The natural resources industry in decentralised Indonesia: how has decentralisation impacted the mining, oil and gas industries?
Indonesia’s decentralisation laws have granted local governments more authority for generating higher own revenues and running more tailored decentralised public services. There is evidence, though, that inefficient and ineffective local governance continues to predominate after decentralisation. Regional autonomy, as defined in the decentralisation laws, has left some matters ambiguous, requiring more detailed implementing regulations. In the natural resource sector, in particular, the implementation of these laws has generated uncertainty for most social actors. Traditional as well as new formal and informal rules of conduct among a wide array of social actors continue to influence the management and allocation of the economic and social benefits of natural resources at the local level. All this has resulted in central-local policy inconsistencies and coordination issues, new hierarchies along geographic-political divisions, the wider spread of corruption, serious fiscal and environmental issues and adverse effects on the investment climate of the country.
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