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					                                                 ANNE BOOTH
         Splitting, splitting and splitting again
        A brief history of the development of regional
        government in Indonesia since independence


The govetrunent of President B.T. Habibie. during its brief period in office in
1998-1999. passed two laws on regional government and centre-regional finan­
cial relations (Laws Nos. 22 and 25, 1999). At the time, few observers realized
just how far-reaching the consequences of this legislation would be; indeed
after Habibie left office, some thought that the laws would never be imple­
mented. The two presidents who succeeded Habibie were both Javanese. and
neitherappea.red to be strongly supportive of the legislation; indeed Megawatt
was overtly hostile. But the demand for fundamental reform of the way Indo­
nesia was governed, both in the national parliament and in the regions, was
too strong to be resisted, and implementation went ahead in 2001.1 Nine years
later, it is dear that the landscape of regional government and regional finance
has changed considerably, in ways which the originators of the 1999 legisla­
tion probably did not anticipate. Unsurprismgly, the consequences of these
changes continue to be much debated, both in Indonesia and abroad 2
    The purpose of this article is not to review all these debates in detail, but
rather 10 focus onotle aspecl of the changes which have occurred since Ihe

1   While the .trooge~t supporters of the Jesislation were hom "u!>;ide Jaw. im:lud i"ll ,,1 rourse
President }lllbibie himself, there' were also many Javanese who supporood the need for change,
not it'<lst in the nep.1'IIn<!nt of the Inl<lrior, where the legislation was drawn up. tn .ddition as
Schulte Nordhol! (2004:37) h"".rguod, GoIkar; lb. domin.n!party during the Soeharto era, 100t
heavily in Java in the 1999 election, and supportro the legi!lIatinn in the hope of maintaining its
power bases outside Java.
2   From bemg a relatively ""Slt!Clod topic dltting the Soeharto era, th" lileralure on decenl:ral­
ization and regional autonomy in lndcmt!Sia ha~ burgeoned since 200(1. Edited volumes indllde
Sakai (2002}, Aspinall and Fllaly (2003), Kingsbury and Avcli"ll (2003). E.rb. Faudler and Soelis­
liyanlo (2005) and Schulle NOl'<!hQlt and Van Klink"" (2007), Most of these volumes (XUS on
the politic.1 ••pects of the change which haw occun:ed sitlO! 2001. Erb and SoelistiyanJo (2009)
rontains a number ,of papers which "".mine the direct elecli""" of r~all""del'l\ since 2004 in
the conleX! of evolving:regiooal power structun'S.

ANNE BOOTH is Professor 01 Eamomics (with reli&encel<> Asia) al the School of Oriental and
African Studies, University of London. Her main field of at.'lIdemic interest is economic develop­
ment of Southeast Asia in the twentieth century. She is the aulbor of The JrnIfJnesi." "''OIwny in
riot lIi"et~lIth ami Iluelllieth ren/uri••:A history"'missed dP/"'fl""mes, Basingsloke: Macmillan. 1998
and of Colonial Itgacf;ts; frcIWmic and 1llJCid develapmenl jn &.t and Southeast AIli•• Honolulu: Uni·
versity of Hawai'j PRlSS, 2007. Prore..or Booth may be: reached at abl~ac.uk.


IMplr.,,,,,, wI de T&ll·, Land- en V./"' .....ndt (1JK1; 107-1 (2011);31-59
@2M1K"ninldjjl<lnstI!uul VCIOt TMh Land- .., Valh'l'l},unde
32                                               Anile Booth

passage of these laws, namely the splitting of provinces and districts into
smaller units.) The article points out that th.is process has in fact been going
on since the 195Ol;;, but has taken on new momentum in the last decade,
especially at the sub-provincial levels of government. Whetl Soeharto left
office in May 1998, there were 27 provinces in Indonesia, compared with 12
in the early 1950s. Since 1998, one province (East Timor) has acl1it."ved jnd<~­
pendence, and seven new provinces have been created, all but one outside
Java. Between 1995 and 2009, 37 new urban districts (lana) and 168 new rural
districts (kabupaten) have emerged. Almost all these new urban and rural dis­
tricts have been created outside Java (TabJe 1).

