37,545 11,078 51,409 29,309 3,721 7,604 1,600 0 1,100

52 478,457 792 9,637 358 208 9,209 873 3,376 2,751 580 833 0 0

63 474,005 11,873 20,104 1,065 0 20,069 2,094 8,381 10,714 2,256 62 0 0 600

73 503,771 3,285 7,505 2,397 0 8,444 4,004 1,662 4,284 2,186 11,171 132 6 125

avrg 487,529 16,295 25,805 3,228 669 666,632 3,849 27,775 19,623 6,696 3,078 846 535 39,312

12 13 16 18 31 32 33 34 35 51 52 63 73

34

Preliminary draft – please do not quote without permission APPENDIX C: AVERAGE EXPENDITURES PER STUDENT (SMP) SECTION E: AVERAGE EXPENDITURES PER STUDENT DURING 1996-1997 KOMFAS 97 (EDUCATION EXPENSE INCURRED BY STUDENTS)

Data A8A1 E1AA E1AB E1AC E1BA E1BB E1BC E2A E2B E3 E4 E5 E6 E7 A8A1 E1AA E1AB E1AC E1BA E1BB E1BC E2A E2B E3 E4 E5 E6 E7

12 671,733 12,953 25,521 1,763 2,746 23,021 1,626 9,528 8,942 9,849 558 0 920 2,750 463,331 35,889 54,069 7,153 3,185 821,468 7,390 54,095 35,562 815,474 3,745 1,423 262 8,531,583

13 390,504 16,535 29,357 2,879 2,019 25,022 3,616 2,164 36,104 11,528 114 10,000 0

16 409,980 31,844 58,561 9,349 2,189 63,043 10,243 139,531 50,614 8,999 13,333 804 104 2,050

18 308,019 7,178 53,022 8,189 4,913 48,856 9,011 52,417 27,925 18,298 5,776 240 438 2,500

31 545,563 115,335 87,481 14,326 5,952 85,866 11,666 45,783 52,465 35,847 5,972 770 475 1,287,083

32 492,442 73,798 78,033 9,894 2,047 74,341 11,448 89,636 56,901 10,437,685 2,970 777 335 62,515,661

Sum of income Principal New student fees: Registration New student fees: SPP/POMG etc New student fees: Tests Continue student fees: Registration Continue student fees: SPP/POMG etc Continue student fees: Tests Supplies: Books, writing materials Supplies: Uniforms EBTANAS Extra-curricular activities Magazines Other Irregular contribution (field trips, pic

33 425,796 36,180 75,080 9,276 725 10,074,701 9,448 61,773 40,629 16,780 1,974 3,164 792 38,470,788

A8A1 E1AA E1AB E1AC E1BA E1BB E1BC E2A E2B E3 E4 E5 E6 E7

34 539,163 64,799 83,938 10,083 14,145 81,502 11,981 103,753 56,709 10,267 9,974 0 227 22,822

35 398,264 34,546 52,506 10,687 3,528 53,158 11,493 73,842 46,343 20,615 2,008 1,361 116 17,207

North Sumatra West Sumatra South Sumatra Lampung Jakarta West Java Central Java Yogyakarta East Java Bali West Nusa Tenggara South Kalimantan South Sulawesi

51 405,135 27,975 60,788 8,203 1,634 55,470 7,834 105,808 64,108 11,762 3,042 1,238 0 30,000

52 456,961 2,029 43,152 1,280 0 42,426 1,280 10,215 6,515 5,892 100 0 0 18,000

63 418,978 19,046 31,455 2,250 857 31,195 2,411 4,333 5,580 4,333 1,377 0 0 10,000

12 13 16 18 31 32 33 34 35 51 52 63 73

35

73 560,764 24,341 23,996 4,816 652 20,485 4,007 4,449 9,466 9,304 1,483 141 0 138

Preliminary draft – please do not quote without permission APPENDIX D: AVERAGE EXPENDITURES PER STUDENT (SMU) SECTION E: AVERAGE EXPENDITURES PER STUDENT DURING 1996-1997 KOMFAS 97 (EDUCATION EXPENSE INCURRED BY STUDENTS)

