UNDP BAPPENAS DSF Creation of New Jurisdictions and People’s Welfare

UNDP BAPPENAS DSF
Creation of New Jurisdictions
and
People’s Welfare
In Search for Alternatives
2 0 0 9

Creation of New Jurisdictions and People’s Welfare:
In Search for Alternatives
A Report by Harry Seldadyo
with the assistance of
Deli Sopian, Denny Julian, Retno Handini,
Rullan Rinaldi, and Wahyudi Romdhani.
BRIDGE Project
UNDP-BAPPENAS
Jl. Ki Mangunsarkoro 21
Menteng, Jakarta Pusat 10310
Indonesia
Telp : 6221 391 7284, 391 8554, 3193 5361
Fax : 6221 315 3461
Publication Series of BRIDGE Project—June 2009
c 2009 ISBN: 978-979-17554-2-9
Disclaimer: This report is made under the BRIDGE project for governance capacity
development initiated by BAPPENAS dan UNDP, and sponsored by DSF. The analy-
ses dan recommendations in this report are, however, not necessarily the oﬃcial views
of BAPPENAS, UNDP, and DSF.

Foreword
The Law No. 22-1999 on Regional Government, revised to become the Law
No. 32-2004 and the Government Regulation No. 129-2000 on the Formation,
Elimination, and Merging of Jurisdictions later revised as the Government Reg-
ulation No. 78-2007, is the policy foundation that allows the formation of new
autonomous jurisdictions, or more commonly known as the proliferation of juris-
dictions (the pemekaran daerah). The main objective of pemekaran daerah) is to
promote equal development, to enhance public service quality, and to increase the
people’s welfare. Between 1999 and February 2009, 205 new autonomous juris-
dictions, comprising seven provinces, 164 regencies, and 34 municipalities, were
established. Observing the high rate of new jurisdiction creation, the govern-
ment has conducted some attempts to control it by, among others, a moratorium
or temporary halt of the process of formation of new jurisdictions, and to al-
lign regulations on the required conditions and procedures of the creation of new
jurisdictions, including to revise the Government Regulation No. 120-2000 to
become the Government Regulation No. 78- 2007. These efforts need to be com-
plemented by endeavors to find various breakthrough and innovations to increase
public service quality and people’s welfare, the main goals of proliferation itself,
aside from going proliferation of regions. This includes conducting studies on the
alternatives for proliferation, one of whose results will be presented in this book.
Previous evaluations on the impacts of pemekaran daerah (Bappenas, 2005
and 2007; Ministry of Home Affairs, 2005; and National Institute of Public Ad-
ministration, 2006), generally conclude that the pemekaran daerah has not re-
sulted in optimal outcomes, in terms of economy, regional finance, government
apparatus, or public services development. This study, through a series of empir-
ical comparisons and tests on the performance of new jurisdictions, confirm that
the pemekaran daerah has not accelerated development significantly, particularly
if compared to the performance of jurisdictions that do not take the option of
pemekaran daerah. The analysis also reveals that the creation of new jurisdic-
tions is not an effective way to reach regional development goals. This study
also identifies some strategic issues in regional development to be considered in
the future regional development. These strategic issues are seen as alternatives
to the discourse pemekaran daerah which has dominated the current Indonesia’s

decentralization. These recommendations are divided into three groups that also
reﬂect the actors that might take initiatives from these alternatives, namely those
at the regency-municipality level, interregional level (the alternative policies that
may include the provincial governments), and the central government level.
Like other studies this report has some limitations in the data and under-
lying assumptions, including lack of discussion on the political aspects (which are
often the main consideration behind the formation of new autonomous region).
The study does not go into a deeper analyisis to test the recommended alterna-
tives, thus becomes a future task to examine them. Nevertheless, as a part of the
background studies to draft the medium term development plan (RPJMN) 2010-
2014, this study is an important input for the government, especially Bappenas,
to establish policy directions and programs on decentralization and regional au-
tonomy in the RPJMN. This report can also be used as a reference for a further
discussion in seeking for alternatives to the discourses of pemekaran daerah in
particular and regional development in general.
We thank many parties for their supports and cooperations so that this
study can be well conducted. These include the United Nations Development
Program (UNDP), through the Building and Reinventing Decentralized Gover-
nance (BRIDGE) program, the Decentralization Support Facility (DSF), the Na-
tional Development Planning Agency (Bappenas), the Ministry of Home Aﬀairs,
the Ministry of Finance, the Central Bureau of Statistics, provincial governments,
regency-municipality governments, and other parties participating in this study.
We welcome any inputs, critics, and suggestions to deliver this study to perfection.
Jakarta, 22 June 2009
Direktur Otonomi Daerah, Bappenas/
National Project Director Program BRIDGE,
Dr. Ir. Himawan Hariyoga, M.Sc.

List of Content
Chapter 1 Creation of New Jurisdictions at a Glance . . . . . . . . . . . . . . . . . . 1
• General Map of Regions 2
• Motives for Proliferation 7
• Consequences of Proliferation 11
• Regional Achievement 19
Chapter 2 Regional Achievements in Comparison . . . . . . . . . . . . . . . . . .23
• Selection of Indicators 23
• General Welfare:
Human Development Index 25
• Education:
Schooling Years and School Participation 26
• Health:
Vaccination and Women’s Conﬁnement 27
• Infrastructure: 28
Road Development 28
• Counter-Factual Analysis 29
Chapter 3 What Determines Regional Achievement? . . . . . . . . . . . . . . . . . .43
• Determinants of Achievements 43
• General Welfare 44
• Education 48
• Health 50
• Infrastructure 52

Chapter 4 Reinventing Regional Development . . . . . . . . . . . . . . . . . . 57
• Looking for Alternative Policies:
Basic Framework 57
• Micro Level
Revitalization of Regional Planning 60
Strengthening Subdistrict Jurisdictions 64
Reinventing Anti-Poverty Policy 65
• Meso Level
Interregional Competition 72
Interregional Cooperation 75
• Macro Level
Balancing Demographic Geography 78
Technocracy of Development 83
Managing Formation of Jurisdictions 84
Chapter 5 Epilog . . . . . . . . . . . . . . . . . . 89
Technical Appendix . . . . . . . . . . . . . . . . . .101
• Evaluation Method 101
• Seeking Comparability of Observation 102
• Comparing Achievements 107
• Determinants of
Social-Economic Achievements 109
• Spatial Model for HDI 118

List of Table
Table 1.1.
Legal Products by Parliament, 1999-2008 . . . . . . . . . . . . . . . . . . 7
Table 1.2.
Geography Administrative, 1999-2006 . . . . . . . . . . . . . . . . . . 15
Table 2.1.
Human Development Index . . . . . . . . . . . . . . . . . . 30
Table 2.2.
Schooling Years ans School Participation . . . . . . . . . . . . . . . . . . 31
Table 2.3.
Vaccination and Mother in Conﬁnement . . . . . . . . . . . . . . . . . . 32
Table 2.4.
Road Development . . . . . . . . . . . . . . . . . . 33
Table 2.5.
HDI: Counter-factual Analysis . . . . . . . . . . . . . . . . . . 36
Table 2.6.
School Participation: Counter-factual Analysis . . . . . . . . . . . . . . . . . . 37
Table 2.7.
Infant Vaccination: Counter-factual Analysis . . . . . . . . . . . . . . . . . . 38
Table 2.8.
Road Development: Counter-factual Analysis . . . . . . . . . . . . . . . . . . 39

List of Figure
Figure 1.1.
Regency and Muncipality 1950-2008 . . . . . . . . . . . . . . . . . . . . . . . . 4
Figure 1.2.
Regency-Municipality Map . . . . . . . . . . . . . . . . . . . . . . . . 14
Figure 1.3.
Fiscal Consequence of New Jurisdiction Creation . . . . . . . . . . . . . . . . . . . . . . . . 18
Figure 3.1.
HDI dan Poverty . . . . . . . . . . . . . . . . . . . . . . . . 47
Figure 3.2.
School Participation and Fiscal Technocracy . . . . . . . . . . . . . . . . . . . . . . . . 51
Figure 3.3.
Infant Vaccination and Health Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . 54
Figure 4.1.
Spatial Dependence in HDI . . . . . . . . . . . . . . . . . . . . . . . . 79
FIGURE TECHNICAL APPENDIX 1.
Distribution of Propensity Score . . . . . . . . . . . . . . . . . . . . . . . . 106

