From The Report: Indonesia 2012
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With some 17,500 islands tied into a single political system, a centralised unitary government has not proved adaptable to Indonesia’s geography or society. Decentralisation, which began in 1999 and devolved power to local administrative units, has seen both successes and failures, but should hopefully prove more stable in the long run. Critics see the programme as multiplying local bureaucracies and putting power in the hands of inexperienced or corrupt politicians, while supporters point to the dissipation of violence in formerly restive areas. The government’s Grand Strategy for Implementation of Decentralisation would attempt to address the concerns, giving a supervisory role to provincial governors, and allowing the central government to overrule local laws that conflict with national laws. The Indonesia Investment Coordinating Board (BKPM) has also instituted a Regional Champions programme that highlights certain provinces with the institutional qualities required for quick impact projects. Projects that have been awarded to regional champions include toll roads, geothermal power plants, mining and airport projects.

This chapter includes a viewpoint from Satish Mishra, Managing Director, Strategic Asia