Table 1. Number of districts (kabupaten and kota)

                                         1961                  1995                  2009

Java                                       22                    25                     34
Sumatm                                     17                    21                     34
Kalimantan                                  5                     5                      9
                                                                   6                    11
Sula",,"'Si
Bali/NU1iiItenggara
Maluku
                                            "
                                            0
                                            1
                                                                   2
                                                                   1
                                                                                         4
                                                                                         4
                                          nla                      1                     2
Indonesia                                  49                    61                     98
Kabupatt'll
Java                                       80                    82                    84
Sumatra                                    47                    52                   116
Kalimantan                                 21                    23                     46
Sulawesi                                   33                    33                     62
BalijNusatenggara                          26                    26                     36
Maluku                                      3                     4                     16
Papua                                     nla                     9                     37
Indonesia                                210"'                  229                   397

• e~clud"" Irian JayoJPapua 

SOU",. 1%1, Central Bureau of Statistics 1%3; sour"", 1995, Central Bureau ofSlatistiesl996; Cen­

tral Bureau of Statlsllcs .1991; source 2009: Central Board of Statistics 2IlO9, Table 1.2. 

What has driven the process of the creation of new provinces and districts in
the post-Soeharto era? Why has that process occu.rred almost entirely outside
Java? What will be the implications for delivery of services to populations
;; The Indonesian word which hos ru."<!T! used to describe tms proa.'S,' is ~r." which means
l:>l""soming. Sorre olfitial public.tiom have used the tenn p'alhan for the spUtting oj provirwe,
and dlsiTids info smaller L1nilS; that"""",s • more .crurate word for what has actually occurred.
'IO!! English word 'splitting' will be usedin !hi. article. The word 'di.<iI?ict' will be w;ed lo refer to
both.Iw~"parcn and loom (lwt.madyall:otupradjal,.Qr 'socood-Ie\'"I' gO\'>'IDm<l!1t1d1ll!tah tingloot dual as
they were known urrtill999.
                               Splitting, splitting 1l1u1 splitting again                             33

across the Indonesian archipelago? This article seeks to cast some light on
these questions. But flrst, in order to set the post-199B developnwnts in c{m­
text, the article examines the way regional and local government developed in
Indonesia after independence.


Development ofregional govet'l1mmt after 1950

To many observers both at the time and later, it would have been logical for
the newly independent Indonesian republic to have chosen a federal consti­
tutionalstructure in 1949. Indeed there were, as Feith (1%2:72) argued, some
convinced advocates of a federal structure within the Republican leadership,
'and Prime Minister Hatta appeared at times to be one of them'.4 But the
Dutch stratagem of creating a federal Indonesian state in 1945·1946 effectively
discredited the concept of federalism in the eyes of the nationalist leadership.
Legge (1961:7) pointed out that 'in developing their proposals for a federal
Indonesia after 1945 the Dutch were not building on prewar foundations'. In
spite of some devolution of powers to the provindal administrations in Java
in the years from 19()() to 1930, the colonial government had certainly never
been federal in concept or in practice. Rather it had been based on a highly
centralist hierarchical system whereby the heads of each level of government
were accountable to those above, and where elected councils played only a
very weak role, both in the selection of these heads and in monitoring their
behaviour (Maryanov 1959:140-52).
    There can he little doubt that 'divide-and-rule tactics did in fact enter
strongly' into the 1945 decision to convert the archipelago into a federa­
tion (Taylor 1960:330). By far the latgest of the federal units created by the
Dutch was the state of East Indonesia, and by the end of 1947 responsibility
for finance, justice, general economic affairs, police, education, information,
health, sodal affairs, industry, shipping, forestry, irrigation and agrarian
affairs had all been delegated to the regional governmen.t, ,,]though in prac­
tice, as George McTurnan Kahin (1952:60) stressed, the exerdse of all these
powers was greatly vitiated by the numerous genera] and specific powers
reserved to the central government in Batavia. It was not by accident that
Eastern Indonesia was chosen a~ the model for the Dutch experiment in
federalism.' As George McTurnan Kahin showed in his dassic study, the

4 In an ifiterview in the Jabrl. Pos/ after Sooh.arto had left oflire (18 November 1999). FciIh point­
ed out that H.tta 'who played the centr.! role in dissolving that federal structure, was aenmlly "
fuderalist'. Lev (19%:148-57) discusses the deI>.lItes between Raden Supomo and MOOammad Yamin
Over the 1945 <:!>nSIiIution; Yamin wis""410 follow more explicitly the Amedcan mod,,!.
" In his study of the {ormation and subsequent hiStory of the slale of East Indonesia, Ide Anak
Agtmg Gd" Agung (19%:798) slale\ that Van lMool,s behaviour in ttl'!iUing slates and regions
within the Republic oflndonesia's territory '!!j)!.ll,ded the cl..alh kMlI tor the concept of a feder....
34                                            Anne Booth