List of Table Technical Appendix
TABLE TECHNICAL APPENDIX 1
Span of Control: Result from Factor Analysis . . . . . . . . . . . . . . . . . . 103
Probit Function for
the Formation of New Autonomous Jurisdiction . . . . . . . . . . . . . . . . . . 105
Optimal Block and Balancing Test . . . . . . . . . . . . . . . . . . 107
TABLE TECHNICAL APPENDIX 4A
Determinants of HDI . . . . . . . . . . . . . . . . . . 113
TABLE TECHNICAL APPENDIX 4B
Determinants of HDI . . . . . . . . . . . . . . . . . . 114
Determinants of School Participation . . . . . . . . . . . . . . . . . . 115
Determinants of Infant Vaccination . . . . . . . . . . . . . . . . . . 116
Determinants of Road Length . . . . . . . . . . . . . . . . . . 117
Spatial Model for HDI . . . . . . . . . . . . . . . . . . 118

List of Table Appendix
TABLE APPENDIX A.1
HDI Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
TABLE APPENDIX A.2
Gross Enrollment Rate: SD, SMP and SMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
TABLE APPENDIX A.3
Enrollment Rate: SD, SMP and SMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
TABLE APPENDIX A.4
National Exam: SD, SMP and SMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
TABLE APPENDIX A.5
Infant Vaccination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
TABLE APPENDIX B
Data Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

Acknowledgements from M21
This report was written in the midst of hustle and bustle of proliferation of
jurisdictions, in the middle of the pros-cons on whether it’s an appropriate way
to achieve people’s welfare. In this report, all stakeholders are appealed to observe
some issues of pemekaran daerah before considering the alternatives to resolve the
remaining development problems. Of course, ideas presented here are open to be
selected, organized, or even rejected.
If this report now is like the current form, it was clearly not the work of
only one person. This report is the result of many helping hands —including, of
course, critical comments. From Jl. Mangunsarkoro 21 —’M21’, as we call it— we
wish to write a long list of very obliging names. From the ’inner circle’, we have
Daan Pattinasarany, Jana Ferdinandus Hertz, and Erita Nurhalim from DSF with
their supports and enlightening comments. There are also Also Antonius Tarigan,
Daryll Ichwan Akmal, Taufiq H. Putra, and —of course— Himawan Himawan
Hariyoga from the Directorate of Regional Autonomy at Bappenas who provides
the space and period for productive interaction during this study. There are also
Rizal Malik, Sofian Effendi, Leonard Simanjuntak, and Budiati Prasetiamartati
from the Governance Unit of UNDP, who are willing to open interesting and
inspiring discussions. From the more inner circle, there are also friends at M21
—Brasukra Sudjana, Mellyana Frederika, Loui Thenu, Ari Prasutyawan, and
Putri Maharani— who have to ‘suffer from the impacts of pemekaran, namely
the preparation of a serial workshops for this study.
This list must be expanded considering that there are other more peo-
ple who have allocated their time and have shared their thoughts in a series
of workshops held at Cempaka Hotel, Bappenas’ office, UNDP’s office, Wisma
Bakrie, and Bintang Hotel. Those who have been kind enough include Ab-
dul Fattah (from the Directorate of Regional Structuring and Special Auton-
omy, Ministry of Home Affairs), Adi Suryanto (LAN), Agung Djojosoekarto
(Partnership), Anang Budi Gunawan (Directorate of Areal Development, Bap-
penas), Aswicaksana (Directorate of Spatial Planning and Land Affairs, Bap-
penas), Awan Diga A. (Bappenas), Bambang Juanda (Management and Busi-
ness Postgraduate Program IPB), Bastian (Bappenas), Budi Harsoyo (BAKD),

Cecep Efendi (ASSD-GLG), Christian Dwi Prasetijaningsih (Directorate of Ur-
ban and Rural Affairs, Bappenas), Cucu Suryaman (Partnership), Endang Tu-
ryana (YIPD), Endi Jaweng (KPPOD), Endi Rukmo (YIPD), Ervan A. (Di-
rectorate of Regional Autonomy, Bappenas), Fadhilla Izzaty (IPB), Frans H.
(Directorate General of General Government, Ministry of Home Affairs), Gu-
ritno Soerjodibroto (GTZ), Hamka (Management of Public Services, STIA-LAN),
Hasa (IGOR), Ig. Sigit Murwito (KPPOD), Jayadi (Bappenas), J. Endi Rukmo
(YIPD), Kadek Arta (LPEM-UI), Khairul Rizal (Directorate of TRP, Bappenas),
Kresnandi (Balancing Funds, Directorate General of PK), LaOde Ida (Regional
Representative Council), Mangara Tambunan (CESS), M. Badaruddinandn Agus
Purnomo (Indonesia’s Parliament), Maulina Cahyaningrum (DSF), Muh. Handry
Irmansyah (ADB TA7010-Preparation of Local Government Finance and Gov-
ernance Reform), Niken L. Wardhani (Program Manager, Sub-National Gover-
nance USAID), Novi Anggriani (YIPD), Petang Sumarsono (Director of Trans-
portation), Pheni Chalid (UNDP- Parliamentary Support Program), Koswara
Kertapradja (Doctoral Program on Government Management at Satyagama Uni-
versity), Rinaldi Rustam (Economic Development Program, Usakti), Raksaka
Mahi (Magister Program on Planning and Public Policy, School of Economics-
UI), Robert S. H (Director of Politics and Communications), Rudy (Kemitraan),
Saleh Thalib (Directorate of Capacity Development and Regional Performance
Evaluation, Directorate General of Regional Autonomy), Samsul Widodo (Direc-
torate of Special Region and Underdeveloped Areas), Sowwam (Directorate of Re-
gional Autonomy, Bappenas), Suahasil Nazara (Head of Demographic Institute,
School of Economics, UI), Suharso Monoarfa (parliament member), Sukarso (Di-
rectorate of Regional Autonomy, Bappenas), Sulton Mawardi (SMERU Research
Institute), Sumedi Andono Mulyo (Directorate of Regional Development, Bap-
penas), Talitha Fauzia C. (Bappenas), Ubaidi Socheh Hamidi (Sub-Directorate
of Special Allocation Grant, Directorate of Fiscal Equalization), Wildan Risan-
jaya (RED-GTZ), Yusman Syaukat (Master Program on Regional Development
at SPS IPB)and Yusrizal Anur (Sub-directorate of Regional Structuring Devel-
opment, Ministry of Home Affairs).
Although there are so many names behind this study and even as it is under
the management of three development agents —UNDP, Bappenas and DSF— this
report do not reflect the offical positions of these individuals and institutions or
’officially represents’ them. All substantive and academic responsibilities are at
the shoulders of its writers.
Last but not least, nothing is perfect. The same goes for this report.
Jakarta, April 2009
The Writers

Summary
Creation of jurisdictions has dominated almost all discourses of Indonesia’s de-
centralization. This issue moves from one point to another, from provinces to
villages, from the regional to the central governnets, and from the central to
the regional governments. Nevertheless, several studies have doubted whether
the creation of new jurisdictions has reached its goal to develop people’s welfare.
This doubt is empirically confirmed by this Report. The quasi-experimental
approach and counter-factual analysis developed in this study find that the for-
mation of new jurisdictions is not an effective way to attain people’s welfare. As
the formation of new jurisdictions is not effective, is there any alternative to more
effectively achieve welfare for the people?
This report recommends a set of policies called ‘reinventing regional devel-
opment’ as an alternative policy package. This policy package is outward look-
ing, as they are more orientated to meet the public needs, rather than inward
looking which concentrates more on administrative issues. ’Reinventing regional
development’ comprises three levels of policies: micro, meso, and macro. At the
micro level, the policy package is divided into (1) human development policy,
which concentraten on poverty issues related to health and education, and (2)
regional development policy, which focuses on developing underdeveloped regions
and the distribution of functions. Meanwhile, at the meso level the policy pack-
age includes a policy to strengthening interregional relationship on the basis of
interregional cooperation and competition. Finally, at the macro level, it is rec-
ommended to establish regional restructurization policies to reduce the regional
disparity among jurisdictions.