A8A1 E1AA E1AB E1AC E1BA E1BB E1BC E2A E2B E3 E4 E5 E6 E7 A8A1 E1AA E1AB E1AC E1BA E1BB E1BC E2A E2B E3 E4 E5 E6 E7

12 557,666 20,404 38,491 1,867 4,813 26,782 2,612 7,909 5,268 10,117 4,167 2,019 48

13 428,734 13,960 87,769 6,212 3,108 96,292 6,212 954 54,660 19,150 4,877 10 0 43,167

508,498 70,149 102,463 11,663 7,064 5,054,913 13,876 60,099 51,385 23,358 6,275 786 5,513 21,565,899

16 566,400 50,270 134,257 17,766 1,067 146,379 23,923 153,238 106,495 15,481 6,594 833 1,560 5,500

18 363,845 42,054 70,609 15,469 7,818 22,796,666 17,706 61,875 42,464 41,063 10,467 240 0

31 578,841 152,965 123,899 14,456 11,018 113,848 15,036 18,358 60,628 46,235 7,094 489 30,292 1,000,750

32 497,744 196,005 139,799 18,838 5,162 138,279 21,590 101,044 65,020 29,620 11,460 117 4,594 67,025

Sum of income Principal New student fees: Registration New student fees: SPP/POMG etc New student fees: Tests Continue student fees: Registration Continue student fees: SPP/POMG etc Continue student fees: Tests Supplies: Books, writing materials Supplies: Uniforms EBTANAS Extra-curricular activities Magazines Other Irregular contribution (field trips, pic

33 470,826 73,009 157,509 12,547 4,659 159,184 13,525 76,660 52,516 31,926 6,196 3,138 7,174 50,022,257 A8A1 E1AA E1AB E1AC E1BA E1BB E1BC E2A E2B E3 E4 E5 E6 E7

34 588,892 148,979 185,063 21,898 26,734 192,174 22,565 118,106 89,887 13,525 10,248 2,145 22,877 142,921,508

35 389,703 57,446 94,519 13,721 3,647 87,729 14,495 76,364 53,429 33,725 7,775 545 1,693 2,883

North Sumatra West Sumatra South Sumatra Lampung Jakarta West Java Central Java Yogyakarta East Java Bali West Nusa Tenggara South Kalimantan South Sulawesi

51 561,203 81,883 105,762 16,514 23,433 96,545 28,806 133,313 93,337 31,096 8,944 688 3,438 15,000

52 427,584 1,783 75,324 1,722 250 70,162 2,774 17,500 11,356 9,933 1,400 0 0

63 633,833 39,351 75,100 4,875 125 41,739,558 5,417 5,896 16,042 9,083 853 0 0

545, 33, 43, 5,

50, 5, 10, 16, 12, 1,

15,

12 13 16 18 31 32 33 34 35 51 52 63 73

36

Preliminary draft – please do not quote without permission APPENDIX E: AVERAGE EXPENDITURES PER STUDENT (Household) SECTION DL (EDUCATION) We would like to ask about school-related expenses for the previous school year. What were your (approximate) school-related expenses during the 1996-97 school year? Registratio n fee