Dutch found it easier to deal with the nationalist movement there than in
Java or Sumatra. Although some traditional leaders in Sulawesi supported
the Republic, the Dutch were able to muster sufficient force to overcome their
resistance, sometimes by replacing leaders sympathetic to the Republic with
those who were more pliant.
    So cynical were the means used by the Dutch to establish their federal
state in Eastern .lndonesia and elsewhere that the nationalists, not surpris­
ingly, equated federalism with collaboration. As Feith (1%2:71) argued, when
the form of the independent state came to be finalized in 1949, th.e issue was
not one of a federal versus a unitary constitutional form. Rather it became
one of support fur an independent republic versus cooperation with Dutch
policies of divide and rule. However Feith also pointed out that the appeal of
the anti-federalist case was 'undoubtedly greatest in Java'. nus was because
the federal units established by the Dutch in Java were transparently artificial,
and also because the independence struggle generally had rome to take on a
deeper importance. in Java than elsewhere,
    Thus the federal option was rejected by the new republic and a provi·
sional unitary constitution was adopted in 1950. While, as Maryanov (1958:31)
argued, 'the spirit of 1950 was to make the unitary state work', discussion
continued regarding a permanent constitutional framework for Indonesia 6
But while talks continued, decisions had to be made about appropriate admin­
istrative structures for the new nation, It was decided that Jakarta, rather than
Yogyakarta should be the new capital, and that Java should continue to be
divided into three provinces, as in the late colonial era7 But the new capital
would be given the status of a province, and as a concesslon to the population
of Yogyakarta and to its sultan who had participated so prominently in the
independero:e struggle, the sultanate would be designated a 'special region'
with provincial status;S Most of the sub-provincial units in Java (regencies or
kabuplltell, icawedanatT, kecamatarl, and kelllrahall) were also kept with few altera­
tions, although there was a trend towards amalgamation of kelurululn in Java.9

lion in Indonesia', See also Cbauvel (1997) for a diSOJssiOtl of the fallure of the Dutch attempt .t
crealinga fllderal state I" the ymrsfrom 194610 1949. That wme politidans from th.Soehartoera
had an inlerestin the Van Mook prop<l<lllls I. confirmed by Mboi{2009;42). He states that when h.
W<.'l1t to the Netherlands in 1989, ;!ft€r a period as governor ofEast Nu.'!atenggara, he ;va.' a.'li<t'd
by Srepardjo Rustam, then lhe Minister "I Internal Amo, 10 look at the Van Mook proposals
again and report on what relevance they still held lot modem Indotwsia.
6 An_nd..d analvsis of the consHtutional debates oftll.l950s am be ioundinNa.<ution 1992.
7 ·Ih. provln<:e of West }.viI ..... created in 1926, after the passage of th<! 1922 GovemmCl1t
Refunn Act; the provinres of Central and F..aSl Java were created later. The principalities "I' Sura·
karta and Yogyakarta were given the status of 'governments' (Niessen 1999:48-9).
S Quinn (2003:17().2) di......sses the reaSOns why Yogyakarta was treated differently from the
neighbouring sunanate of Surakarla in the early post-independenC<' ern,
9    AIr..algamatlan of villages was oo:ompanied by the Introduction of elecWJns fur all villoge of­
ficials on the hasi. of universal.dul! suffrage (George McTuman Kahio 1952:472). Outside Jav••
the pa£C of change was slower, although some amalgamalim! of small village'll inlo larger units
                              Splitting, spliffing and splitting again                              35