Chapter 1
Creation of New Jurisdictions
at a Glance
The change in the political-administrative regime of Indonesia from centralization
to decentralization does not automatically resolve the problems faced by the
region (the daerah). Albeit some progress has been achieved by the daerah,
several problems still remain persisent until now (Hill et al., 2008 and 2009; del
Granado, 2009). Similarly, although it brings a lot of hopes, decentralization also
leads to some new serious issues that need to be addressed.
One of the most phenomenal issues since the launch of decentralization is
the creation of new jurisdictions, commonly known as the proliferation of admini-
strative regions (the pemekaran daerah), ie., the formation of new jurisdictions
particularly at the regency-municipality level. The pemekaran daerah is pheno-
menal as it has become a big bang —the biggest formation of jurisdictions over
the last 30 years. The accompanying socio-political dynamics is also phenomenal.
Mass mobilization, political lobbying, and open conflicts occur along with the
pemekaran daerah. Nowadays, the discourse of Indonesia’s decentralization is
almost dominated by the issues of the pemekaran daerah. Other issues around
decentralization seem only the derivative discourse of this issue: the formation of
new jurisdictions.
In such a situation, some important questions remain. Is the political-admi-
nistrative measure like the pemekaran daerah able to attain its main objective,
namely improving the people’s welfare? Is the creation of new jurisdictions an
effective way to resolve the problems that remain persistent over time? Or, are
there other effective alternatives to achive welfare?
This report endeavors to answer these questions. By presenting the perfor-
mance of the new jurisdictions after the decentralization took place, this report
finds that the political-administrative measure like the pemekaran daerah is no
guarantee of people welfare attainment. Therefore, efforts that directly tackle the
1

2
heart of regional development problems are required. Regional development needs
to be ’reinvented’ so that it is not merely dominated by political-administrative
discourse, and it needs to be turned back to the main objectives of decentra-
lization. ’Reinventing regional development’ restores the orientation of regional
development from inward looking orientation which concentrates on political-
administrative issues, to outward looking orientation targeted directly to the
issues of improving the people’s welfare.
General Map of Regions
This report specifically observes the phenomenon emerging at the regency-munici-
pality level. There are several reasons why the administration at this level is the
point of interest in this report. First of all, jurisdictions at this level are the basis
of decentralization and regional autonomy policies of Indonesia. Regency and
municipality are granted a status of ’full autonomy’, while province is granted a
’limited autonomy’ (Rasyid, 2007).1 Secondly, the phenomenon of the formation
of new autonomous jurisdictions (known also as (Daerah Otonomi Baru, DOB)
is more commonly found at the regency-municipality level than at the provincial
level. This phenomenon totally alters the map of administrative geography of In-
donesia, as obviously seen from the comparison of pre- and post-decentralization
maps. Thirdly, the change in the administrative geography of regency and munci-
pality has also altered the overall fiscal architecture. Since the launch of decen-
tralization, the regency-municipality administration’s revenue has been surged by
300 percent (Hill et. al., 2009). Del Granado (2009) calls this phenomenon a big
bang of fiscal decentralization. The following section discusses how the changes
in the landscape of regency-municipality administrative geography occur along
with the accompanying dynamics.
Regency-Municipality Over Time
The phenomenon of creation of jurisdictions at the regency-municipality level is
not new in the Indonesia’s political-administrative history. The existing juris-
1
The ’full autonomy’ status refers to the absence of the Central Government’s operations
at regency-municipality level unless for several fucntions as regulated by the law. Meanwhile,
the ’limited autonomy’ status refers to the possibilities for the central government to operate
at the provincial level. See Ryaas Rasyid. 2007. ’Otonomi Daerah: Latar Belakang dan Masa
Depannya.’ (Regional Autonomy: Its Background and Future) in Syamsuddin Harris (ed.) De-
sentralisasi dan Otonomi Daerah: Desentralisasi, Demokratisasi, dan Akuntabilitas Pemerintah
Daerah (Desentralization and Regional Autonomy: Desentralization, Democratization, and Ac-
countability of Regional Government). LIPI Press.

3
dictions at the regency-municipality level —even at the provincial level2 — are
basically the results of the creation of jurisdictions initially formed when the in-
dependence of Indonesia was declared in 1945. This means that what emerges in
the past 10 years might be considered a resurfacing phenomenon.
Figure 1.1 depicts an annual dynamics of the formation of subnational
jurisdictions since 1950. It is apparent that the relatively major surges in the
number of regency-municipality only occurred in two sub-periods, namely (1)
before the 1959 Presidential Decree, and (2) after the reform of political system
and the decentralization of administration system in 1999. Between these two
periods, there was hardly any new creation of regency-municipality.3
In the first 10 years since the independence, Indonesia had only 101 juris-
dictions at the regency-municipality level. Between 1956 and 1959, this figure
jumped from 149 (1956) to 177 (1958), and 254 regencies and municipalities
(1959). However, for 33 years since 1960, the speed of the formation of regency
and municipality was slow. In 1966, for example, there were only six new ju-
risditions established at regency-municipality level, which made a total of 260
regencies and municipalities shaping the administrative landscape in Indonesia.
2
Different from the one occurs at the regency-municipality level, the speed of jurisdiction
formation at the provincial level is found slower. Starting with six provinces, not long after the
independence there were 20 new additional provinces established at the launch of the first Five-
Year Development Plan (the first Pembangunan Lima Tahun, Pelita I ). Under the New Order
administration, Indonesia recorded 27 provinces as East Timor became a part of the nation.
Before reaching the current composition of 33 provinces, three events mark the phenomena at
the provincial level. First, the secession of East Timor to become a new independent country.
Second, the formation of seven new provinces: Bangka Belitung, Riau Islands, Banten, West
Sulawesi, Gorontalo, North Maluku, and West Papua. Third, the annulment of the formation
of a new province: Central Irian Jaya. Through these changes, the composition of Indonesia’s
provinces now comprises 10 units in Sumatera including one special autonomous region (Aceh),
six in Java including two special autonomous regions (Jakarta and Yogyakarta), three in Nusa
Tenggara, four in Kalimantan, six in Sulawesi, two in Maluku, and two in Papua, of which both
are special autonomous regions.
3
What is interesting here is that the two major surges in the number of regency-municipality
occurred when the bargaining position of the parliament relative to the president strengthened.
The period before 1959 was the parliamentary democracy era, when the executives practically
became the subordinate of the parliament (See Miriam Budiarjo (2008) for the classification of
Indonesia’s political eras). Meanwhile, the period after 1999 was the presidential democracy
era when a reform of political relationships between the parliament and the president took
place accentuating the parliament’s power. In between, there were two periods of presidential
autocracies with centralized power —albeith Soekarno (1959-1965) call it ’guided democracy’
and Soeharto (1965-1998) ’Pancasila-based democracy’— in which the president’s bargaining
power relative to the parliament’s was significantly boosted. When the parliament’s position
weakened and, conversely, the president’s relative bargaining power strengthened, there was
no significant amount of the formation of new jurisdiction. It seems that the fluctuation in
the formation of jurisdiction moves in accordance with the fluctuation in the political balance
between the parliament and the executives. The periods when the number of new regency-
municipality formation increases (decreases) are the periods when the parliament’s bargaining
power over the executives strengthens (weakens).

4
This ﬁgure was added by only nine units to became a total of 269 regencies and
municipalities in 1970, and six more were added in the following ten years to
reach the total to 275 regencies and municipalities. In the second half of the
1980s, not more than two new units of regency-municipality were added to make
a total of 277, which increased to 280 jurisdictions at the beginning of 1990s.
In total, there were an amount of 340 regencies and municipalities colored the
beginning of Indonesia’s political reform.
At the time of political reform and the launch of decentralization policy,
the number of regency-municipality jurisdictions expanded. In 2001, there were
at least 353 regencies and municipalities spread from Weh to Merauke and from
Sangihe to Rote. This number rose to 390 in 2002 before it surged to 440 in 2003.
In 2007 there were 465 regencies and municipalities stretched across the country,
from Sabang to Pegunungan Bintang and from Tahuna to Ba’a.4 The peak was
in 2008, when 498 regencies and municipalities formed the new landscape of the
Republic of Indonesia (Data up to November 2008).
FIGURE 1.1. Regency and Muncipality 1950-2008
4
These ﬁgures are calculated on the basis of the establishment year of regency-municipality.

