Indonesia Tries Rural Development

In an effort to make Indonesia’s rural backwaters the focus of development and reduce the burden on the central government, President Joko Widodo’s administration has since 2014 poured millions of dollars into projects that have built 95,200 km of village roads, 914,000 meters of bridges and 22,616 water supply units, among other improvements.

Indonesia has been attempting to cope with devolution, as it is called, since 1998 when in what has been termed a “big bang” the post-Suharto government devolved political and fiscal power down to sub-provincial units – districts, or kabupaten, and cities and municipalities, or kota. In 2005, the government introduced direct elections for local executives, including district heads and mayors.

It hasn’t been an unqualified success. A 2012 study by the International Crisis Group said the combination of devolution and elections “has made for a very powerful stratum of local authorities which feel neither beholden to the central government nor always compelled to comply with rulings from the nation’s top two courts.”

There is also the problem of corruption. The initial flood of money into government units unaccustomed to receiving it – and where few checks on corruption existed – enriched a huge number of local officials at the same time it gave them political power without doing anything for the villagers.

Nonetheless, Jokowi – once the mayor of a relatively small city who made combating corruption a cornerstone of his successful administration – apparently knows the odds. In a 2018 speech, he pointed out that since 2004, 12 governors and 64 regents have been arrested for their involvement in corruption. The KPK has also arrested members and chiefs of the House of Representatives.

He has chosen to go ahead with the program, called Dana Desa, or Village Funds, which is designed to strengthen Indonesia from the periphery, with a bottom-up approach that makes rural governments, the lowest management units in the country, the spearhead to improve the welfare of communities, authorizing them to organize and manage their own interests.

The first Dana Desa budget was authorized in 2015, totaling Rp20.7 trillion (US$1.505 billion). That was increased to Rp46.98 trillion and Rp60 trillion in 2016 and 2017 respectively. Of these funds, each village receives an allocation averaging Rp800 million per year.

Allocations over the past three years have mostly been aimed at equitable development. Other allocations are mandated to develop the economy of the communities via organizing skills training, developing tourist areas, and improving village-owned enterprises.

Dana Desa for Economic Well-Being

Village funds this year are to be widely allocated for labor-intensive activities. As Jokowi asserts, this is done to make the wheels of the economy spin faster and the ratio of the rural poor in communities decline. The President said the village funds are meant to allow for rural governments to provide employment for villagers so that they aren’t forced to be reliant on third parties.

Poverty eradication is one of the main 2018 focuses. As a follow-up to evaluation of the previous funds, the government in Jakarta will no longer provide funds under previous ratios. Villages with higher proportions of poor will receive higher proportions of funds Villages with a high number of poor people are to receive 15 percent more fund injections than more fortunate ones.

Categorization is based on four factors: the total number in the general village population, the ratio of poor, the geographical area, and a “geographical difficulties” index. Until now there has been no transparency in data which disclose which villages deserve the additional 15 percent allocations. Thus, in the process, accountability and transparency should be upheld so as not to arouse jealousy among villages.

Corruption or Catalyst?

Although the policy has reduced the ratio of rural inequality from 0.34 in 2014 to 0.32 in 2017, the administration, allocation, and preservation of village funds still requires considerable improvement.

As noted by Jokowi himself, the infusion of funds under the policy opens up opportunities for corrupt practices. Tjahjo Kumolo, Minister of Home Affairs, acknowledged that among the 74,910 villages receiving funds, the government received 932 complaints involving misappropriation. Kumolo also confirmed that 500 villages featured officials proven to commit corruption on village funds. That is probably extremely low. Many cases are never reported. Also, even among villages free from cases of misappropriation, planning of Village Funds is also often viewed as improperly targeted.

The problem of corruption, often viewed as an issue among the elite, has thus now become a reality at the village level. Too often village governments which had never in the past received funding, and whose responsibility was previously usually limited to solving administration issues, are now receiving funds that too often are misspent. The risk of corruption has become an issue that must be dealt with. Rampant corruption in the three-year evaluation impelled Jokowi to cancel plans to increase village funds from Rp60 trillion in 2017 to Rp120 trillion in 2018. The government stressed the need for improvement in management and governance among rural governments.

Lack of Professionalism

Good management is results not only when funds are allocated to the right people and programs, but also when they are administered by competent managers. The administrative tools in Indonesian villages and the people working in them can’t be equated with government employees at the district and municipal levels. Individuals with no more than primary school educations can register as village heads. In 2017 alone, 40 percent of elementary and junior high school graduates served as heads of villages.

The limited competence of village heads and other staffs is also a cause of corruption. Managing large funds with accountability is not an easy. That is the reality of Indonesian village society, especially in underdeveloped villages, which make up almost 30 percent or 20,168 of all villages. The education level is still very low. Therefore, the assistance of district-level governments is crucial.

Dana Desa is designed to address various problems prevalent in rural areas such as poor nutrition, limited access to education and healthcare, as well as limited infrastructure. However, there is plenty to do to get there. Jokowi appears to believe the problems aren’t insurmountable however.

Muhammad Zulfikar Rakhmat and Dikanaya Tarahita write regularly on Indonesian development