    Outside Java the problems were more difficult, as provinces had not been
formed in the colonial era, and boundaries were often more contested. It was
decided to carve Sumatra into three provinces (North, Central and South),
while Kalimantan, Sulawesi, the Moluccas, and the Lesser Sundas (Bali and
Nusatenggara) each became one province. As Feith (1962:99) pointed out this
arrangeme!1t 'paid liltle heed to regional or ethnic group feeling' and 500n
provoked strong reactions which in several instances led to armed revolt. In
Aceh there was particular resentment among the leaders who had sided with
the republican forces from 1945 to 1949; they felt betrayed when the promise
of provincial status made to them in the late 1940s was withdrawn, and Aceh
was incorporated into the province of North Sumatra (KeI11995:1O-1; Miller
2006:293). Other parts of Sumatra .feared dominafion by particular ethnic
groups, and in many parts of both Java and Sumatra, as well as in other
r€gions, the Darul Islam struggle, which sought the creation of an Islamic
state, gathered many supporters.
    These resentme!11S erupted intQ armed struggle and the establishm~'l1t
of an alternative govemmtmt in the province of West Sumatra in 1951. The
government reacted by offering provincial status to what had been the resi­
dencies of Riau and Jambi, although the loyaltiee of the populations in both
provinces were divided between the Jakarta government and the rebels
(Audrey Kahin 1999:192). The resource-rkh province of Kalimantan was also
divided into four provinces in 1957. Aceh was also awarded provincial status.
Sulawesi waS divided into two, and Kalimantan was divided into four prov­
inCE!s.lO The Lesser Sundas became three provinces (Bali, West Nusatenggara,
and East Nusatenggara). Thus by the time of the first post-Independence
population census in 1961, the.te were 22 provinces, although one was still
under Dutch control (Irian Bara!. or West Irian as it was then known). More
dh.isions took place in the early 1960s when the two provinces in Sulawesi
were divided into fOUf, and Lampung and Bengkulu were split off from
South Sumatra.ll Each of these provinces was in tum divided into kabupaten

probllbly took pla<:eduring tile fiB/two decade" of ,,,dep""';..,,,,. tn roIonial Java th"", was .Iso
<Ifurther layer of govemmt!r1t In l<1va bel",••,., the provin<:e mid the dilUrictcaUed the '",id<>nC)'.
Ibis laye, 8wlIived into tile pusl-indepenm",<e era; the head wru; u.sually referred to as an 'a...
sistant gove-mor".
10 For a diSClJESion of tM splitting of Kalimantan into lour provinces, """ Muhyarto and Baswir
19B9;5()3. Om!raJ l<alimantan was :formed a lew months after Ihe otw.. three in 1957; the main
","S('m fur ""paral>! provim:ild .tatlls fur thi.s i.ol.1ll<:! and lightly populated region ~ppears to
have been the fact that tile JXlPUlallOl1 w.... mainly O<lyak, ralher than Banjal'tlS<'.
II TI,e "plitting of sura"",.; inlo fuur province. had been preceded by the formation 0/ ...v.",1
new kIl/ruP'lt£o in both Central and So~515ulawesi ;n!he latler p.1ft of the 195fJs (Hill 1989:
Chapti!tS 22 and 25). SoutheastSulawesi had been OIle kl/ll.pau", after independence; in 1959 it
was split into four and !he new provin<:e was em.ted in 1%4. Bengkulo. whi<:h had the smalies!
population of any provif'lCO in 1971, appeats to have beengi""" pn;IVinci.l status (along with
lamptmg) lO 1964 becau"", of preS'i'Ure from 5oekarno's oocond wl~ Fatmawali, who was a na­
tive of I.lengkulu and whom Soekamo roe! during hi. exile there in the lam 1930s.
36                                           Anne Booth

and kota, and these in tum W<!I'C divided into kecamatan and village units.
Boundaries in Java remained largely unchanged, and because the popula­
tions of the three provinces in Java were so much larger than any province
outside Java, populations of kllbupaten and leota were also on average much
larger. In Java in 1961, the average population of a district-level government
was over 600,000 compared with around 250,000 in Sumatra and a lower
average elsewhere (Table 2).

Table 2. Average population size of district~, 1961,1995, and 2009 (x 1000)

Region                             1%1                    2009           Average sa.e (sq. km)
Java                               618        1,072       1,137                     1,097
Sumatra                            246          559         331                     3,205
Kalimantan                         158          374         238                     9,894
Sulawesi                           191          352         230                     2,582
Bali/N usatenggara                 214          361         315                     1.827
Maluku                             197          417         114                     3,945
                                                194          77                   lQ,66S
lnaonesla                           372"        669         462

, Excludes Irian Jaya/Pap"a.

