Indonesia

Indonesia is the most populous Muslim country and the third largest democracy in the world.  Since 1999, it has undergone an extraordinary transition to democracy while faced with the multiple challenges of ethnic and religious conflict, secessionist movements, and an economy that has been slow to recover from the Asian financial crisis of the 1990s.

The government of Indonesia made a bold move in 1999 by passing two laws that devolved governing power and fiscal autonomy from the central to the district level. This set the country on the road toward the most ambitious decentralization effort ever undertaken, with implementation beginning on January 1, 2001. 

In response to this ambitious decentralization initiative, ICMA received funding support from the U.S. Agency for International Development (USAID) to carry out multi-faceted programs that responded to the challenges stemming from the change. First was the Building Institutions for Good Governance (BIGG) Program, which had two components: the Local Governance Support and Partnership Program (LGSPP) and the Core Management and Budget Skills for Indonesian Local Governments Program.

Then in 2005, ICMA was awarded the Local Governance Support Program (LGSP) as a subcontractor to RTI International. LGSP was one of the largest USAID governance programs in the world and covered strengthening the legislative process, engaging citizens in planning and strategic decision making, and improving systems for planning and budgeting for better service delivery.

More recently, Indonesian professionals have been involved in ICMA programs focusing on sustainable communities, the legislative process and governance, and municipal financial management: the Professional Fellows Program and the Municipal Finance Training Certification Program.

Throughout its early projects in Indonesia, ICMA employed its CityLinks model (called Resource Cities at the time) to bring together experienced management practitioners from cities in the United States and officials from developing and transitioning local governments. CityLinks participants form long-term, sustainable partnerships through which they share resources and technical expertise that translate into practical strategies for improving the lives of local residents. After the partnership teams come together and perform an assessment of the city’s current challenges, they develop a work plan to serve as a roadmap for realistic, lasting solutions for these problems.

The Indonesian partnerships focused on environment, education, water services management, citizen participation, financial management, tourism and historical preservation, and natural resource management, among other topics. A list of CityLinks/Resource Cities partnerships appears in the right-hand column of this page.

Here is a summary of ICMA’s programs in Indonesia:

Building Institutions for Good Governance (BIGG)

ICMA’s Building Institutions for Good Governance (BIGG) program sought to strengthen the core management and budget skills of Indonesian local government officials. BIGG worked with the governments of Indonesia and the Indonesian local government associations to (1) improve local government budget and financial management practices and accountability; (2) support improved democratic decision making; (3) enable more efficient and effective delivery of community services; and (4) incorporate citizen participation in local government decision-making.

Local Governance Support and Partnership Program (LGSPP)

Local government associations play a significant role in advancing professionalism in local management. The Local Governance Support and Partnership Program (LGSPP) component of BIGG provided training and technical assistance for the newly established Indonesian local government associations at the urban and rural district levels to strengthen their capacity for advocacy, organizational management, communications, networking, training, and other member services.

ICMA retains an affiliate relationship with the Association of Indonesian Municipalities (APEKSI), which is still active today. The association continues to collect and publish best practices to share among cities. LGSPP led to the following accomplishments:

  • In 2001-2002, the lobbying efforts of local government associations were successful in suspending the central government’s attempts to revise the laws on regional autonomy. In 2003-2004, several local government associations worked together as a coalition to advocate against efforts to recentralize the authorities of local governments.
  • Associations greatly increased communications with members through newsletters, websites, email lists, regional office computer networks, radio talk shows, press releases, and membership magazines.
  • Associations also documented, published, and disseminated case studies on best practices in local government management. This process became institutionalized.

