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International Decentralization Education & Training Capacity Building through Decentralization Education & Training for Public Service Delivery 2010-2011

International Decentralization Education & Training     Capacity Building through Decentralization Education & Training For Public Service Delivery 2010-2011    

DECENTRALIZATION SUPPORT FACILITY Indonesia Stock Exchange Building, Tower I, 9th Floor Jalan Jenderal Sudirman Kav. 52-53 Jakarta 12190 Phone: (+6221) 5299 3199 Fax: (+6221) 5299 3299 Website: The Decentralization Support Facility (DSF) is a government-led multi-donor trust fund whose principal purpose is to support the decentralization agenda of the Government of Indonesia. The DSF attempts to fulfill three principal roles, which are designed to help the Government of Indonesia to: (i) improve the harmonization, alignment, and effectiveness of development assistance; (ii) inform and thereby improve policy development and implementation; and (iii) build governance capacity, particularly at sub-national levels. The institutional membership of DSF comprises the National Development Planning Agency (BAPPENAS), the Ministry of Finance, the Ministry of Home Affairs, and nine donors (ADB, AusAID, CIDA, DfID, Government of Germany, Government of the Netherlands, UNDP, USAID, and the World Bank). The principal financial donor to DSF is DFID, with AusAID and CIDA also having made financial contributions. Cover photos copyright World Bank Photo Library (main photo), Bambang S. Aji (top left, section 2 of content), Directorate of Regional Autonomy, Ministry of Home Affairs (top right, section 4 of content) and Kurnia (bottom left, section 1 of content). All rights reserved. International Decentralization Education & Training is a product of consultants of the Decentralization Support Facility. The findings, interpretation, and conclusions expressed herein do not necessarily represent the views of the Decentralization Support Facility or its donors. Cover design by Harityas Wiyoga  



Funded by Decentralization Support Facility  Central European University Summer Short Course on Fiscal Decentralization and Local Financial Management  Master Degree Programs in United Kingdom  Decentralization Training in United Kingdom  Comparative Study on Public Service Standards & Delivery in China

Table of Content   Section 1: Central European University Summer Short Course on Fiscal Decentralization and Local Financial Management……………………..….


Section 2: Master Degree Programs in UK…………………………………...


Section 3: Decentralization Training in United Kingdom………….......…


Section 4: Comparative Study on Public Service Standards & Delivery in China……………………………………………………………………………….…



International Decentralization Education & Training


Objective. The course aimed to enhance the capacity of officials from three key line ministries – Ministry of Finance, Ministry of Home Affairs, and the National Development Planning Agency – for successful implementation of public sector resource management reform by analyzing mechanisms for transfer of resources among governments and identifying ways to address the issue of regional disparities and local resource mobilization. Participants. Twelve delegations, comprising officials from the National Development Planning Agency, Ministry of Finance, and Ministry of Home Affairs. The course was also attended by participants from eighteen other countries (Serbia, Poland, Romania, United Kingdom, Nepal, India, Russia, Azerbaijan, Moldova, Kazakhstan, Armenia, Mongolia, Georgia, Tajikistan, Sierra Leone, Zambia, Uganda, Argentina). Program. The core faculty consisted of professors from the School of Public Policy, University of Birmingham, UK; District of Columbia Government, Washington, USA; Development Alternatives, Inc., Bethesda, USA; and University of Geneva, Switzerland; and former high-ranking officials (e.g. former Minister of Foreign Affairs of Hungary). Topics covered included worldwide trends in fiscal decentralization and the concept and practice of the assignment of expenditure responsibilities and revenue authority; the design of various forms of central to sub-national transfers and local own-source revenues; creditworthiness and the financial risks of local authorities; and emerging issues in budgeting and local public management. The course was carried out through advanced group discussion and analysis of thorough exercises and case studies. Two special presentations on fiscal decentralization policies and intergovernmental transfer practices in Indonesia were delivered by Professor Heru Subiyantoro, Secretary of Directorate General of Fiscal Balance, Ministry of Finance. Additionally, the participants from Indonesia undertook site visits to the office of the Mayor of Budapest, the Szolnok County Office, and the Office of Drinking Water Providers Association of Hungary. Lessons Learned. Decentralization policies in many The Indonesian representatives felt more confident different countries are influenced by various aspects, that the implementation of fiscal decentralization such as the economy, social background (e.g. in Indonesia could become a benchmark for distribution based on ethnicity, tribes, or potential international best practices, despite existing separatism threats), and political state (e.g. federalism, barriers and problems in implementation. unitary republic). Comparative experiences from participants from different countries provided particularly useful insights, including the correlation between the effects of decentralization toward regional capacities in enhancing the ability to generate the local taxes. This variety of comparative experiences provided by participants from eighteen different countries could be utilized as references for providing alternative input to policy formulation and development of the decentralization in Indonesia. It could be concluded that the basic common purpose of countries applying fiscal decentralization is to provide larger authority for local governments to serve their citizens. Knowledge Sharing. Participants aimed to share lessons learned with colleagues back in their respective ministries in a continuous way, such as small focus group discussions on particular subjects of most interest and urgency. Small focus group discussions is considered to be more effective compared to large forums that tend

