Speech

Conference on Responsive & Accountable Local Government

William M. Frej, Mission Director

Jakarta | Tuesday, February 21, 2006

Your Excellency, Ibu Sri Mulyani, Minister of Finance, Government of Indonesia,

Your Excellency,  the Ambassador of Japan,

Distinguished Naitonal and Local Government Officials,

Distinguished leaders and representatives of international institutions and donor agencies ,

Distinguished professors and representatives from professional associations,

Team leaders of programs from the donor institutions, and

Distinguished participants in this conference,

First of all, let me express my sincere joy and honor to be with you today in this important event.  It’s not too often that we get the opportunity to discuss a common mission – to help this country in this difficult and turbulent, but exciting phase of decentralization.

While confronting the institutional inefficiencies that are familiar to those who have been in the country for some time, we are seeing a strong determination of President Susilo Bambang Yudhoyono to build responsive and professional local governments. We are witnessing unprecedented public participation and strong public opinion after decades of suppression. We recently saw clean and fair direct elections. There are also clear signs of the government’s strong desire to confront and eradicate corruption.  In other words, we are seeing that democracy in Indonesia is alive and well!

The central topic of this week’s conference is timely and relevant. For those of us who champion decentralization reforms,  it may appear that this is a never-ending and unrewarding process.  But let me say this, in the nearly six years of decentralization, this country has progressively advanced in every field of decentralized reform: improved planning and budgeting, performance-based management, minimum standards of public services, strong citizen participation, clean and fair direct elections and an active media.  

A few bupatis and walikotas dared to breakthrough and innovate, to put public interest first – and some paid a price for it.  We laud these leaders.  A few local agencies have done pioneering work – for example in one district in Central Java, the planning agency developed a good network with a local NGO network advocating good governance – risking direct confrontation with the non-reform minded bupati.   

We have experienced persistence of community-based organizations, NGOs and other civil society organizations in fighting for the poor and the marginalized, although many of these organizations are still unable to fund their own programs.  We notice courage within some private sector firms to take financial risks in investing in local markets. We also note that there are champions of good governance in every ministry, like many of you who are here. This is clearly encouraging news. 

Since the enactment of Law 22 of 1999, superseded by Law 32 of 2004, USAID has committed itself to support Indonesia’s ambitious decentralization process, including its “Grand Strategy on Decentralization” currently being formulated.  The U.S. government is providing $129 million over five years from 2004 to 2008, to support the Indonesian government and civic organizations in their efforts to build effective and accountable local governments, to address conflict and encourage pluralism, and to consolidate national-level democratic reforms. We continue to assist local governments as well as national agencies in moving the Government’s decentralization policy forward, and to implement of district and community-based capacity building programs like the Local Governance Support Program.  Civil service reform will improve the technical quality of staff of local governments, and strengthening the DPRDs will ensure that local governments will pass responsive laws.  At the national level, we are working with other Donors such as the Asian Development Bank, GTZ and the World Bank on clarifying obligatory functions, fiscal transfers and local revenues.  At the local level, LGSP is assisting in organizing local citizens and media to participate in planning and budgeting and improvement of public services in eight provinces, including Nanggroe Aceh Darussalam. 

In its present strategy for assistance, USAID has shifted focus from assisting central government partners to directly engaging Indonesia’s citizens, communities, private businesses and local governments, to promote a more moderate, stable and productive Indonesia. USAID seeks to improve public services  especially in health, education, other basic human services and economic growth. 

Furthermore, inherent in all activities is our fight against corruption which is costing the country dearly in terms of foregone investments and high social costs.  Presently, USAID is leading the effort to support Indonesia’s Financial Intelligence Unit to strengthen the government’s ability to fight financial crime and corruption, and combat money laundering.  We are also assisting the Supreme Audit Board to improve its auditing and oversight of government institutions.  In all of its governance programs, USAID promotes transparency and accountability in procurement. 

There is still a lot to be done to clarify roles and responsibilities at each level of government under the new laws on decentralization. Responsibilities need to be clearly defined and the reform agenda adopted at every level of government. We need to see more accountability in local governments, and institutionalized checks and balances. Finally, we need to work in partnership with  a strong and active civil society.

While the challenges seem huge, I am convinced that our discussion during these two days will provide significant contributions to consolidating the Government’s decentralization and governance reform.

USAID is grateful to the Faculty of Economics of the University of Indonesia, the Japanese Government, The World Bank and the other co-sponsors  for taking the initiative to hold this important conference. I wish great ideas and commitments will result from this conference that will directly benefit the people of Indonesia.

Thank you and Good morning to all!