Core Management and Budget Skills for Indonesian Local Governments 

The Core Management and Budget Skills component of BIGG provided budgeting and financial management assistance that reached more than 400 local governments in Indonesia. This program worked intensively with 46 local governments in West Sumatra, West Java, Central Java, East Java, South Sulawesi, East Kalimantan, and the Bird’s Head Region of Papua by providing on-site consultancies, technical assistance, training, and publications. The combination of these activities supported improved democratic decision making, more efficient and effective service delivery, budget priority setting and performance tracking, and a greater level of citizen participation in the budget preparation process. Accomplishments included:

  • Development of a wide range of self-sustaining, interactive training models, manuals, and publications on performance budgeting and other financial and management topics. The materials were used in universities across the country.
  • All 46 local governments that received intensive training in one department took the initiative to use BIGG’s training materials to train their entire local government staff at the local government’s own expense through the use of their own trainers.
  • The local legislative councils where BIGG was active became more engaged in the budgeting process. Where previously they only “rubber stamped” a proposed budget, the legislative and executive branches began working together to jointly set budget priorities.
  • BIGG formed and trained a pool of highly sought-after local government consultants from a broad range of institutions such as local governments, local government associations, central government ministries, and universities.
  • Mayors began to link results of their performance budgets, balance sheets, profit and loss statements, and cash flow statements to their annual accountability reports.
  • Local legislative council members became more accountable to the public: for example, they reduced gasoline expenditures of non-active members and recorded attendance of council members.
  • Local governments conducted radio discussions about the budget with listener participation.
  • Local government departments began to identify measurable targets for each of their budgeted activities.

Local Governance Support Program (LGSP) 

ICMA's primary involvement in the Local Governance Support Program (LGSP) was in the area of finance and budgeting, providing training and other assistance to help local governments

  • Develop performance-based budgets that reflect community priorities
  • Create timely and accurate financial and performance reporting systems
  • Improve the stewardship of public assets
  • Transparently and responsibly meet financial obligations and build sustainable revenue streams
  • Develop internal controls and financial audits
  • Evaluate the implementation of performance-based budgeting in relation to the annual strategic plan
  • Improve budget transparency and oversight and the performance of local agencies.

At the program’s end, accomplishments included the following:

  • Citizen participation in local budgeting through public hearings and other transparent mechanisms
  • Broadened scope of finance and budgeting activities to include asset management and program evaluation
  • Improved integration of planning, budgeting, and accounting processes in most provinces and districts
  • Across-the-board improvement in average outcome measures for all LGSP provinces on the following, as assessed before and after the program: planning and budgeting, accounting and reporting, and asset management
  • Improved commitment on the part of the various stakeholders involved in the local budget, including civil society and local councils, and interaction among stakeholders to find solutions to common problems.

Sustainable Communities Professional Fellows Program 

Six professionals from Indonesia were among 24 participants in the Sustainable Communities Professional Fellows Program, in which Fellows enjoyed short-term stays in U.S. local governments and participated in job shadowing, meetings with government officials, and visits to nonprofits and community groups working to create sustainable communities. Staff from U.S. host communities then made reciprocal visits to Indonesian cities. The purposes of the program were to:

  • Provide opportunities for professional development and cultural exchange
  • Promote partnerships on climate change and sustainable communities at the local government level between key local government practitioners and professional associations in the United States and their counterparts in other countries
  • Actively engage the fellows in exploring local government policies and adaptation strategies for dealing with climate risks and for creating more sustainable communities
  • Develop and implement a long-term plan of engagement between exchange fellows and other local governance stakeholders that will continue after the grant program has ended
  • Increase opportunities for local government professionals to network and develop solutions for impending climate risks.

Legislative Process and Governance Professional Fellows Program 

In 2014, 14 Indonesians are participating in a similar Professional Fellows Program focusing on the legislative process and governance practices, accountability, and transparency.

Municipal Finance Training Certification 

ICMA developed and delivered an intensive course in municipal finance for East Asian and Southeast Asian officials in 2011, 2012, and again in 2013. The objective of the training, funded by the World Bank, was to increase the capacity of local governments to secure bond financing necessary for infrastructure improvement. ICMA partnered with the World Bank’s Global Development Learning Network, an interactive videoconferencing system, which allowed participants from Indonesia, Malaysia, Mongolia, the Philippines, Thailand, and Vietnam to attend sessions.

The modules covered the operating budget, capital planning and budgeting, revenue generation, accounting and reporting, and creditworthiness and debt financing. More than 200 individuals successfully completed the training.