Sou.rt:<i 1961; Central Bureau 01 Statistic; 1963; SOUTO! 1995: Central aure~u oi Statisti"" 19%; Cen­
tral Bur""u of Sl~tistia! 1991; SOu"'. 2008: Central Board of Statistics 2IJ09: Tabl,'S 1.;\, 23.
The splitting of provinces in the 19505 can be viewed as 'dh'ide and rule' tactics,
implemented by a central government facing armed insurrections in sl'veral
regi.ons and the threat of more violent outbreaks in others, But creating more
provinces and districts did little to remove the grievances felt by many out­
side Java towards the central gowrnmer.t as the economy deterioTa.ted over the
1960$, The main resentments were well summarized by Feith (1962:487-8):

     Over the whole period which followed the fonnation of the unitary state there
     was a crescendo of demands from· the provinces and regions. Provincial spokes­
     men denounced 'Jakarta' for not giving them enough autonomy. They castigated
     it for it!; cumbersome administrative procedures, for the fact that governmental
     leaders in the regions had often to fly to Jakarta for approval of quite minor decl­
     siems of poll..:y. They critids<!t:i the central government focille supervision which it
     exercised over their alfairs through. its pamong pradja representatives, governors,
     !<;!5idents, regents and so on. Above all they reproached the center for not giving
     them enough money.

From a strictly economic point.of view, much .of this discontent was caused by
the fact that, from independence onwards, Java ~s producing .only a small
                               Splitting,. splitting and sp1ittin~ again                             37

fraction of the nation's exports, but was consuming the bulk of the imports.
This led to constant complaints by the exporting regions, that although they
were the main generators of the nation's wealth, they were neglectt.'<I when de­
cisions were made on government expenditures. The whole issue of regional
finance was subjected to detailed investigation in the mirl-1950s by a commit­
tee headed by M. Nasroen, a senior civil servant in the Department of the Inte­
rior, and many of the findings of this committee were incorporated in Law No.
32 of 1956, concerning financial relations 00twet.'n the ct'ntre and the autono­
mous regions. I. This law did in fad: make some important coru;:essions to the
regions in that it allowed the proceeds of both income taxes and foreign trade
taxes to be shared between provinces where the tax revenues originated and
the centre. Unfortunately as Legge (1961:193) pointed out, implementation of
this law was slow. In particular little progress was made in laying down rules
for the sharing of the most important taxes between the centre and the regions.
    As well as new legislation concerning financial relations between the cen­
tre and the regions, a new local government law passed at the end of 1956
(Law No.1 of 1957) made important modifications to established procedures
governing the relationship between appointed regional heads (kepalll daerah)
and regional parliaments. Legge (1961:52) viewed the neW legislation as an
attempt to weaken the office of the regional heads and strengthen the parlia­
ments, and by implication the role of the political parties that expected to
dominate the ejected parliaments. Local government e\e<:tions did in fact ta.ke
place in Java during 1957, but when President Soekarno decided to return
to the 1945 constitution in July 1959, it was clear that the powers of both the
ceJltral and the regional parliaments would be drastically curtailed. 13 It was
not untillhe demise of .President SoehatlO almost four d('''Clldes later that new
legislation became possible. Law No. 22 of 1999 can thus be seen as trying to
achieve the same goals as Law No.1 of 1957, albeit in a rather different poUti­
caI and economic setting.
    By the early 1%05 the army had demonstrated its capacity to impose the
writ of the central government in most parts of the archipelago, and most of
the regional rebellions in Sumatra and Sulawesi were brought under control.
But increasing inflation and a hugely overvalued I!Xchange rate led to increased
smuggling, much of it carried on with army connivance. Increasingly the diss;·
dent regions found tha.t they could make common cause with the anti-Commu­
rust military (in whose senior ranks there were after all a fair sprinkling of non·
Javanese) in their continuing struggles with the centre. As Mackie (1980:674-5)
summed up the situation, a politics of manipulation and compromise replaced
the earlier confrontational pattern. A system of 'de facto federalism' came to

12 See I'.auw 196:), Appendix E for" discussion of !his legislation.
l.lFor a dlsrussion of the 1957Iegislati<"" and it>; fate during tile Guided O<.'I11ocr'CY period, S<'.~
Holland 1999:2Jl4-6.
38                                           Anna Booth

apply, where compromise and ad hocelJ[ affected economic as well as political
aspt.'(;ts of the relationship between the centre and the regions. Bargains over
the imposition of illegal taxes and the. sharing of revenues from smuggling
were struck between local offioals, the military and ovilian representatives of
the central government, with the last being usuaIly by far the weakest partner.
The centre indeed had little opti9n but to turn a blind eye to much of what was
going on because it had no effective means of enforcing central government
laws and regulations even where its official representatives in the form of gov­
ernors, bupati, alma! and so on might have wished to do so.