School fee

Exam fees

Books/school supplies

Uniform/sport fees

Transport costs

Housing/food costs

Special course costs

Other school expenses

12

86,701

135,504

25,735

74,873

43,208

150,005

200,798

82,087

22,380

13

81,676

119,072

12,209

67,892

65,705

116,328

205,836

63,980

44,417

124,175

28,912

66,843

36,065

124,306

139,279

153,329

84,477

28,043

42,767

32,988

120,964

104,446

36,203

64,000

16 18

108,766 58,413

-

31

380,142

541,609

89,359

160,500

44,848

297,872

562,627

183,253

68,625

32

215,081

242,165

67,813

100,594

37,131

266,860

403,104

119,176

63,121

33

101,957

159,713

49,304

54,498

37,732

134,080

212,778

118,463

29,997

34

363,811

269,953

43,563

77,172

52,837

138,159

416,200

84,528

127,134

172,336

28,736

69,559

32,846

137,313

175,532

97,172

52,901

139,470

39,068

63,969

39,473

110,958

211,020

60,704

11,422

35 51

82,690 120,376

52

57,275

103,342

39,669

43,392

46,782

137,271

174,626

99,281

11,833

63

50,185

75,121

22,160

44,343

30,383

104,670

169,808

81,878

26,333

98,244

24,830

55,907

34,916

130,003

106,545

97,443

73

121,380

-

37

Preliminary draft – please do not quote without permission

Appendix F: The Indonesia Family Life Survey (IFLS): Brief Description The Indonesia Family Life Survey is a continuing longitudinal socioeconomic and health survey. It is addressed to a sample representing about 83% of the Indonesian population living in 13 of the nation’s 26 provinces. The survey collects data on individual respondents, their families, their households, the communities in which they live, and the health and education facilities they use. The first wave (IFLS1) was administered in 1993 to individuals living in 7,224 households. IFLS2 sought to reinterview the same respondents four years later. A follow-up survey (IFLS2+) was conducted in 1998 with 25% of the sample to measure the immediate impact of the economic and political crisis in Indonesia. The next wave, IFLS3, is scheduled to be fielded in 2000. The Indonesia Family Life Survey is designed to provide data for studying these behaviors and outcomes. The survey contains a wealth of information collected at the individual and household levels, including multiple indicators of economic well-being (consumption, income, and assets); education, migration, and labor market outcomes; marriage, fertility, and contraceptive use; health status, use of health care, and health insurance; relationships among coresident and non-coresident family members; processes underlying household decision-making; transfers among family members and inter-generational mobility; and participation in community activities. In addition to individual- and household-level information, the IFLS provides detailed information from the communities in which IFLS households are located and from the facilities that serve residents of those communities. These data cover aspects of the physical and social environment, infrastructure, employment opportunities, food prices, access to health and educational facilities, and the quality and prices of services available at those facilities. Source: Frankenberg, E. and D. Thomas. “The Indonesia Family Life Survey (IFLS): Study Design and Results from Waves 1 and 2. DRU-2238/1-NIA/NICHD.

38

Preliminary draft – please do not quote without permission APPENDIX G.1 EDUCATION EXPENSE INCURRED BY STUDENTS 1997, SD, as a percentage of Java region

Sumatra (west)

Java (central)

Eastern

Sum of income Principal

93%

100%

102%

New student fees: Registration

46%

100%

48%

70%

100%

56%

27%

100%

81%

115%

100%

6%

1%

100%

1%

36%

100%

91%

49% 63% 36%

100% 100% 100%

38% 42% 18%

123% 40% 78%

100% 100% 100%

239% 31% 0%

New student fees: SPP/POMG etc New student fees: Tests Continue student fees: Registration Continue student fees: SPP/POMG etc Continue student fees: Tests Supplies: Books, writing materials Supplies: Uniforms EBTANAS Extra-curricular activities Magazines Other

Irregular contribution (field trips, pic 15% 100% Source: Calculated from IFLS by the author.

1%

39

Preliminary draft – please do not quote without permission APPENDIX G.2 EDUCATION EXPENSE INCURRED BY STUDENTS 1997, SMP, as a percentage of Java region

Sumatra (west)

Java (central)

Eastern

Sum of income Principal

93%

100%

96%

New student fees: Registration

26%

100%

28%

New student fees: SPP/POMG etc New student fees: Tests

55%

100%

53%

51%

100%

38%

Continue student fees: Registration

56%

100%

15%

2%

100%

2%

55%

100%

35%

68% 61% 1%

100% 100% 100%

42% 42% 0%

108% 227% 94%

100% 100% 100%

33% 28% 0%

Continue student fees: SPP/POMG etc Continue student fees: Tests Supplies: Books, writing materials Supplies: Uniforms EBTANAS Extra-curricular activities Magazines Other

Irregular contribution (field trips, pic 0% 100% Source: Calculated from IFLS by the author.

