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Editorial: Make Sure Regions Spend Money Wisely
September 14, 2011

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How times have changed. Before the Regional Autonomy Bill came into being, civil servants in the provinces had to depend on the goodwill of the central government for funds and those funds often were inadequate to meet their needs.

As a result, many regions remained underdeveloped and their bureaucrats underpaid. The Regional Autonomy Bill was aimed at reversing that situation by giving provincial government leaders greater authority and more funds to develop their constituencies. It was hoped that being directly elected, those leaders would spend their funds more wisely.

Unfortunately, this has not come to pass. In fact, the reverse has happened. Regional leaders are using their new-found wealth to bloat local bureaucracy by hiring more civil servants — so much so that the bulk of the funds, up to 80 percent in some cases, is being allocated for staff expenses to the detriment of the people and economic growth.

This is the worst case of big government being out of control. Instead of spending money on infrastructure, schools and hospitals, the money is going to paying civil servants, many of whom are inefficient and plainly overpaid.

Realizing the severity of the situation, the central government is considering amending the law on fiscal balance between central and local governments, with the aim of forcing the local government to shift its focus from officials’ expenditure to increasing infrastructure spending. We wholeheartedly welcome this initiative as it is necessary.

Marwanto Harjowiryono, the director general of fiscal balance, said the government plans to cap official expenditure at 50 percent of the local government budget or require at least 20 percent of expenditure to be used for infrastructure. That is a good start, but one fears it may still be inadequate.

Unless regional governments are forced to upgrade their infrastructure, the country will not be able to achieve its economic growth targets. Moreover, Indonesians will suffer from poor facilities which will impact their quality of life. There must be an immediate freeze on new hiring of civil servants by regional governments that are already bloated.

Having set ambitious infrastructure plans, the central government must act decisively to ensure the Rp 400 trillion ($46 billion) flowing to the regions is better utilized.




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