Achievemmfs and failings of tile Soeharto era

There is universal agreement that the Soeharto years were marked by 'an in­
exorable trend towards recentralisation of power' (Mackie 1980:676), and a
crucial role in this process was played by the system of central grants to the
regions. Over the 19608 the value of such grants had. been eroded by inflation,
and by 1%8 central grants were virtually wQrthless. Beginning in 1969, the
central government began a serieS of programmes whose purpose was to en­
able provincial, district and village administrations to carry out much needed
rehabilitation of infrastructure (roads, bridges, irrigation facilities. village
halls), using earmarked grants fCQrrt the centre. It was envisaged that labour­
intensive construction techniques would be used, and that much of the work
would be carried out in the agricultural slack season. Thus the programmes
were intended to have a significant employment generation effect. I.
    These programmes (which became known by the acronym INPRES) were
important not just because they demoos.trated the concern of the centre for
the parlous state of local infrastructure, especially in rural areas, and also the
centre's concern over the problem of rural under-employment. TIley were
also important because of the way that the grants were allocated.. Detailed
guidelines for allocation proeroures were drawn up by the Planning Bureau
in Jakarta and by central departments and, with very few exceptions, these
were adhered to, at least uptil the la.tler pari of the 1980s. For their part, local
governments could rely on a guaranteed flow of funds from the centre from
year to year. They could, within the guidelines laid down from the centre,
begin to make rolling plans for infrastructure development over several

14 For a dlS.<:ussion 01 the aims and iml'lem<1nlation of the origiMi INI'RES KabuPll'en Pro­
gramme, sc,<,o" Will973; i'alte!'l, Dapice .nd Faleon 198!l. These papers "''''''' written by ..dvis<;",
who were doocly connected with me original INJ'RES progtal'nJl'1eS and gi"" an outline 01 Il,e
"'.Y lhe proj<'cl$ we..., impleroenood, at least in lhe early ye<lrs. From the outset, it wa$ made dear
that Ire grants were not to be used for of6"" buildings Or vehicles, although other lund. at the
diSposal of kotalkobuptlfrrl governments induding the land tax (IPEDA) revenues were used for
offlre building:> in many cases.
                              Splitting, splitting alld splitti118 again                           39

years, se....ure in the knowledge that the funds would be available.
    After the first oil shock in 1973-1974, which coincided with the beginning of
(he second five-year plan of the Soeharto era, new INPRES programmes were
initiated which were directed to specific types of infrastructure, The largest
was the INPRES Sekolah Dasar which provided funding for the construction
of a simple three-roomed school hOUSl! in every village unit in the country,
using a plan which was drawn up jointly by the Department of Education and
the Department of Public Works in Jakarta, and sent to every province in the
country. A parallel programme provided funds for the construction of primary
health care centres. Again dear guidelines were laid down on the allocation
of funds and the construction of facilities, supposedly to minimize corruption
and waste. As these programmes accelerated, tngether with th.e growth in
expenditure on development projects implemented by agencies of the central
government, people everywhere in the archipelago began to see some evidence
that the oil wealth accruing to the government was being used on facilities
which would directly benefit them and their families, But the grant allocation
systtID remained highly centralized with the central government maintaining
tight controls over grant allocations, and also over how the money was spent.
    It is perhaps surprising that the oil boom of the 19708 did not bring with
it any demand on the part of the producing provinces to retain a larger share
of the profits. In fact, over the oil boom period (1973-1981), most of the oil
came from two provinces, Riau in Central Sumatra and East Kalimantan.
Both were small and lacking in strong regional identities or in much traditim1
of regional nationalism. In both provinces, but especially in East Kalimantan,
a large number of migrants from other parts of the country were drawn info
the oil and logging sectors and related activities, and in both provinces eth·
nic Javanese held key positions in the civili<ln and military bUfCaucraciesY
Although there was debate about the extent to which the oil boom 'spilled
over' to the local populations in both these provinces, there were sufficient
signs of improvement in infrastructure and living standards to convince the
majority of the indigenous popula.tion that lhey were benefiting from the
exploitation of their provinces' natural resources even if these benefits were
modest in comparison with the total value of their oil exports. 16
15 from the 196()s through ro the end of the ",ntury. the demographic structure of Easl Kallman·
tiln ov<>lved in a very differonl way from that of other provinces in lrulonesia. By 2000, 70 pcr cent
or the population ",.re living in the lour main cities. and the urban pop,ilatlons were mainly 01
J.vanese. Ouginese arulilanjarese origin (Morishita 2000;89-90). Large numoorsol .rugr.nts from
Java and other parts of Sum.1m also flooded into Rlau, giving riSOl ro an ongoing debate In the
post-Soeh/lrto era as to who exm:tly 1. an o,ang .Ria" (Ford 2003).
16 For more detailed disc;ussioIU of ecam.m'.ic development in the resouro>-rich. provinces untiJ
the m\d-19110s, see Chapters3-6 of Hill 1989, Allhough thellE' chapters "'''''e written by Tndnnesian
sdwlan;, they delllDnlllraled a remark.ble lad< of """""rn ave< the iSSI<e of sharing the resource
rent.. whidI suggesl!! that the provinCial elites in provinces such a.~ Aa>h and Rinu we", not un­
happy with the " y - !'T"v.i1ing.t the Dme,
                                            Anne Bootl.