5
In the last two parliamentary cycles and four times of government change,
not less than 150 new regencies and municipalities were created. On average,
15 new regencies-municipalities have been added annually since 1999.5 These
figures still exclude the new sub-districts and villages formed via the local-level
regulations, considering the fact that the creation of jurisdictions also occurs
at these two lowest levels of administration —as a direct consequence of the
formation of jurisdictions at the regency-municipality level. In the same period of
10 years since the launch of decentralization, the number of sub-districts jumped
more than 2000 units (from 4028 in 1998 to 6131 in 2007), while the number
of villages surged more than 6000 units (from 67,925 units in 1998 to 73,405 in
2008). On average, around 20 districts and 50 villages have been established
every month in the last 10 years.
Law on Creation of Jurisdiction
The above description clearly shows a big bang in the creation of new jurisdictions
which rapidly occurs particularly after the launch of decentralization. This big
bang closely relates to another big bang, namely production of the laws on the
creation of new jurisdictions by the parliament, which also moves at the same
speed. This may happen because —as stated in the articles 18, 18a, and 18b in the
1945 Constitution— every new jurisdiction to form must be legalized by a law.6 In
other words, the creation of new jurisdition, aside from a product of technocratic
process at the executive level —as apparent in the Government Regulation (the
Peraturan Pemerintah, PP) No. 78-2007— is also a product of political process
at the parliament level. In the political process, the parliament initiates drafts
of law on jurisiction formation (the Rancangan Undang-Undang Pembentukan
Daerah, RUUPD) which become an agenda at the National Legislation Program
(the Program Legislasi Nasional, Prolegnas).7 However, formally, the government
can also propose such initiative.
An important issue to raise toward the political and technocratic processes
is that whether the political process is a function of the technocratic process or,
on the contrary, they are independent each other. Stated differently, does the
5
Without an effective and firm moratorium policy, this figure will potentially rise considering
the fact that several proposals for the formation of new jurisdictions and the accompanying laws
are being drafted.
6
It’s worth noting Soepomo’s explanation for the article 18 of the 1945 Constitution, “. . . As
the state of Indonesia is an eenheidstaat, within Indonesia there is no region with the same
staat nature. Indonesia is be divided into provinces, and provinces is also divided into smaller
jurisdictions. In jurisdictions with autonomous status (streek and locale rechtsgemeenschappen)
or merely ‘administrative status’, everything follows the regulations established by laws.” The
italic print on the last phrase is made by the writers of this report.
7
Formally, the House of Regional Representatives (the Dewan Perwakilan Daerah, DPD) also
holds such functions, but this function is not effectively pronounced.

6
political process also take into account the technical considerations of the Re-
gional Autonomy Advisory Council (the Dewan Pertimbangan Otonomi Daerah,
DPOD) for the proposals of new jurisdiction creation, or is the political process
uncoupled with the technical one?8 These questions are important because —as
discussed in more detail later— the jurisdictions that are in theory regarded as
having the capacity to govern and therefore the capacity to increase welfare,9
in practice perform the opposite. In other words, the question of whether the
technocratic process at the DPOD and the political process at the parliament
contribute significantly to the people’s welfare should be always kept in mind
during the process of creation of new jurisdiction.
Table 1.1 indicates that during the last two parliamentary cycles, namely
1999-2004 and 2004-2009, the laws on creation of new jurisdictions (the Undang-
Undang Pembentukan Daerah, UUPD) almost dominated the legal products of
the parliament. For instance, about 40 percent of the laws produced by the
parliament in the first term were the laws of formation of new jurisdictions. On
average, at least 14 UUPDs were produced every year between 1999 and 2004
—meanwhile, if the year 2004 is excluded, this figure rises to 16 UUPDs per year.
In 2003 —the year leading to the end of the parliament’s term— the number of
UUPD was the highest.
In the subsequent term, the laws of creation of new jurisdictions continue
to be an important legislative agenda, although extremely vary from one year to
another. In the first three years of the 2004-2009 term, practically no a single
UUPD was produced. In these years the parliament’s focus shifted to other laws.
However, as in the previous period, in the last years of the parliament’s tenure this
situation changed. Half of their attention in the legislative process was allocated
to deliberating the UUPDs. As a consequence, more than 30 percent of the
laws produced in the deliberation sessions of 2004-2009 were about the formation
of new jurisdictions. This also means that around 35 percent of the 358 laws
produced in the last decade were about the formation of new jurisdictions. Of
127 UUPDs issued in the two parliamentary cycles, 13 were revised, thus 114
laws are effectively passed.10
Knowing all of these trends, a natural question to raise is that what moves
the creation of new jurisdiction? Why does a region opt for the proliferation while
others do not? The following section discusses the motives for the proliferation
of jurisdictions.
8
Unfortunately, there is no official statistics showing the rejection rate of proposals evaluated
by the government and the parliament, or even the DPD.
9
Law No. 32-2004 and Government Regulation No. 78-2007 state that jurisdictions that can
be proliferated are those categorized as ‘highly able’ and ‘able’ to meet the basic requirements.
10
The number of UUPD does not correspond to the number of new autonomous jurisdictions
(the Daerah Otonomi Baru, DOB) as a UUPD can cover more than one DOBs.

7
TABLE 1.1. Legal Products by Parliament, 1999-2008
UUPD Other Laws Total New New
Relate to No Relate to Law Reg. Prov.Year
Production In Effect
Autonomy Region Mun.
1999 19 19 5 32 56 27 1
2000 14 3 1 23 38 0 3
2001 12 12 2 8 22 12 1
2002 13 13 0 19 32 38 1
2003 24 23 1 15 40 49 0
20041]
1 1 1 28 30 0 0
1999-2004 83 71 10 125 218 126 6
20042]
0 0 2 9 11 0 1
2005 0 0 1 13 14 0 0
2006 0 0 2 21 23 0 0
2007 25 25 1 22 48 25 0
20083]
19 18 3 22 44 33 0
2004-2008 44 43 9 87 140 58 1
1999-2008 127 114 19 212 358 184 7
1] Up to 30 September 2004; 2] Started from 1 Oktober 2004
3] Up to the production of Law No. 34-2008 for the law of creation of new jurisdiction, and
up to the Law No 44-2008 for other laws
Motives for Proliferation
What drives the creation of new jurisdictions? Does the formation of new ju-
risdictions just appear without an order? Or, is there any systematic driving
force?
The motives for the creation of new jurisdiction vary from one region to
another. In a particular place, a particular factor may be more notable than
in others; while in other locations it may be the opposite.11 Nevertheless, the
pemekaran daerah does not seem to be a random phenomenon as there are several
systematic symptoms that may be identified. These can be classified along three
dimensions: social, economic, and political dimensions.
Social Motive
What is the social motive for the creation of new jurisdictions? The social motive
should be put in a broader context of the central-regional political-administrative
relationship, ie., decentralization —particularly if considered that the decentra-
11
Time may also play a role, as it always provides a certain context for an event like the
creation of jurisdiction. See also footnote 3.

8
lization was first implemented in the the middle of heterogeneity of Indonesia
and dissatisfaction of the regions with the centralization and uniformity in many
development aspects. Ethnocentrism is an example. When the decentralization
takes place, it is argued that ethnocentrism will color the development of regional
autonomy as it materializes in several forms as apparent in the selection and
appointment of local leaders, both the executives and legislatives, as well as
recruitment and promotion of local bureaucrats (Badjuri, 2007, Suyatno, 2007).
The social motive for the pemekaran daerah cannot be excluded from this kind
of ethnocentrism (Djohan, 2007).
On the link between ethnocentrism and the creation of new jurisdictions,
Fitrani et al (2005) discover that ethnic clustering has triggered the regions’ ten-
dency to proliferate. Through a series of econometric models, they detect that
the motive for ethnic clustering is one of the statistically-significant determinants
in explaining why many regions opt for the pemekaran daerah. The inclina-
tion to create new jurisdictions with new geography-administrative boundaries
—separated from the old ones— emerges along with the increasing tendency to-
wards ethnic clustering. This phenomenon is more evident in the period after
2001 —the base year for decentralization in Fitrani et al’s analysis— than the
period before.
This situation signals that ethnic identity tends to be embodied into territo-
rial identity, because the ethnic clustering phenomenon is basically a reflection of
the homogeneity preference of the people, while the creation of new jurisdictions is
a manifestation of the formation of new territory.12 This new territory is smaller,
both in terms of the size of administrative-geography and population, compared
to the parent jurisdictions. In a smaller territory the heterogeneity preference
of the people tends to be minimum. Therefore, it is not surprising that the for-
mation of new jurisdictions is triggered by a sociological motive towards ethnic
homogeneity. The desire to live in a homogenous ethnic space is not impossible
to lead towards regionalism —“a feeling of regional identity” (Schrijver, 2006, p.
28). Such a spirit, however, is contradict with the normative spirit portrayed in
the symbol of Bhinneka Tunggal Ika as the national ideological commitment.
12
Another variant on the relation between territorial identity and ethnic identity is found in
the case of new immigrants in Canada. McDonald’s econometric test (2004) shows that the
presence of ethnic enclaves in particular places significantly affects the location choice of new
immigrants. The new immigrants tend to choose areas where people from their ethnic live. In a
broader context, Collier and Hoeffler (2002) argue that the root of political secession problems
can also be traced from the issues of political identity resulting from a feeling of ethnic identity
uniformity.

