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Can Indonesia Decentralise Successfully? Plans, Problems And Prospects


  • James Alm
  • Robert Aten
  • Roy Bahl


Indonesia is engaged in an unprecedented social and economic experiment. Responsibility for much government expenditure is being decentralised, largely to local (district) rather than to provincial governments. If this process is successful, the world's most centralised large country could become one of its most decentralised. This paper considers the issues arising as preparations for decentralisation are finalised, and as the socialisation of its plans and practices is considered by the central government, the People's Representative Council, the decentralised units of government, and the public. These issues were identified partly through interviews with local government officials. They include policy and administrative matters yet to be resolved, such as local budgeting, financial management and auditing practices, personnel decentralisation, local taxation, borrowing by local governments, and the match between revenues and expenditures. A major theme is the importance of a continuing national and local discussion on the goals and processes of decentralisation.

Suggested Citation

  • James Alm & Robert Aten & Roy Bahl, 2001. "Can Indonesia Decentralise Successfully? Plans, Problems And Prospects," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 37(1), pages 83-102.
  • Handle: RePEc:taf:bindes:v:37:y:2001:i:1:p:83-102
    DOI: 10.1080/000749101300046537

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    Cited by:

    1. World Bank, 2003. "Decentralizing Indonesia : A Regional Public Expenditure Review Overview Report," World Bank Other Operational Studies 14632, The World Bank.
    2. Manof Shresta, 2002. "An Overview of Intergovernmental Fiscal Relations in Nepal," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0205, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    3. Bambang Brodjonegoro & Jorge Martinez-Vazquez, 2004. "An Analysis of Indonesia's Transfer System: Recent Performance and Future Prospects," Chapters,in: Reforming Intergovernmental Fiscal Relations and the Rebuilding of Indonesia, chapter 8 Edward Elgar Publishing.
    4. Yogi Vidyattama, 2016. "Inter-provincial migration and 1975–2005 regional growth in Indonesia," Papers in Regional Science, Wiley Blackwell, vol. 95, pages 87-105, March.
    5. Roy Bahl & Jorge Martinez-Vazquez, 2013. "Sequencing Fiscal Decentralization," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 641-687, November.
    6. Ari Perdana & Deni Friawan, 2007. "Economic Crisis, Institutional Changes and the Effectiveness of Government : the Case of Indonesia," Governance Working Papers 21905, East Asian Bureau of Economic Research.

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