No one believed that the accession of Megawati Sukarnoputri to the presidency on 23 July 2001 would mark the beginning of a new era of dynamic reform. Rather, the Megawati presidency was welcomed with relief because the drama and chaos of 21 months under President Abdurrahman Wahid had at last come to an end. It was hoped at least that Megawati would preside over a period of stability that would enable her ministers to tackle the massive challenges that had largely been neglected by Gus Dur, as Abdurrahman is popularly known. The new president succeeded in meeting the first expectation. Government has indeed been stable under Megawati, who has avoided provoking the anger of her enemies and the despair of her friends in the manner of her predecessor. But she has failed to provide effective leadership and seems to have little mastery of the complex issues facing the government. Her public statements have usually been banal in the extreme, while policies were often handed over to her ministers to decide and left floating when they were unable to reach agreement among themselves. The reform agenda was effectively abandoned and government has become something of a holding operation.

Like Gus Dur, Megawati included all major political groups in her 33-member cabinet. Conscious of her party's lack of a parliamentary majority, she appointed only three senior leaders from her own party, the Indonesian Democratic Party of Struggle (PDI-P), the same number as from the second largest party, Golkar. Special attention was given to the loose Muslim grouping, the Central Axis (Poros Tengah), which had played a decisive role both in having Gus Dur elected in 1999 and in bringing him down in 2001. In addition to awarding four cabinet posts to Muslim parties, Megawati supported the election of Hamzah Haz, chair of the Muslim United Development Party (PPP), as vice-president in 2001, despite his campaign against her – as a woman – in 1999. Of the main political factions, only Gus Dur's wing of the National Awakening Party (PKB), which was still fretting over the dismissal of its leader, was excluded (although two prominent members of Nahdlatul Ulama (NU), on which the PKB is based, were included). The military was represented by four retired officers.

The decentralisation of government functions initiated by Law No. 22/1999 constitutes one of the most radical changes to Indonesian public administration since independence in 1945. Local administrations are now delivering a far greater range of public services, and are fully responsible for the planning, managing and budgeting of such services. They have been forced to reorganise their organisational structures to accommodate new staff and new functions. Untied central government grants allow the regions discretion in allocating revenue, requiring local governments to justify their priorities for public policies. The previously strong position of the bureaucracy, which in the past used to determine local public policies unilaterally, is being challenged by the much stronger role of regional representative bodies (DPRDs) in local policy-making, in the budgeting process and in electing the local leadership. Add to this the decentralisation law's emphasis on community participation and transparency of public sector activities (including finance), and the ‘new world’ in which the regional administrations find themselves becomes apparent.

Yet despite these fundamental systemic reforms to the Indonesian bureaucracy, surprisingly little seems to have changed in the way in which civil servants go about their activities and public institutions deliver (or fail to deliver) their services. Individual cases of reform and change do occur (Kusumaatmadja 2002), but there is an alarming lack of concerted and coordinated reform initiatives targeting public administrative structures and working procedures. At the national level, civil service reform has barely received any attention from the political leadership, meaning that recruitment, career systems and the remuneration system remain virtually unchanged from the Soeharto area. Neither has decentralisation been complemented by a systematic effort to overhaul the often unwieldy and byzantine central government administration, where departments continue to be ‘poor in functions but rich in structures’. Corruption, collusion and nepotism (commonly known by the acronym KKN) have not decreased, and Law No. 28/1999 on clean public sector administration remains a political statement with little practical implementation.

In the following, I will discuss the effects of decentralisation on the structure of the Indonesian bureaucracy at the local and central levels, as well as the continuing need for administrative reform, to which decentralisation has added a new layer of complexity. I will argue that the reform of the bureaucracy is one of the forgotten elements of reformasi and that there is a lack of political will to address core administrative problems.

Since the fall of President Soeharto in May 1998, Indonesia has gone through drastic political, economic and social change accompanied by a problematic process of democratisation. The decision to implement regional autonomy from January 2001 showed a clear recognition that regional interests needed to be reflected in policy-making processes. Under decentralisation, regional governments were given the power to determine their own policies, except in defence, foreign policy and some other limited areas. The preparatory period for the implementation of regional autonomy was short, leaving unresolved many legal issues related to the authority of the various levels of government, and much of the detail of power sharing between Jakarta and the regions.

Moreover, in the post-Soeharto era, long-suppressed local elites have sought to capture important government positions and strengthen the political position of the putra daerah (‘sons of the region’ or indigenous ethnic groups). In response to the complications arising from decentralisation, Jakarta has proposedamendments to the regional autonomy laws. So far, however, none have been passed.