    As world oil prices began to fall in the early 1980s, the Indonesian govern­
ment was forced into making cuts in its budgetary expenditures to compen­
sate for falling oil revenues. By and large, both central and re.gional govern­
ments accepted the decline in real resources available to tht.m through the
19805 as the inevitable consequence of the fiscal austerity nece.o;sitated by the
decline in oil prices. 17 Severe social unrest was minimized because, in contrast
to countries such as Mexico, Venezuela or Nigeria, Indonesia had not used
its oil revenues to subsidize prices of basic needs so that budgetary cutbacks
did not involve massive increases in prices of staple foods or other essential
services.. The period of the fifth five-year plan (1989-1994) saw a considerable
growth in INPRES expenditures relative to total domestic revenues and total
government development expenditure. By 1995-1996, they accounted for over
25 per cent of the development budget. Most categories of INPRES expendi­
tures shared in the growth over 1989-1994, although the fastest growth was
experienced by the tNPRES Jalan. which was targeted towards rehabilitation
and extension of the road network (Shah and Qureshll994: Chapter 4; Booth
1996: Table 11.1). In 1994-1995, a new lNPRES programme was introduced
which targeted particularly those villages which were considered to have
been 'left behind', that is those that had not benefited from the rapid econom­
ic growth of the past two decades 18 This new programme reflected growing
official concern with spatial inequities in economic development, and espe­
cially with what was seen as the 'problem' of Eastern Indonesia.
    During the 32 years of Soeharto'spresidency, only one new province was
created (Ea~t Timor) and this was the re!>ult of territorial conquest of the
former Portuguese colony, rather than splitting an existing province. There
WaS some increase in the numbers.of /cal.iuparen and IwtlJmadya, mainly outside
Java (Table 1). New Iwtamadya .Nf\ected the accelerating pace of urbanization,
although the central government was often slow to grant /wltlmadya status
even to areas which were clearly urban in terms of population density and
function. As popUlation grew between 1%1 and the mid-I99Os, the average
population of both provinces and districts also grew. By 1995, the average
size of a district (daernh tingkaJ dual in Java was over one million and around
560,000 in Sumatra. Rapid increases in the average population of a distrkt
also occurred in other regions (Table 2).
    The most dramatic change in the number of local government units over
the Soeharto era occurred at the village level. In 1969.1970 there were around
44,500 villages in IndolU'.!lia acco.rding to the official definition (Table 3).


17   The central government inttia led a PI"OC'eSS of tax reform in the rnid-l980s, which mvolved the
introduction of a value-added tax, and subsllIntial reiorm of the petS<lrull and corporate income
tax. There Was however no attempt 10 reform the system of local government financ(>,
18 For a discussion of the JNPRP.5 Des. Ternnggal, _ Pangesru and AzL> 1994:32
                            Splitting, splittillg a~ld splitting again                       41

By 1983-1984 this had increased to 66,000 although there was some decline af­
ter 198B-1989, The creation of new 'villages', especially outside Java, was often
controversial in that it was viewed as a deliberate attempt by the central gov­
ernment to impose an essentially Javanese construct on indigenous systems
in other regions.l~ Certainly there does appear to have been an official polk)'
over the 1980s to prevent villag!:.'!; from .exceeding a certain size in terms of
population, and to divide villages up once the maximum had been reached. In
some of the lightly populated regions outside Java, officials were concerned
that villages should not cover too large a geographical area. These concerns
no doubt reflected deeper worries about the re-emergence of radical organi­
zations, whether political or religious, at the grass roots. But these worries did
not extend to provinces and districts, whose populations grew considerably
between the 19608 and the 19905.