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International Decentralization Education & Training

to adopt a rigid and formal discussion style. Three subjects from the course received prominent attention from all participants, namely intergovernmental transfers; local taxes and charges; and local government financing. In relation to the intergovernmental transfers, in-depth discussions on developing a transfer formula that can accommodate justifiable political interests, and benchmarking the development of specific grant formula would be most beneficial. Most international studies thus far are associated with general allocation grants. In connection with local taxes and charges, the types of taxes Three subjects from the course received that should be managed by different government levels remain prominent attention: intergovernmental to be an interesting topic. Furthermore, methods by which local transfers; local taxes and charges; and governments are afforded the opportunity and flexibility to local government financing. impose various local taxes, and the impact of high-cost economy arising from the imposition of local taxes to be borne by the respective regions are still dilemmatic up to now. Other areas for stimulating discussions include the effectiveness of tax administration and the economics and efficiency of tax collection. Indonesia is currently implementing the "closed list" system, whereby the central government, through the law, determines the types of local taxes and charges that can be imposed by local governments. Local governments are therefore not permitted to create new types of local taxes without central government permission. Based on experiences shared by participants from other countries, some local governments pay more attention to potential tax revenues by removing small-generating taxes. For example, if the industrial sector is considered to be more attractive than tourism, the local government would optimize industrial charges and remove various charges in the tourism field. Meanwhile in Indonesia, local governments tend to impose all types of taxes allowable under the law, without bearing in mind the effectiveness and efficiency associated with the collection of taxes.

Related to local government financing, the extent of the central government's role and intervention in taking overall risks arising from the issuance of municipal bonds is a particularly important topic. In some countries, local governments are provided the full authority to issue municipal bonds to cover its budget deficit without having to consult, coordinate, or seek approval from the central government. However, the practice in Indonesia is very conservative, where local government is regulated by the ratio of budget deficit, and bond issuance must be approved by the central government. This tight fiscal policy is viewed to have limited the issuance of municipal bonds, but consequently, Indonesia has no experience on regional fiscal collapse due to

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International Decentralization Education & Training

failure of paying principal and interest installments on municipal bonds. Finding the right balance certainly requires further study on local financing. Conclusions. The knowledge gained from the course will not be directly implemented on the daily work of the respective participants. However, benefits will become apparent in the medium and longer terms, considering the nature or characteristics of the work in the ministry are policy-driven. Three subjects were selected as prominent subjects to be shared with office colleagues, comprising intergovernmental transfer policy, local taxes and charges, and local government financing. It is considered that the most effective way to share the knowledge is by organizing small focus group discussions. Comparative international practices on fiscal decentralization are found to be useful in attracting colleagues’ attention and interest.


H. E. Martin Hatfull, the former British Ambassador to Indonesia (2008-2011), expressed confidence that the newly acquired knowledge and problem-solving capabilities gained by scholars will equip them to contribute to Indonesia's goals of growth, prosperity, and economic reform.

Participants. Twenty four government officials from the Ministry of Finance, Ministry of Home Affairs, and BAPPENAS pursued Master degree studies in the UK funded by the Decentralization Support Facility (DSF). The scholarships, worth a total of US$1 million, were testament to DSF's commitment to strengthen the capacity of government officials through providing high-quality decentralization education on important aspects of public service delivery, principally fiscal decentralization and social accountability. Program. The universities at which the officials pursued their studies included the University of Birmingham, University of Manchester, University of Leeds, University of Bradford, University of Southampton, University of Bristol, and University of Newcastle. The specific programs taken consisted of Decentralized Governance and Development, Urban Governance for Development, Local Governance Finance, Public Administration, Public Service Policy and Management, and Corporate Environmental Management. Outcome. Having successfully completed their studies, the officials expressed that study in the UK was a challenging yet an outstanding and extremely enriching experience. They were impressed with the British education system and highlighted the effectiveness of interactive teaching, which has promoted their critical thinking and enhanced their understanding of technically complex concepts. Several scholars noted that their chosen topics for dissertations were selected in view of their positions in the government. H. E. Martin Hatfull, the former British Ambassador to Indonesia (2008-2011), during the pre-departure briefing expressed confidence that the experiences, knowledge, and problem-solving capabilities gained by the scholars will equip them to contribute to Indonesia's goals of growth, prosperity, and economic reform. This remark is indeed acknowledged by all officials, who, upon their return, stated that their enhanced experiences and qualifications have significantly – and will continue – to contribute to the improvement of their respective work.