9
Political Motive
Interestingly, the expressions to form new jurisdictions receive sufficient responses
from the political factions in the parliament to be further continued to the legis-
lative processes. A series of deliberations for the laws on the formation of new
jurisdictions, as presented earlier, shows such responses. Different from the re-
lationship between the government and the parliament, there is no any signif-
icant controversy found in the parliamentary’s inter-faction relationship during
the legislative processes for the UUPDs. This is also different from the legisla-
tive processes for other laws, which often creates polarized positions among the
political factions that could even persist up to the plenary session.
In theory, the creation of new jurisdictions can be seen as a way to bring the
politicians closer to their constituents, thus the aspirations and preferences of the
people will be more effectively absorbed. Nevertheless, in practice, certainly there
are some political calculations that lead the political parties to respond to this
bottom-up expression.13 This includes new opportunities to compete for public
positions in the executive and legislative bodies following the establishment of
new jurisdictions and opportunities to expand the political constituency as well.
At the legislative level, for example, two parallel indicators can be used to confirm
such political calculations. First, political fractionalization14; and, second, the
number of parties in the local parliament. Political fractionalization in the new
jurisdictions tends to be higher than that in the other, the non-proliferated ju-
risdictions. In the new jurisdiction, the parliamentary seats are distributed more
evenly.15 Similary, compared to the non-proliferated jurisdictions, more parties
participate in the local parliaments in the new jurisdictions.16 This suggests
that political parties and politicians have a bigger preference for the pemekaran
daerah. Grossman (1994) argues that such a preference emerges due to the high
return of votes due to the small population size in such areas as apparent in the
new jurisdiction.
13
It is worth noting that there is a small number of top-down initiatives for the pemekaran
daerah. In Papua, for instance, the pemekaran is initiated by the central government but rejected
by the local people including the elite.
14
Political fractionalization is the fragmentation of parliamentary seat measured by the pro-
portion of seats held by each party. The more parties involve in the parliament, the more
fragmented would the parties’ seats be.
15
A two-side t-statistic test on the distribution of parliamentary seats as a result of the 2004
Elections in 440 regencies-municipalities shows that the difference in political fractionalization
is significant at one percent level (t-value=4.31).
16
A two-side t-statistic test on the number of parties in local parliaments shows that the
difference between the new jurisdictions and their counterpart is also significant at one percent
level (t=2.87).

10
Economic Motive
Aside from the social and political motives, there is also a series of other mo-
tives for the pemekaran daerah. What is commonly discoursed of is the economic
motive. A potential incentive in the form of central government transfer —eg.,
the General Allocation Grant (the Dana Alokasi Umum, DAU)— is commonly
found as an important reason for the pemekaran daerah. This transfer is auto-
matic. Once a jurisdiction is established, it will directly receive the DAU as its
right. More than that, this becomes an automatic incentive because the DAU
is empirically a function of three characteristics naturally embodied into a juris-
diction, namely the geographical size of region, the number of population, and
the number of local civil servants (the Pegawai Negeri Sipil Daerah, PNSD).17
Interestingly, there is no any ‘central government’s variable’ in determining the
DAU. The amount of DAU is completely ‘determined by the region’ through its
automatically-attached characteristics. Fane (2003) also concludes the same way,
eg., the DAU has become an incentive for the creation of new regions.
The expectation of revenue sharing from natural resources extraction is
also an equally important trigger. This expectation mainly exists in rich resource
regions. In such regions, forming a new jurisdiction means building an authority
over the rights to gain benefits from natural resources extraction as stated by the
law.18 This report finds that the probability to find a new jurisdiction increases
as the contribution of extractive sector to the economy increases (see Technical
Appendix). Like the DAU, the transfer of Revenue Sharing Fund is also auto-
matic. As soon as a jurisdiction is established, the Revenue Sharing Fund will
flow in right away. It is, therefore, clear that the pemekaran daerah is also rooted
in this motive.
Another economic motive for the pemekaran daerah is the desire of eco-
nomic catching up. In reality, however, this contradicts the administrative re-
quirements for the creation of new jurisdictions as stated in Government Regu-
lation (the Peraturan Pemerintah, PP) No. 129-2000 and its revised version (the
PP No. 78-2007). If the requirements in these regulations were met, the economic
catching up motive is practically not an important issue behind the pemekaran
daerah.19 Nevertheless, the empirics show the opposite. The probit model in this
17
Via a linier regression it can be seen that 84 percent of the variation in the DAU can be
explained very significantly by the variations in these three variables (The t-values range between
11 and 17).
18
This is clearly seen in the relationship between the Non-Tax Revenue Sharing Fund (the
Dana Bagi Hasil Bukan Pajak, DBHBP) and the extractive sector’s value added gained by
regency-municipality. About 74 percent of the variation in the DBHBP at regency-municipality
level can be explained very significantly by the size of forestry and mining (including oil and
gas) sectors (the t-statistics is between 12 and 17).
19
It is worth noting that, aside from the legislative process, the proliferation proposals also
go through a technical evaluation. In the technical evaluation, a jurisdiction will be catego-

11
report indicates that the probability to find a new jurisdicition increases along
with the status of underdevelopment (See Technical Appendix). This means that
poor areas have a bigger tendency to proliferate compared to non-poor areas.
Adjacent with the underdevelopment issue is poverty. The normative desire
of economic catching up can also be explained through poverty problem faced by
the daerah. This report also finds that the probability to find a new jurisdiction
lifts up in the regions with a severe poverty problem (See Technical Appendix).
In other words, the tendency to proliferate a jurisdiction will escalate when the
poor population in the respective region is also big.
Clearly, social, political, and economic motives are apparent in the above
description. One motive might stand out more than the other. Indeed, a com-
bination of the three is not uncommon. This suggests that the universe of pro-
liferation is not an isolated vacuum, or assumed to be exogenous, but formed
by a series of motives, which makes it endogenous and multidimensional. Nev-
ertheless, whatever the motive for the pemekaran daerah is, two issues should
be used as the benchmark: the consequences and effectiveness of the creation of
new jurisdiction to attain development goals. For the first, every action always
bears a consequence just like a consequence is inseparable from an action. In the
second, every action is also directed to attain its objectives, ie., in our context
now, the objectives of the pemekaran daerah itself. The pemekaran daerah essen-
tially establishes the people’s welfare as its goal. Therefore, the creation of new
autonomous jurisdictions must be observed through this perspective.
Consequences of Proliferation
The democratization of political system since 1999 has opened a huge space for
various expressions, including the desire to form new jurisdictions.20 At the
same time, the democratization dynamics is also followed by a similar dynamics
in decentralization, where the pendulum of administrative system moves away
from the central to the region. Within a combined circumstances of democracy
rized as ‘highly able’ and ‘just able’ jurisdiction if it meets the administrative, technical, and
physical requirements. This is explicitly stated in the PP 78-2007. The explanatory section
of the PP states that “The technical requirements are based on factors like economic capacity,
region’s potential, socio-culture, socio-politics, demography, geographical size, defense, security,
and other factors that make a jurisdiction to be able to run regional autonomy . . . Under such
requirements, it is expected that the new jurisdiction can grow, expand, and be able to conduct
regional autonomy in order to increase public service to accelerate the people’s welfare, and to
strengthen the unity of Republic of Indonesia.” (The Italic prints are made by the writers of
this report.)
20
At the state level, Alesina and Spolaore (1997) show that democratization opens an oppor-
tunity for separation that creates more number of countries.