Table 3. 	Number of villages, per capita village grant and percentage oHotal
          grant accruing to Java

Fiscal year        Number of villages           J'er capita grant         Percentage of
                                                   (x Rp. 1000)            total grants
                                                                         a«ruing to Ja va
1969-1970                 44,478                         100                   4bA
1973-1974                 45,58'7                        100                   48.9
1971H979                  61,296                         350                    38.6
1983-1984                 66,437                       1,250                    36,B
1988-1989                 66,744                       1,500                    36.8
1995-1994                 63,721                       5);00                    36.4
1996-1997                 64,41J4                      6,500                    39,>
2009                                                      nlil                  nla
SoUf<-es;DcpartJ:nmt of Inform<>Uon 1993: Table XIV-2; Department of Information 1998: Table
[X-16. 2009 figures from Central Board 01 Statistics 2009: Table 1.2.


By the early 19905, it was dear that there was considerable unrest in many
parts of the country over the system of regional and local government which
had grown up under Soeharto (Booth 2003:185·94). In the resource-rich parts
of the country, the old grievances about Javanese exploitation had not gone
away, and when provincial poverty estimates were published in the early
19905, the problem of 'rich provinces and poor people' became more obvi­
ous. Although the headcount measu re of poverty WaH lower than the national
average in Aceh, Riau and East Kalimantan, it was much higher in Irian Jaya
in 1996 (Booth 2004: Table 4).

I.   Law No. 5!19l":1..,t out the prindpJ... of lhe New Order regarding YlIlage government; Ant­
lov (2003:195) argues!Ml with the passage of the law, 'village .ffaiwWf!re1>rougltl firmly under
lhe supervision and ccmtrol of hlglter authorities, and villa~ structures were recasl within a
sing!<: homog0lt'OUS mould'.
42                                          Anne fiooth

And in East Kalin)antan, which shared II long border with East Malaysia, dif­
ferel1C€s in poverty levels between East Kalimantan and the state!! of East Ma­
laysia were wMiderable in spite of the fact that per capita regional GOP (in
US dollar terms) was higher in East Kalimantan than in Sabah and Sarawak
(Booth 2003: Table 6), By the early 19908, many of the INPRES grants were
skewed to regions outside Java, but thill did little to assuage resentments in
many parts of the outer islands (Table 4):"1 At the same time, the lower per
capita allocations to the more densely settled regions, especially on Java, were
leading to grievances there, These perceived inequaUties, combined with evi­
dence of growing corruption at the province and district level, was build ing
into demands for a change in the heavily a!Iltrallzed system when the eco­
nomic crisis erupted.in late 1997,

Table 4. 	 Percentage of INPRES grants accruing to Java, 1973-1974, 1978-1979,
           1989-1990 and 1996-1997

INPRES 	                      1973·1974         1978-1979         1989-1990         1996-1997
Grant by type
Village                          48,9              38.6               36.9
                                                                             -          39.3
District                         44,3               58,9              59.2              54.9
Roads (district)                  n/e.               7,0              25.3              15.4
Provincial                       15-5               2.8,6             18.5              16,5
Roads (provincial)               nla                "'a               23.8              12.6
A~sistancc   to schools          nla                nfa               n/a               42.9
Villages left behind             nle.               n/a               n/a               27,8

Source: Department of Informotion 1993: Table XIV-9 to XIV-33; Depilrtm<:nt ofInformation 1991l:
Tab!1,?S lX-3 10 1X-20.



Implementation ofthe 1999legislativn

The years from 1998 to 2000 were some of the most troubled in Indonesia
since independence, The decision taken by President Habibie in 1999 to al­
low the people of East Timor to vote on a referendum giving them the choice
of special autonomy or independence resulted in a huge majority voting for
independence. Enraged militias backed by elements in the Indonesian army
destroyed infrastructure and killed civilians across the province, A United
Nations force moved in to restore order and prepare the territory for eventual

20 Alr••<jy' by the 1980. there was a tendency for the smaller, less dcOS<'ly settled provinces to
"",oj"" higher INPRES gyants bo(h in per capita rerms and ",Ialiv. 10 GDp, For evidence thai
there WilS no 'Java bi"", in the aUocatiQn ofiNPRES gyanls, """ Boolh 2003:189--90; Sit,'er, Azi. and
Sch~r 2\]()1:35«;.

				
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