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International Decentralization Education & Training


Participants and Program. Thirty eight government representatives from five ministries/agencies were sponsored by the DSF to undertake a training that covered specific subjects, namely fiscal decentralization; social accountability; inter-regional cooperation; spatial planning; and border area and regional economic development. The program consisted of visits to state and city government institutions in United Kingdom to learn first-hand how decentralization and social accountability mechanisms in a developed country work in practice. Indonesian officials from the Ministry of Home Affairs, Ministry of Finance, National Development Planning Agency, Ministry for the Development of Disadvantaged Regions, and the National Border Management Agency visited the House of Parliament and Civil Service Headquarters in London, the Welsh Assembly in Cardiff, the Cambridgeshire County Council in Cambridge, the Great Yarmouth Borough Council, and the Welsh Local Government Association. Lessons Learned. The United Kingdom, composed of Great Britain (England, Wales, Scotland) and Northern Ireland has a unique political system whereby the Parliament in England (‘Westminster’), as the highest legislative authority in the country, exists alongside a constitutional monarchy who asserts limited and largely ceremonial powers (e.g. opening and dismissing the Parliament at the beginning of the Parliamentary year and after a general election respectively). Following referendums in Scotland and Wales in 1997, and in both parts of Ireland in 1998, Westminster initiated a dynamic and asymmetrical devolution process, and by 1999, the Scottish Parliament, the National Assembly for Wales, and the Northern Ireland Assembly were established. Each devolved parliament has its own executive body/government (e.g. the Scottish government constitutes a Cabinet and Ministers), with varying arrangements that reflect their distinct individual history and administrative structures. The UK parliament, including the devolved The UK government maintains control of all matters that parliaments in Scotland, Wales, and Northern have not been devolved, such as defence, national Ireland, provides extensive access to security, foreign affairs, fiscal and monetary system, social information about their cabinet programs and security, broadcasting, civil service, and immigration. contact details of each Member of Parliament Although it has the official power, the UK Parliament has (MP). Many MPs have utilized blogs and adopted the convention that it does not pass any social network to be closer to constituents. legislations on devolved powers without the agreement of the devolved parliament. Local governments are given full discretion to manage the utilization of block grants that comes without any ring fencing, tied grants, or conditional grants. This principle of subsidiarity allows local governments to determine public sector funding allocation to best satisfy their constituents. Currently, nonetheless, there is a trend that local governments in the UK are pushing for more decentralization (e.g. the Scottish Nationalist Party has desired a referendum for independence for many years), partly due to the asymmetry of the devolution that could motivate devolved governments to seek extra powers. Any recent dynamics has remained peaceful, and largely transparent. Access to information related to the government in the UK is impressive, and extensive information are provided in the websites of the respective parliaments. Furthermore, a brief background note and contact details of each member of parliament (MP) are also listed. Some MPs have even turned to blogging and social network (e.g. Facebook, Twitter) in the attempt to bring themselves closer to the people they represent.

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International Decentralization Education & Training

This superior level of vertical and horizontal access to information has proven successful in the UK, something which Indonesia should also consider in the effort to strengthen its downward and upward accountability. One of the British government’s main programs under decentralization is the reduction of costs associated with a ballooning bureaucracy, both centrally and locally. Resistance from both levels was apparent. For example, the abolishment of organizations/projects considered redundant is often compromised by the formation of a new organization or the extension of projects with principally the same tasks and functions (a phenomenon referred as ‘mission creep’). In Indonesia, the issue of bureaucratic streamlining has also garnered heated debates. At present, the draft Law regarding National Civil Apparatus is expected to play a vital role in ensuring greater efficiency of the civil service in Indonesia. An important matter to consider, in the event of streamlining, is addressing the resulting increased level of unemployment. The establishment of any new organizations should be based on genuine needs. Efforts in creative and innovative development should also be encouraged.