12
Thousand Ways to Separate
The creation of Gorontalo Province was smooth. “It took only 14 months,” said
M. Nasser, the former head of Inter-Institutional Relations at the Central Committee
for the Formation of Gorontalo Province. The committee went through all channels
to clear the way. “Well, it was sort of a guerilla lobby.” The idea to form the
province emerged at a gathering event for several prominent figures in Jakarta in
1999. The idea was spread out to the region. The initiators formed a committee for
the formation of Gorontalo Province and held a seminar in Bidakara Building in 1999.
The central committee was then established to lobby the officials and key figures in
Jakarta. A political guerilla lobby was initiated in Jakarta to secure a support from the
government commission in the national parliament and the Ministry of Home Affairs.
The committee also held a special dinner in Mulia Hotel, after which each legislator
was offered a present of kerawang cloth, a traditional wear of Gorontalo.
The central committee also lobbied some key parliamentary figures like the heads of
political factions and commissions. The committee even visited their official and pri-
vate residences and brought some gifts like grilled fish, spicy frilled chicken, and binthe
biluhuta. Accomplishing their tasks in Jakarta, the central committee invited the par-
liament members to visit Gorontalo in 2000. Mandala Airlines tickets, accommodation
and transportation for a three-day visit to Manado and Gorontalo were provided by
the committee. The committee also visited these guests in the hotel rooms they were
staying. Envelopes exchanged hands. “It was just 1.8 million rupiah per person. This
was a stipend as they came to Gorontalo,” Nasser said. Such a stipend was also given
to a team from the Ministry of Home Affairs that visited Gorontalo. Each member
was given 23 million rupiah. The funds used on this process, according to Nasser,
reached 1.3 billion rupiah. However, according to Abas Nusi, it reached more than
3 billion rupiah. To complete the tasks, the committee also lobbied the Governor of
North Sulawesi, E.E. Mangindaan for his support.
On the contrary, the creation of Riau Islands Province in 2002 was not flowing
smoothly. “The process was quite long, similar to the plan to create Tapanuli
Province, which was a mess,” said Huzrin Hood, the former head of Riau Islands
regency, who, at that time was the head of the executive body for the creation of
Riau Islands Province. The efforts to create the province were hampered by a lack
of recommendations from the local parliament and the Governor Saleh Djasit. The
executive body then formed a lobbying team. One time, Huzrin had to come at near
midnight to the residence of the parliament’s speaker Akbar Tandjung to lobby him.
Lobbying in Jakarta allowed for the deliberations of creation of Riau Islands to take
place in Senayan. However, the discussion faltered as the parent province did not
provide its recommendations. The executive body mobilized 3,000 people to rally in
Senayan. In the middle of the process to form the province, Huzrin was sentenced for
2.5 years in prison for corruption. He was initially targeted to be the governor.
Quoted with editing from
Tempo 51/XXXVII 09 February 2009

13
and decentralization, the idea to establish new jurisdictions is communicated
more massively from one node to another, from elites to communities, and vice
versa, before it becomes a collective idea and flow through existing channels of
democracy institutions. Therefore, it is not surprising if the formation of regency-
municipality is now very expansive.
Administrative Geography
The direct impact of the expansion in the number of new autonomous jurisdic-
tion is found in the changing geography of Indonesia’s jurisdictions. In the first
moment of decentralization of 1999, Java dominated the composition of regency-
municipality in Indonesia with 32 percent portion. However, Java’s domination
slowly fades in subsequent periods. Along with the rise of jurisdiction prolife-
rations in Outer Java (Luar Jawa, known also as Outer Islands), regency and
municipality in Sumatera now account for 30 percent of the total regency and mu-
nicipality —overtaking the Java’s domination since 2003 with 26 percent share.
Maluku and Papua have also taken bigger shares. As the number of regency-
municipality are doubled, the share of Maluku as well as the share of Papua now
are also twice as big as than those a decade ago. New regency and municipality
also mushroom in Kalimantan and Sulawesi. In these two neighboring major is-
lands, the number of regency-municipality are now 50 percent higher than it was
10 years ago. Last Growing number of regency-municipality in Nusa Tenggara,
although smaller, also marks the landscape of jurisdiction there.
Figure 1.2 confirms all of these visually: the pemekaran daerah is an Outer
Island’s phenomenon. There is barely any major island or group of islands in
Outer Java without proliferated regency-municipality. There is also almost no
province in Outer Islands without proliferated regency-municipality.
The change in the map of jurisdiction composition naturally shrinks the
geographic size of each jurisdiction and also the number of village per jurisdiction
(Table 1.2) —although, if observed further, the total number of village increases
over time. In almost all groups of island, except Java, this change is very obvious.
This, of course, brings a reduction in the government’s span of control. Particu-
larly in the new established jurisdictions, this implies that the pemekaran daerah
seems able to reach one of its objectives, namely the reduction in span of control.
For example, if the two types of jurisdiction —the new autonomous jurisdictions
(the Daerah Otonomi Baru, DOB) and the non-DOB— are compared, the index
for span of control constructed in this study shows that the DOB consistently
has a much more smaller span of control compared to that of its counterpart.21
21
The indexes for span of control in the DOB and the non-DOB, respectively, are −0.38 and
0.18. This difference is statistically significant. See Technical Appendix.

14
ParentJurisdictionNewJurisdiction
FIGURE1.2.Regency-MunicipalityMap

15
TABLE 1.2. Geography Administrative, 1999-2006
Kel. Pulau 1999 2000 2001 2002 2003 2004 2005 2006
Size of Area(km2
)
Jawa 1.169 1.146 1.099 1.079 1.079 1.051 1.051 1.053
Sumatera 5.938 5.244 5.080 4.757 4.204 3.713 3.628 3.664
Nusa Tenggara 2.522 2.522 2.438 2.395 2.285 1.975 2.151 2.151
Kalimantan 17.814 14.456 14.456 12.405 11.659 10.314 10.314 10.306
Sulawesi 4.332 4.355 4.357 4.240 3.671 3.163 3.163 3.154
Maluku 9.377 10.938 10.938 10.938 10.938 5.665 5.665 5.469
Papua 37.229 30.142 30.142 30.142 15.050 14.938 14.711 14.757
Indonesia 5.942 5.762 5.679 5.302 4.925 4.403 4.371 4.375
Total Subdistrict (unit)
Jawa 17 17 18 18 17 18 18 18
Sumatera 11 11 12 12 12 11 12 12
Nusa Tenggara 9 9 11 11 11 11 11 11
Kalimantan 13 11 11 10 10 9 10 10
Sulawesi 11 11 12 12 12 11 12 13
Maluku 7 8 7 11 12 6 7 9
Papua 15 12 12 13 8 8 12 14
Indonesia 13 13 14 14 13 12 13 14
Total Village (unit)
Jawa 227 226 227 222 217 218 218 214
Sumatera 5.938 5.244 5.080 4.757 4.204 3.713 3.628 3.664
Nusa Tenggara 129 132 131 130 123 124 125 122
Kalimantan 200 166 160 135 122 118 121 123
Sulawesi 181 160 172 160 138 131 134 137
Maluku 196 194 194 197 201 102 100 117
Papua 243 233 240 268 140 134 134 160
Indonesia 220 209 203 190 173 161 163 164
Measured as the average ﬁgures per regency-municipality
Unfortunately, the reduction in the span of control22 is not automatically
followed by an improvement in economic and social development. In theory,
a reduction in the governmental span of control due to pemekaran daerah is
expected to increase the quality of public service and the people’s welfare. In
practice, however, the real impact of having smaller span of control on the people’s
welfare is still questioned. Notice that the creation of new jurisdiction is not
supposed to merely satisfy the preference of a few local elites. The pemekaran
daerah will lose its meaning if the people’s welfare is not treated as the standing
point. Certainly, the pemekaran daerah itself is not the goal of development. It
is only a way to attain the people’s welfare.
Consequently, a natural question to raise is that whether the creation of new
jurisdiction really improves the people’s welfare. Are there other more eﬀective
alternatives to attain this goal?23
22
In the current technology progress, the geographic-and-governmental span of control, to a
certain degree, may no longer relevant to be considered an obstacle of development.
23
The creation of new jurisdictions always results in the changes in jurisdiction size. The

