The origins of regional autonomy in Indonesia: experts and the marketing of political interests.(Essay)

This article argues that, in contrast with prevalent choice-theoretic accounts of institutional origins in new democracies, the passage of Indonesia's regional autonomy laws in 1999 took place despite the interests of powerful political actors rather than because of them. Lacking the past experience to calculate retrospectively the likely electoral payoff from supporting an effort to devolve political power to Indonesia's city and regency governments, New Order-era political elites in Jakarta gambled on the advice of a team of experts. The experts assured them that supporting the effort would give them strong and salient reformist credentials on the eve of free elections. The conclusion of the article suggests that the political origins of regional autonomy in Indonesia have broad implications for the understanding of institutional genesis in new democracies, and that the potential impact of expert advisers is a fruitful focus of future research.

KEYWORDS: Indonesia, decentralization, federalism, institutionalism, transition

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On May 21, 1998, Bacharuddin Jusuf Habibie, President Suharto's final vice-president, assumed the presidency of Indonesia in the aftermath of a devastating economic crisis that spurred massive anti-regime protests and eventually Suharto's resignation after thirty-two years in office. Although according to the Indonesian constitution Habibie had a legal mandate to fill Suharto's term in office--which would have ended in 2003--he inherited a de facto obligation to prepare the country for a political transition much sooner than that. The buzzword for all of the demanded and actual changes to Indonesia's political system--Reformasi--became a hotly contested term. Little certainty or consensus existed, however, over the shape of reform or the transition, leaving Habibie the latitude to try and define them himself even as he tried to parry demands from activists, separatists, regime loyalists, and the international community.

Hoping to ride his success at managing the transition--and ideally to win an anticipated presidential election on his own--Habibie relied on a "change team" of experts, who came to be known as Team 7, to help him define Refonnasi. (1) Originally charged with reforming Indonesia's electoral system in preparation for the elections ultimately held in June 1999, (2) Team 7, after completing that task in late 1998, turned to writing a comprehensive reform of the country's unitary system that would devolve power to its regions. Only a few months later, the team presented the first draft regional autonomy bill to President Habibie, who agreed to support the bill, and then to the parliament.

In May 1999, the Indonesian People's Consultative Council (Dewan Perwakilan Rakyat, or DPR) passed Law 22 on regional autonomy and followed it with Law 25 on intergovernmental fiscal relations. (3) It has since been described as the world's largest political decentralization project. Nearly 2 million civil servants were transferred from the central government to the regency (kabupaten) and municipality (kota) levels along with authority over more than 40 percent of government expenditures and more than 60 percent of the national development budget.

More notable still is that these laws were pushed by a president and passed by a parliament made up entirely of holdovers from the Suharto era: the three official parties during this period and the army faction. (4) All three parties were highly centralized and vested in and committed to both the unitary state that held their interests and to the continuation of the centralized nature of the party system. (5) Moreover, although they all stood to gain from supporting democratic reforms in the eyes of the citizens whose votes they hoped to win, it remained highly uncertain which "reforms" would hold most salience. In short, it was unclear whether decentralization would prove to bring much in the way of electoral payoffs.