Objective. This comparative study sought to strengthen the capacity of the Ministry of Home Affairs, Ministry of Health, and Ministry of National Education to improve public service delivery by examining how important elements of public services are delivered in another emerging economy. Participants and Program. Ten officials from the aforementioned ministries carried out a comparative study in Beijing and Shanghai by visiting the Chinese Ministry of Health, regional hospitals, and universities.

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International Decentralization Education & Training

Lessons Learned. Improving the delivery of public services is a core All doctors in China operate under component of China’s 12th national economic and social the status of civil servants and development plan (2011-2015), which emphasizes higher quality devote full working hours to public service. Private practice is prohibited growth by taking a scientific development approach towards a to ensure that equally affordable fairer and greener society. Public services such as health care and treatments are extended to citizens. education are taken seriously in order to reduce public welfare gap, and to allow all citizens to participate and enjoy the fruits of China’s economic success. In recent years, the central government has substantially increased transfers to rural services, and has broadened the scope and raised the minimum standards for services that local governments should deliver. The focus of the government upon delivering minimum service standards in China was a very important takeaway for the Indonesian delegates. The draft revision of Law No. 32/2004 regarding regional administration in Indonesia – currently being examined by the House of Representatives – is a step forward in the effort to clearly delineate the authority and responsibility of each government level. Moving forward, the central government should ensure that local governments are well equipped to undertake service activities by clearly defining sector-specific technical standards and criteria. Unlike most countries, where the assignment of responsibilities to local governments is formalized (e.g. in Indonesia, through Law No. 32/2004), there are no formal institutions that govern decentralization in China. The Constitution of China formally assigns all powers to the central government, including the authority to assign and adjust responsibilities at lower levels. In public services delivery, the administrative structure is highly decentralized, with a six-tier downward delegation of authorities and responsibilities (central-provincecity-county-township-village). The governments at the county and township levels are responsible for financing, delivering, and managing both health care and public health services. The assignments are broadly similar for education and social welfare services, whereby rural governments at the grassroots levels bear heavy financial and administrative responsibilities. At present, though, the accountability relationships are weak at multiple levels, with the result that compliance with central policies is not always assured at the local levels. However, this administrative system is currently undergoing reform, and as stated in the current five-year development plan, key priorities include IT and research & development, that are expected to enhance public accessibility to information. Similar to China, the issue of accountability is commonly shared in Indonesia. Aside from improving information accessibility, which also forms part of Indonesia’s long-term masterplan for accelerating economic development (MP3EI), it was discussed during the visit that the role of citizens should be enhanced, and that citizen/community participation in the design, delivery, and monitoring and evaluation of public service delivery should be strengthened. In the health sector, the largest division under the Ministry of Health is Control and Prevention of Disease, which consists of twelve divisions and a total of sixty-five staff. Many agencies for disease control are set up by the government. Such attention paid to disease control is noteworthy for Indonesia, because based on monitoring and evaluation performed by the Ministry of Home Affairs, local governments in Indonesia find it challenging to manage communicable diseases and endemics, the sole authority over which (including funding) has been transferred by the central government to local governments. Page 6

International Decentralization Education & Training

Traditional Chinese medicine is widely accepted in China, both by communities and formally by the government, of which the usage is regarded equally with modern medical treatments. The ability to capitalize on local knowledge provides citizens with a wider range of health treatment options to suit various levels of household economies. All doctors operate under the status of civil servants and devote full working hours to public service. Private practice is prohibited to ensure that equally affordable treatments are extended to citizens. Additionally, law enforcement in the health sector in China is extremely strict, and malpractices would be severely punished. Consequently, health services providers are encouraged to extend their highest commitment in service delivery. The government in China provides access to extensive The role of citizens should be enhanced, and fundamental resources related to medical sciences at citizen/community participation in the design, no cost, and when necessary, foreign texts are delivery, and monitoring and evaluation of translated to the local language. This in turn stimulates public service delivery should be strengthened. learning, and helps to develop future health workers who are competent in their fields. Additionally, the government is striving to increase high school enrollment rate from 82.5% to 87% by 2015. Considering the huge number of population in China, this is a commendable effort. Indonesia should also continue its endeavor to increase access to and quality of education. As of 2010, the net high school enrollment ratio in Indonesia stands at 45.6% (Statistics Indonesia).

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PA3_DET_DSF International Education & Training