16
Fiscal
The current rapid growth of the creation of new jurisdiction is not without risks.
“There is no such thing as a free lunch,” as the Nobel laureate Milton Friedman
said. Several issues can be noted here. First of all, what is promptly obvious is
the fiscal consequence of the pemekaran daerah. The creation of new jurisdictions
at the local level always has a budget consequence at the national level. Two
measures can be used to scrutinize this: [1] total flow of funds from the national
budget to subnational budget via the central government transfer (the Belanja
Daerah, BD); and [2] the ratio of the central government transfer to the total
ependiture (the Rasio Belanja, RB). The first one portrays the budget burden
from the view of absolute measure, while the second from the relative one.24
It is true that the revenue and expenditure indicated in the national budget
show a rising trend. Nevertheless, it does not mean that no fiscal burden faced by
the budget. The burden of the central government transfer is still high considering
that there is always potential declines in both sides of the budget —the revenue
and expenditure. As a consequence, not only the additional flow of transfer that
might potentially decline, the total flow of transfer might also potentially shrink,
especially if there is a serious shock in the state budget. In such a situation, fiscal
risk will always exist.
Figure 1.3 portrays a clear picture of the budget consequences of the pe-
mekaran daerah. On Panel 1.3a, the left-to-right movement of the number of
regency-municipality along the horizontal axis is followed by an upward move-
ment of the budget burden along the vertical axis. It is evident that the flow of
central government transfer, both in absolute and relative terms, is very sensitive
to the number of regency-municipality. This implies that, to a certain degree,
the more jurisdictions are created, the bigger the government transfer must be
allocated, particularly if the constraints from the revenue side of the national
budget are disregarded.25
literature record a long list of the benfits and costs of jurisdiction size. A large size —which can
also be a combination of smaller jurisdictions— gains benefits from (1) the economies of scale to
produce public goods, (2) the internalization of cross-regional externalities by centralizing the
provision of public goods that involve strong externalities, or the internalization of externality
due to natural resources exploitation by small independent jurisdictions, (3) the redistribution
of revenue among jurisdictions, which cannot be conducted by each jurisdiction independently,
and (4) the size of market. The costs can be seen in the heterogeneity of individuals’ preferences
as the bigger the size, the more heterogenous the preference of the people. See Alberto Alesina,
et al., 2005. ‘Growth and the Size of Countries.’ In Philippe Aghion and Steven Durlauf (eds.).
Handbook of Economic Growth. Elsevier
24
Notice also that there are some central government’s offices in the regions that have to
be fincanced. This is in line with the decentralization law which dictates that some particular
functions remain at the hands of central government. The two measures above, however, exclude
this spending item.
25
The data is based on current price, thus no inflation adjusment.

17
Panel 1.3b confirms this from a different angle. It is true that the central
government transfer increases every year. However, it is also apparent that the
government’s ability to provide an additional amount of transfer consistently
falls. The red line shows that the expansions of government transfer occured
only in the first half of the 1999-2008 period, when there were only 440 regencies-
municipalities and 30 provinces. Thereafter, interrupted by two years of sharp
declines (2003-2005), the central government’s ability to increase the share of
transfer declines. Even if the sharp drop did not happen, the data shows that
the tendency of diminishing marginal transfer is inevitable. In the last two years,
the trend line is flat and then dropps.
The pattern of diminishing marginal transfer also occurs in the annual
transfer per jurisdiction, as reflected by the blue line in Figure 1.3. The govern-
ment transfer per jurisdiction creepingly climbed after the year of 2001, to reach
its peak in 2006, and then moves slowly. Considering that the number of juris-
dictions, particularly at regency-municipality level, tends to rise every year due
to the pemekaran daerah, the central government’s ability to provide transfer will
potentially hit its limit. This is true when the transfer is set to be a fixed por-
tion of the domestic revenue, or a portion of other reference benchmark of budge
items.26 Stated differently, the additional transfer per year received by each ju-
risdicition declines along with an increase in the number of jurisdiction. However,
there is a tendency of regional budget to increase over time. As a consequence,
a trade-off between the transfer received by every jurisdiction on one side and
the growth of the number of jurisdictions on the other side is unavoidable. A
breakthrough to cope with this trade-off is possible only if there is an aggressive
escalation of transfer funded by an expansion in domestic revenue; or, if there is
a tight control over the growth of new jurisdiction creation.
Policy Delay
Unfortunately, in the new jurisdictions the central government transfer is not
automatically translated into development policies that have direct and immedi-
ate impacts on the people’s welfare.27 This issue now becomes a public concern.
In the initial years, for instance, the new jurisdictions inevitably have to focus
on administrative bureaucracy issues. Preparing local executive and legislative
bodies, recruiting and staffing, developing government infrastructures, and other
related issues to run the new jurisdictions are the long list of priorities that must
26
Law No. 33-2004.
27
Throughout 2007 and 2008, the media intensively reported that many jurisdictions did
not properly spend this grant but saved it in the form of the central bank certificate (the
Sertifikat Bank Indonesia, SBI). This confirms that fact that the government transfer does
not automatically inject the local economy nor be translated into activities that generate the
economy.

18
(a) Left vertical axis: Central goverment transfer (CGT, in trilyun ripuah). Right ver-
tical axis: Ratio of central goverment transfer to total spending (Transfer Ratio, RTS).
Horizontal axis: Number of jurisdiction (province, regency, dan municipality, PRM ). Red
line: Estimated line of the red dots on the relationship between CGT and PRM. Blue line:
Estimated line of the blue dots on the relationship between RTS and PRM. Red line: Ln
CGT = −29.56+5.62 Ln PRM ; R2
= 0.88. Blue line: Ln RTS = −15.44+2.31 Ln PRM ;
R2
= 0.74.
(b) Left vertical axis: Ratio of government transfer to total government revenue (RTR.
Right vertical axis: Government transfer per jurisdiction (GTJ, trilyun rupiah). Horizontal
axis: Year. Blue line: Connecting line of RTR and Year. Red line: Connecting line of
GTJ dan Year.
FIGURE 1.3. Fiscal Consequence of New Jurisdiction Creation

19
be first tackled. These priorities certainly need some resources to be allocated.
As a consequence, there is a shift in financing government activities to follow the
list of priorities, but at the cost of the provision of essential public services. This
condition suggests that the start-up costs in the new jurisdiction with the new
executive and legislative infrastructures tend to be higher than the ones in their
counterpart.
What subsequently occurs in such a situation is a policy delay. Policies
that are more substantially directed to the people’s welfare must be postponed
because the financing priorities must be given first to the development of govern-
ment infrastructure. When these substantial policies are delayed, the attainment
of people’s welfare will also be delayed. Consequently, there is a significant time-
lag for the substantial policies to be implemented and to take effect, because the
authorities have to first concentrate on the administrative policies. The accelera-
tion of development that has been initially claimed as the objective of pemekaran
daerah is not materialized in a real development. This policy delay makes the
creation of new jursidictions costly, considering the long(er) development route
that has to be taken. The policy delay also makes the local authorities to be left
behind the real development issues.
In summary, there are at least three consequences of policy delay. The first
and most striking consequence is that the people lose the opportunity to gain
welfare that can supposedly be achieved in a shorter time length. Second, pol-
icy makers lose the timing to respond to the real problems faced by the people,
particularly when there are rapid social and economic changes. Third, all devel-
opment actors lose resources because of (mis-)allocations of prioritized resource,
ie., putting the development of government infrastructure first, but leaving the
real development of the people behind.
Regional Achievement
Effectiveness of Proliferation
The rapid creation of new jurisdictions is not immediately followed by an im-
provement in the jurisdiction’s performance of the quality of public services and
in the achievement of the people’s welfare as the main objectives of the pemekaran
daerah. In fact, several studies tend to report negative impacts of the creation
of new jurisdictions: the costs are considerably high, while the benefits are rela-
tively limited (DSF, 2007)28, the performance of new jurisdictions in a number of
28
Here, ’costs’ are defined as the decline in development spending due to the pemekaran daerah.
Meanwhile, ’benefits’ are stated as the comparison of development spending productivity in the
new jurisdictions and their counterpart that do not experience administrative changes. See,
DSF (2007), Costs and Benefits of New Region Creation in Indonesia. Final Report, Nov. 2,