This chapter will explore the impact of regional autonomy on regional resource management through a case study of West Sumatra's Padang Cement Company (PT Semen Padang), part of the Gresik Group. In order to deal with Indonesia's mounting national debt, the central government decided to sell Gresik to Mexico's Cemex Group as part of a privatisation program initiated under instruction from the IMF.

Semen Padang uses nearly 2.7 million hectares of land traditionally owned by the Nagari Lubuk (Nagari Luki) community as hak ulayat (a customary and communal right to land). The planned privatisation would involve the sale of this land, which is located in and around the city of Padang, to a foreign company. This is prohibited under the customary law (adat) of the indigenous Minangkabau people. The decision to privatise Semen Padang enraged local elites in West Sumatra, who demanded that the company be spun off from the Gresik Group and continue to operate as a state-owned company. Political tensionheightened when the provincial parliament endorsed a statement in November 2001 allowing Semen Padang to operate under the supervision of the provincial governor. The case of Semen Padang therefore provides a good case study to shed light on two important issues in post-Soeharto Indonesia: the complexities of regional elite politics, and the position of hak ulayat.

Building functional, democratic and autonomous politics in a situation of political distress, economic crisis and floundering social institutions, after decades of hegemonic authoritarian rule, is the daunting task on which Indonesia has embarked. So far it has been a painful and somewhat slow process – after four years of democratisation the nation still has not managed to decide on a comprehensive reform agenda for the renewal of the bureaucracy and public institutions. But by other measures the country has come a long way since the election in 1997 when the state party, Golkar, received 76 per cent of the national vote, allowing Soeharto to be unanimously re-elected as president the following year (only to be ousted two months later). Most astonishing perhaps is the radically revised relationship between the central and local governments, and the revival of local democracy and grassroots initiatives. Civil society actors around the country, who for decades have been left outside the public sphere, are demanding their rights. And local state bureaucracies are slowly opening up to consultation and public participation in ways that were unheard of five years ago.

But consolidating democracy will not be easy. As Vedi R. Hadiz argues in Chapter 8 of this book, authoritarian forces are still strong within the military, the economy, the bureaucracy, and even political parties. The present form of democracy in Indonesia – recently described by Törnquist (2002) as a ‘bad-guys democracy’ – benefits local bosses, thugs and corruptors. A weak state is just what the old forces and hardliners want. They have been innovative in capturing the new democratic spaces provided by the dismantling of the Soeharto empire and the centralised state. The bureaucracy remains dominated by people trained under the authoritarian regime, so riddled with corruption that it has grown incapable of serving the public interest. Many of the people who lived comfortably under the New Order are still in power today, albeit under new political arrangements, and often wearing different party shirts. They have been joined by a new class of ‘predatory interests’ (to use Hadiz's term) or preman politik, ‘political thugs’ (Suaedy and Simanjuntak 2000), people that haveemerged since the demise of Soeharto to cleverly capture the new democratic spoils.

During the 32 years of Soeharto's New Order regime (1966–98), observers of Indonesian politics and society became accustomed to continuity. The pace of political change was glacial, despite rapid economic growth and modernisation. Soeharto faced serious challenges from time to time, but succeeded for the most part in co-opting or suppressing his opponents. Between 1973 (when Indonesia's political parties were forced into debilitating amalgamation) and 1998, no major reform of the political structure took place. By contrast, Soeharto's fall in May 1998 triggered a dramatic, and at times chaotic, transformation. Old certainties have been overturned or contested in almost every sphere: restrictions on political parties have been lifted and democratic elections held, the army has been forced to make a significant withdrawal from political life, cultural expression has flowered, and the formal separation of Islam and the state has been challenged by fundamentalist groups, to name just a few obvious examples.

One area where change has been very rapid has been in relations between Jakarta and the regions. World attention has focused on the most dramatic cases where secessionist movements have struggled for independence, successfully in the case of East Timor. At the same time, a somewhat less tumultuous, but equally profound, transformation has been proceeding in every region of Indonesia. Driven by the parallel processes of democratisation and decentralisation, a dramatic reworking of the country's political landscape is under way. Extensive powers have been devolved to regional governments, new struggles for political and economic power have erupted at the local level, novel forms of politics based on local identity are emerging, and there has been a flourishing of grassroots civil society. This book represents a preliminary attempt to come to grips with this profound transformation and the manifold ways in which the rise of the local has affected virtually every aspect of Indonesia's politics, economy and society.

