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Research Report

The Impacts of Forestry Decentralization on District Finances, Local Communities and Spatial Planning: A Case Study in Bulungan District, East Kalimantan

Iman Suramenggala
Heru Komarudin
Yan Ngau
Copyright Date: Jan. 1, 2005
Pages: 60
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Table of Contents

  1. (pp. 1-3)

    The foundations for decentralizing Indonesia’s highly centralized governance system were laid out in Law No. 22/1999 on Regional Governance and Law No. 25/1999 on Fiscal Balancing between the Central and Regional Government. Decentralization, or regional autonomy, provided district governments with considerable opportunities to reform their governance, development and public services delivery. The most tangible manifestation of decentralization in the forestry sector was that, for the first time, district heads were given the administrative authority to grant small-scale forest concessions.

    In common with the governments of most forest-rich districts across Indonesia, the District Government of Bulungan, East Kalimantan, welcomed the opportunity...

  2. (pp. 4-9)

    The research team selected Bulungan District, East Kalimantan, as the study location for a number of reasons. First, the district still has relatively large tracts of natural forests. Second, the District Government was issuing relatively high numbers of Timber Extraction and Utilization permits (IPPK), which was having a significant impact on the direction of forest management in the area. Finally, the district has traditionally had relatively low levels of outside intervention or support. Since Bulungan District was subdivided in 1999 into two separate districts, Malinau and Nunukan, due to the need to develop communities and improve governmental delivery services, very...

  3. (pp. 10-18)

    The transfer of authority over forestry from the central administration to the region governments began with Government Regulation No. 62/1998 on the transfer of Forestry Matters to Regional Governments. Several forestry matters were delegated to the districts in accordance with this regulation18. In the following year, Law No. 22/99 on Regional Governance was issued, and central government also issued Government Regulation No. 6/199919. A key article in this regulation stated that district heads could issue permits for timber and non-timber forest product extraction in state-owned production forest areas to individuals, cooperatives and legal entities owned by Indonesian citizens.

    Guidelines for...

  4. (pp. 19-25)

    Our research with local stakeholders revealed that decentralization in general, and the local Timber Extraction and Utilization (IPPK) policy in particular, have had both positive and negative impacts on the District Government and communities in Bulungan (see Table 8).

    The most significant impact of the new policy was that for the first time the District Government was able to raise funds for its own budget from forestry activities. IPPK concessions provided four sources of revenue: from direct fees, levies and taxes at the district level, and fees collected by the central administration and redistributed using national fiscal balancing mechanisms.

    1. IPPK...

  5. (pp. 26-35)

    Administrative authority over land changed following decentralization. Presidential Decree No. 34/200353 transferred authority to district/city governments over the following aspects of land management: granting permit locations, procuring land for development, solving disputes over arable land, arranging damages and compensation for land allocated for development, determining land taxes, determining communal land and solving problems relating to that land, utilizing empty land and solving related problems, granting permits to clear land, and district/town land-use planning.

    Along with this newly delegated administrative authority, the Bulungan District Land Affairs Office54, which is an extension of the National Land Agency (BPN), still has extensive authority...

  6. (pp. 36-39)

    As we enter the fifth year of decentralization since the legal basis for decentralization was enacted in 1999, the principal obstruction to sustainable forestry development is still the unclear division of administrative authority between district and central government over forest management. We found that this lack of clarity over administrative authority weakened accountability between district and higher-level institutions. Research undertaken by the Center for International Forestry Research (CIFOR) at the outset of regional autonomy (2000 and 2001) identified the same situation.

    A number of stakeholders in Bulungan identified possible solutions to this crucial problem. They felt that one answer would...

  7. (pp. 40-41)

    After almost five years of regional autonomy, since the original legislation was introduced in 1999, the division of authority and the rights and responsibilities of central and district governments remain unclear. Central government has become involved in a long and often fraught tug-of-war with regional governments over which has authority for forest management. This has emerged as a crucial problem, highlighted by this research project. Bulungan District Government used the newly granted authority to issue a policy on small-scale concessions (Timber Extraction and Utilization Permits – IPPKs). Despite the main goals of decentralization of giving local communities greater access to...