In an effort to attract both domestic and foreign investment, a healthy competitive spirit is growing between the archipelago's regencies. Last week, Ibnu Subiyanto, mayor of Sleman, told OBG of his plan to create the most transparent local administration in the country.
Since 2001, beginning with the implementation of regional autonomy, state structure in Indonesia has changed dramatically. The decentralization process transferred a broad authority and accompanying responsibility from the central government to the regency (kabupaten) level. Local governments are now mostly responsible for public works, industry and trade, investment, environment, land matters, cooperatives and manpower in their areas.
The transfer was judged by many as being quite sudden and while allowing some regencies to take better control of their development, it has left many struggling with insufficient human capacity and other challenges to overcome.
The benefits of decentralization in terms of the economic welfare are still not clear according to Agung Pambudhi, executive director of KPPOD (Regional Autonomy Watch), a non-governmental agency set up to monitor the development of the regions following decentralization.
Sleman is one of the regencies that has benefited most from the decentralization process even though Subiyanto acknowledged the regency faces numerous challenges, especially in terms of labour. To help resolve this issue, Subiyanto sends some of his staff abroad to study English and Japanese and to learn how to use the internet.
Subiyanto said he intends to overcome the challenges by becoming the leading regency in Indonesia in terms of management. He told OBG that developing the local bureaucracy would be the key to achieve this. "The most important thing is to have transparency, accountability, and representation in the bureaucracy, and if bureaucracy is good then the society is good," he said.
He expects the regency to reach this goal by 2012 through engaging in ambitious reforms. Subiyanto told OBG that 70% of the reforms they wanted had been already implemented in the past six years but the remaining 30% would be the most challenging as they involve changing the mentality of government employees.
The main economic activity in Sleman is tourism as the regency is home to many temples and the world famous Mount Merapi volcano. Eruptions occur on Merapi every 3-4 years, which brings in a large number of tourists for lava tours.
The Merapi area of Sleman was awarded National Park status in 2004, which has given extra resources to make the place attractive for tourism. According to Subiyanto, tourists coming to see the volcano primarily come from Australia but also from Europe, Japan and the US.
To promote tourism, the regent's office has been sending representatives to international tourism fairs in coordination with the ministry of tourism. Subiyanto told OBG that more recently the regency had increased its promotion activities by publishing an annual magazine with information on tourism activities available in the area, building a golf course and resort near the bottom of the volcano, building a volcanic centre and broadening the regency's promotion abroad to new markets such as Russia.
Economic indicators have been very positive in the past few years. According to the regency's annual report (Sleman is the only regency to publish an annual report with the government's balance sheets), the rate of economic growth rose steadily from 4% in 2001 to 5% in 2005. According to Subiyanto, it will continue to grow in the coming years, reaching 6% in 2009.
Sleman's success story comes amidst a growing concern about the benefits of decentralization. There are still many unresolved issues in terms of implementation of the policy, which has driven the home ministry to release its Grand Strategy earlier this year in order to help local governments.
Speaking in January, Made Suwandi, the home ministry's director of regional autonomy, told the local press he believed that "intervention from the central government continues to be needed in the implementation of regional autonomy because not all local administrations are competent".
Suwandi did not include Sleman in this category; he later added in regard to the Grand Strategy, that "if all local leaders were as good as Pak Ibnu [Ibnu Subiyant]...then the central government would not need to provide this guidance".
Because of this lack of clear demarcation of responsibility, the leadership of the Bupati has become central to the success of decentralization. This is also the opinion of Pambudhi, from KPPOD.
Yet Sleman still has some progress to make. In its latest ranking of the competitiveness of regencies, KPPOD ranked Sleman 67th out of 169 regencies evaluated. Through an ambitious plan to make Sleman the best bureaucracy in Indonesia in the coming years, their investment attractiveness is bound to rise.