The structuring of centre–region relations in Indonesia changed little between the late 1950s and the late 1990s. Sukarno's ‘Guided Democracy’ (1959–66) and Soeharto's New Order were centralised, authoritarian regimes in which the authorities saw regionalism as a major threat to Indonesia's survival as a unitary state. The New Order in particular built an extensive edifice of state surveillance and control to ensure that central government policies and directions were enforced right down to the village level.

Since the downfall of Soeharto in May 1998, Indonesia's political system has experienced a significant shift of power from the once omnipotent centre to the regions. This phenomenon is not only related to the decentralisation program initiated by the Habibie government in 1999, it is also a result of the so far unsuccessful attempt to establish political parties as the main actors of institutional decision-making at the centre. With political leaders struggling to enforce party policies in regional branches, local politics has become the domain of bureaucratic and business-related power brokers. It has become the exception rather than the rule for party functionaries to gain the top positions in the provincial and kabupaten (district) governments. Instead, influential business people or bureaucrats exploit internal party splits to run their own campaigns for political office.

Once elected as governors or district heads (bupati), these entrepreneurs and bureaucrats are able to take a more independent stand towards the central administration than was possible during the New Order period, thanks to new political powers and additional funds generated by the local autonomy legislation. They remain vulnerable, however, to the complexities of their home regions. The often shaky political coalitions that allow them to grab power are also the most serious threat to their continued rule. Local legislatures have proved capable of throwing out local and provincial government leaders only weeks after electing them. Often, the payment of bribes to fellow political players is the only effective means of maintaining power.

Given the weak foundation of political leadership in the regions, it is essential for power-holders to secure the support of the two main pillars of the previous regime, the bureaucracy and the Indonesian National Army (TNI). The bureaucracy, however, has lost the solidity that was its trademark during most of the New Order period. Governors and bupati often view their subordinates as possible challengers to their leadership, and more than once have sacked bureaucrats suspected of harbouring plans to run against them at the next election. Confronted with demanding and at times hostile parliaments, as well as power struggles within the bureaucracy, local power-holders often turn to the TNI for help. In extreme cases involving, for example, the impeachment of an executive leader or a disputed election result, the security apparatus may in fact be the only institution capable of keeping an incumbent in power.

Before decentralisation was implemented in Indonesia, there was great concern about its prospects. Many doubted the capability of local governments tomanage their own affairs. Civil society organisations were viewed with suspicion by the government. Critics painted a grim scenario, predicting there would be a deterioration in public services and an increase in corruption.

Despite the perceived limitations of the decentralisation laws, implementation went ahead in January 2001. Signals about what was happening on the ground were mixed. The media focused on stories of excessive taxation by local government, with other local initiatives such as the ‘one-stop shops’ set up to issue licences and permits also getting occasional coverage. The regions were in various states of readiness and many of the ‘preconditions’ for decentralisation had not been met. As decentralisation proceeded, it became clear that the central government needed a mechanism to find out what was actually happening on the ground. To fill this need, in July 2001 the Asia Foundation developed an independent monitoring program called the Indonesia Rapid Decentralisation Appraisal (IRDA). The aim was to provide systematic and objective feedback to government and other key actors on the progress of decentralisation, within a short time frame of six to eight weeks.

Using data from the two appraisals already conducted, in this chapter I describe the progress of decentralisation and evaluate it using criteria derived from comparative literature on decentralisation. First I provide some background on the conceptual links between democracy, governance and decentralisation, and formulate a framework for the discussion. I then tackle the research results to describe how local governments are coping with the changes arising from decentralisation. Finally, I provide a summary and evaluation of progress so far.

I argue that the conditions for successful decentralisation are beginning to emerge in Indonesia, 18 months into its implementation. First, there is an evolving policy framework capable of ensuring that the financing and fiscal authority of local government matches its functions and responsibility to provide services. Second, local governments have reorganised their administrative structures to become more efficient in the delivery of public services while at the same time absorbing the large number of personnel devolved to them.

A new political regime characterised by the prominence of such institutions as parties, parliaments and elections has emerged in Indonesia. However, old predatory interests incubated under the New Order's vast system of patronage have successfully reconstituted themselves within this new regime. Through new alliances, they have effectively captured the institutions of democracy. This chapter examines the process of reconstitution and appropriation primarily through a discussion of the case of North Sumatra, but also on the basis of observations from Yogyakarta in Central Java. It pays particular attention to the rise in local politics of those formerly ensconced in the lower layers of the New Order's system of patronage. The analysis involves a reconsideration of some features of the democratic transitions literature, especially as adapted to the Indonesian case, and of currently fashionable notions of ‘good governance’.