0%

40

Preliminary draft – please do not quote without permission APPENDIX G.3 EDUCATION EXPENSE INCURRED BY STUDENTS 1997, SMU, as a percentage of Java region

Sumatra (west)

Java (central)

Eastern

Sum of income Principal

95%

100%

107%

New student fees: Registration

25%

100%

31%

59%

100%

54%

63%

100%

44%

41%

100%

58%

4171%

100%

7587%

72%

100%

61%

72% 81% 69%

100% 100% 100%

53% 54% 51%

76% 60% 3%

100% 100% 100%

37% 13% 6%

New student fees: SPP/POMG etc New student fees: Tests Continue student fees: Registration Continue student fees: SPP/POMG etc Continue student fees: Tests Supplies: Books, writing materials Supplies: Uniforms EBTANAS Extra-curricular activities Magazines Other

Irregular contribution (field trips, pic 0% 100% Source: Calculated from IFLS by the author.

0%

41

Preliminary draft – please do not quote without permission References Abidin, Adi (2002). First Indonesia Rapid Decentralization Appraisal (IRDA) Synopsis of Finding, The Asia Foundation-Conference on Progress in Fiscal Decentralization, Regional University Consortium Project 497-0357 / 104-000, Strategic Objective 1,ECG, USAID/Indonesia, Contract No. 497-C-00-98-00045-00, Center for Institutional Reform and the Informal Sector (IRIS), University of Maryland at College Park. Bahl, Roy (2001). An Overview of Decentralization in Indonesia, IRIS/USINDO presentation,. Becker, Charles (2001). Lecture 25: Fiscal Federalism And Decentralization In Practice, Department of Economics , University of Colorado at Denver, October 29, 2001. Depdiknas (2003). Laporan Kemajuan No. 3, Bantuan Teknis Pendukung Desentralisasi Manajemen Pendidikan. Filmer, Deon (2003). Determinants of Health and Education Outcomes, Background Note for World Development Report 2004: Making Services Work for Poor People, The World Bank May 2003. Frankenberg, E. and D. Thomas. “The Indonesia Family Life Survey (IFLS): Study Design and Results from Waves 1 and 2. DRU-2238/1-NIA/NICHD. Ginting, Edimon and Candra Fajri Ananda (….) Enabling Institutions for Fiscal Decentralization in the Framework of National Integrity, Session 4: Institutional and Human Capacity of Local Governments. Ismail, Munawar (2001). Pendapatan Asli Daerah Dalam Otonomi Daerah, Fakultas Ekonomi Universitas Brawijaya, TEMA, Volume II, Nomor 1, Maret 2001. Kaiser, Kai (2004). Financing Education in Indonesia, Presentation for International Conference on Governance & Accountability in Social Sector Decentralization, Intergovernmental Finance of Education, Thursday, 19th February 2004 (Session 5a), PRMPS. Kimura, Hirotsune (1999). “Desentralisasi: Bentuk Baru Integrasi Nasional?” (Decentralization: A New Type Of National Integration?), Jurnal Ketahanan Nasional, No.4(3), Desember 1999, Universitas Gadjah Mada. Osoro, Nehemiah E. (2003). Decentralization and Growth, Ad-Hoc Expert Group Meeting, 7-9 October 2003, UNCC, Addis Ababa, Fiscal Policy and Growth in Africa: Fiscal Federalism, Decentralization and the Incidence of Taxation Institutions. Treisman, Daniel (2000). Decentralization And The Quality Of Government, Department of Political Science University of California, Los Angeles. Vidyattama, Yogi (2004). Pendidikan dan Janji Alokasi 20 Persen dari APBN, Kompas, Sabtu, 01 Mei 2004.

42

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Decentralization in Indonesia: The Possible - RAND Corporation

Preliminary draft – please do not quote without permission Decentralization in Indonesia: The Possible Impact on Education (Schooling) and Human Reso...

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