ON TRANSITIONS AND INSTITUTIONAL CHANGE

The still-growing ‘democratic transitions’ literature essentially concerns the different scenarios that may follow the demise of an authoritarian regime, which may or may not culminate in the consolidation and maturation of democracy.O'Donnell and Schmitter, key figures in the transitions literature, describe their seminal work as being concerned with ‘transitions from certain authoritarian regimes toward an uncertain “something else”’. They note that this ‘something’ could be the ‘instauration’ of political democracy or the restoration of a new, and possibly more severe, form of authoritarian rule; or that it could simply be ‘the rotation in power of successive governments which fail to provideany enduring or predictable solution to the problem of institutionalising political power’ (O'Donnell and Schmitter 1986: 3).

However, those writing on Indonesia have tended, at least initially, to ‘forget’ the different kinds of ‘something else’ that are conceivable, attracted as they are to the linear conception of democratic change that is said to begin from authoritarian decay, then go through the stages of ‘transition’, ‘consolidation’ and ‘maturation’ (van Klinken 1999: 59). Related to this view is the idea that the transition to a liberal form of democracy is primarily a question of crafting the right kinds of institutions of governance. Thus much attention has been paid to charting the development of constitutional changes, new election laws, laws on regional decentralisation and the like.

The above quotation was taken from a letter received by my daughters' nanny from her cousin in her home village in Grobogan, Central Java. She told me people were fascinated by the election of the lurah (village head) and that all eligible voters (those with Grobogan ID cards, including herself) were being encouraged to come home to vote.

The story illustrates the changes taking place in Indonesia. For many ordinary people, a new era of popular representation has begun. They now have the opportunity to vote for someone they know to lead their village rather than having their lurah appointed for them by higher authorities. This new development was made possible by the political changes in 1998 that paved the way for the country to embark on a decentralisation program in January 2001. Many of the ‘ordinary people’ affected by these changes are women, who make up around 51 per cent of the Indonesian population and 57 per cent of eligible voters. The sweeping changes brought about by decentralisation will have major impacts on them. It is these impacts that this chapter examines.

The chapter is divided into four sections. The first summarises some of the arguments made in favour of decentralisation and examines the implementation of decentralisation thus far. The second considers the challenges that decentralisation poses for women, and the third examines the opportunities it has brought, at least in some parts of Indonesia. Finally, the chapter argues that both civil society and the state need to favour particular initiatives and policies if women's interests are to be fully served in the decentralisation process.

IMPLEMENTATION OF A REFORMASI AGENDA

The regional autonomy program, as an agenda for reform, was initially introduced as a response to regional disappointment with the central government. Under Soeharto, the state was run from Jakarta with almost no consideration given to the specific conditions of the regions.

The new policy of regional autonomy introduced in Indonesia under Laws 22 and 25 of 1999 has been legally in force since January 2001. Unlike the laws of the same year on the party system, general elections and the structure of the legislatures, which were subject to widespread public comment and debate, the two decentralisation bills attracted relatively little public attention. In the national parliament itself, the bills were passed into law with a minimum of debate and few amendments. Indeed, no substantial changes were made from the government's original draft legislation, a remarkable outcome considering the sweeping nature of the decentralisation provisions. Members of parliament generally considered the bills to be too good to be true; for the first time, the government itself had initiated a policy to reduce its own powers and surrender authority to the regions in a significant way. In other words, for both parliament and the public, Laws 22 and 25 reflected a genuine commitment to the reform of governance.

Parliament's positive response to the decentralisation bills reflected a view that the proposed changes represented an acceptable compromise between the two main contending concepts of government reform, namely the introduction of a federal system under which power would be devolved to the provinces, or the retention of the existing highly centralised system with only small modifications. Neither of these options enjoyed strong public support. Any attempt to shift power to the provinces would have been read by the conservative Unitarians as promoting federalism, by extension placing at risk national coherence and integrity. Inevitably this would have ignited a bitter public debate. The Habibie government had maintained from its inception that the period of extreme centralism was over, but it did not wish to be labelled federalist. The focus of regional autonomy was therefore on the district and municipality (kabupaten/kota) rather than provincial level of government. The devolution of political and economic authority to the district tier of government was seen as an acceptable middle-way solution. The policy was intended to provide more scope for local creativity and initiative in making policy and promoting public participation.