20
development sectors are not always better compared to that of the counterpart
jurisdiction (BAPPENAS and UNDP, 2007; Qibthiyyah, 2008), as also found in
the weaker performance of the government apparatus (BAPPENAS, 2004).29
Observing four development sectors —public welfare, education, health and
physical infrastructure— this report empirically confirms the doubts over the ef-
fectiveness of the creation of new jurisdictions. The quasi experimental approach
and the counter-factual analysis developed in this study find that the formation
of new jurisdictions is not an effective way towards the attainment of people’s wel-
fare. All indicators simulated and evaluated in the study —Human Development
Index (HDI), schooling year, school participation, infant vaccination, and medical
services to assist birth, as well as district roads— do not support the claims on
benefits gained from pemekaran daerah. While the quality of human development
is not much lifted up, not more children go to school. Also, fewer infants and
toddlers get vaccinated. Equally important, the development of regional physical
infrastructure also fail to show a significant improvement.
The picture above elicits fundamental questions about the effectiveness of
the creation of new jurisdictions on the people’s welfare, and even about the
direction of Indonesia’s decentralization as well. From the view of development
achievement, it is not surprising that the new jurisdictions are not able to perform
better than their counterpart. This report statistically indicates that the creation
of new jurisdictions fails to its achieve development goals. In the four sectors
analyzed in this report the signs that the creation of new jurisdictions is far from
its objectives are presented. The counter factual scenarios developed also in this
study suggest that measures directly answering the real problems of the people
are found more effective.
To defend the facts above, the proponents of pemekaran daerah usually
argue that the new jurisdictions need some time and opportunity to employ all
potentials before they perform. This argument is certainly plausible if viewed
from administrative bureaucracy development, because the bureaucracy needs
the accumulation of knowledge and experience to discover its own learning curve.
Nevertheless, from the view of development achievement —the one that the public
is waiting for— this argument is obviously debatable, knowing the fact that there
are many urgent and critical problems in the society that need quick responses.30
2007.
29
It is interesting to further examine whether the phenomenon of flypaper effects occurs in the
fiscal relation between the central-regional governments via the government transfer, particularly
if linked to the economic performance of the regions.
30
In fact, there is no a clear correlation between the establishment year of jurisdiction and
its socio-economic performance. The correlations between HDI, school participation, infant
vaccination, and length of district road in the one side and the establishment year of jurisdiction
as a proxy for governance experience in the other are found very low. For the DOBs, the
correlations are between −0.05 and −0.26, and for the non-DOBs between −0.03 and −0.11.
Meanwhile, for the overall jurisdictions the correlations are between −0.14 and −0.20.

21
As mentioned earlier, the policy delay due to the pemekaran daerah poses serious
risks to the people’s welfare.
Determinants of Achievement
This report finds that the basic issues of regional development —poverty and
underdevelopment— are the important explanatory variables for regional achieve-
ments. Meanwhile, the simulation developed in this report shows that policies to
tackle these basic problems are much more effective if conducted without going
through the pemekaran. Hence, measures that directly answer these problems
are needed.
The decentralization policy as a correction for the past centralization policy
needs to reinvent its main objective, eg., to attain the people’s welfare. This is in-
tended to prevent decentralization from the dominating discourse of the creation
new jurisdictions. As a consequence, an alternative discourse focusing on attain-
ing the people’s welfare —that is not merely via the pemekaran— are needed.
This alternative discourse can be seen as an effort to re-map the regional de-
velopment problems and the ways to resolve them —ie., to reinvent regional
development (Kant et al, 2004) covering human development and spatial devel-
opment dimensions as well as regional inequality dimension. Reinventing regional
development in this report is the alternative discourse to the pemekaran daerah
since it has a broader coverage than the merely political administrative issues as
found in the pemekaran daerah. Some initiatives need to be taken to spread out
this discourse without being limited by the merely political administrative issues.
This report ends up with a launch of this discourse. In the first three
chapters of this report, some issues are elaborated before a discussion on the
alternative policies to attain the people’s welfare. These issues are linked to the
empirical portraits of the new jurisdiction seen from the perspective of people’s
welfare. This perspective is used in this report as it is always claimed as the ob-
jective of the creation of new jurisdictions. Using this perspective, the discourse
of ’reinventing regional development’ is also rolled on as the alternative discourse.
Policies to create new jurisdictions are now at the crossroads. In limited cases,
this report does not deny the fact that there are some successful stories of pe-
mekaran daerah. At the same time, this study also notes that the proposals for
creation of new jurisdiction is still flowing out. However, the welfare effects of
the pemekaran daerah deserve to have a serious attention. At this crossroads the
choice is determined.

Chapter 2
Regional Achievements
in Comparison
Has the creation of new jurisdictions achieved its goal; bringing the people to
better welfare? Now, after a decade of decentralization, such a question is worth
further examination. This is needed not only to look back and evaluate what has
happened, but also to look forward in anticipation of other proposals for creation
of new jurisdictions continuously submitted. Such a question reveals the deepest
essence of the pemekaran daerah: the people’s welfare.
Selection of Indicators
This chapter reviews development achievements of the DOBs and non-DOBs in
not only economic but also social sector. It is because social sector development
cannot be isolated from other sectors. Social development should be, for instance,
a result of economic development. Development in economic sector is meaningless
without improvements in social sector. Eﬀorts to develop economic sector that
fail to result in positive impacts on social sector can be considered ‘fruitless’.
An increase in per capita income, for example, is pointless in the absence of
improvement in education and health. On the contrary, progresses in education
and health can become important foundations for increased productivity and
eﬃciency. Not surprisingly, as mentioned by Hill (1996), social sector can become
the most tangible yardstick of economic development.
Under the same spirit, the pemekaran daerah should also lead to the peo-
ple’s welfare. Question of whether the pemekaran daerah is successful —even
the idea behind the pemekaran daerah itself— must be viewed from this angle.
More than that, Indonesia as a whole must also be seen through the lens of peo-
ple’s welfare. On the basis of these considerations, this chapter concentrates on
discussing the variables that are directly representing the people’s welfare. This
23

24
chapter also compare the achievements of new established jurisdictions and their
counterpart, respectively as the treated and control groups. Detailed discussions
on the methodology used in this chapter are presented in Technical Appendix.
Development achievements of regencies and municipalities discussed in this
chapter refer to the outcomes of four sectors, namely general welfare, education,
health and infrastructure. This is to portray a more comprehensive picture of
development because these sectors cover both social and economic dimensions of
development. Aside from being used to get their substantive values, the choice of
these indicators is limited by the availability of data that can cover 440 observed
regencies-municipalities. Several key indicators are specifically discussed to show
the achievements in these four sectors. Some of these indicators are as follows:
• Human Development Index (HDI). This index represents an aggregated
achievement in the people’s welfare as it simultaneously captures develop-
ment both in the economic and social sectors.
• School Participation. Different from the observation on HDI which is
not limited to a particular demographic cohort, school participation refers
to a specific demographic cohort.
• Infant Vaccination. Representing the health sector, this indicator re-
flects an even more specific demographic cohort. Along with the previous
indicator for education sector, this indicator portrays ’human quality’ in
the specific demographic cohort, thus the evaluation on the jurisdictions’s
achievements captures relatively complete demographic cohorts.
• Road Length. Development achievement in the form of road length to rep-
resent the physical infrastructure sector is also be discussed in this chapter.
As widely recognized, road is the vein used for good and service transporta-
tion to promote a regional economic development.
Apart from these indicators, the corresponding indicators for education and
health are also complemented by other variables like schooling years and birth
attended by skilled health staff. To a certain degree, these indicators explain
what happens to infrastructure and institutional development in education and
health sectors. Other related indicators —albeit not discussed specifically in this
chapter— to capture regional achievements in economic and social sectors are
also presented in Appendix A.

25
General Welfare: Human Development Index
How to measure the level of general welfare is actually problematic since it is a
broad-coverage term. Among various existing indicators to measure it, Human
Development Index (HDI) seems to be the most appropriate one. In this in-
dex, welfare is not only viewed via per capita Gross Regional Domestic Product
(GRDP), but also seen through the achievements in social sector like education
and health. For the later, literacy rate and life expectancy rate are two indicators
commonly included in HDI construction.
Table 2.1 reports the difference in HDI achievement between the treated
and control groups. For overall regencies and municipalities of Indonesia, through
a matched pair approach, it is found that the HDI achievement in the treated
group is worse than the one in the control group, as characterized by the negative
ATET (Average Treatment Effect for the Treated).31 The three techniques —
stratification, nearest neighbor, and kernel matching techniques— produce qual-
itatively the same results. Two of these even report quantitatively similar re-
sults. With the relatively small standard error —approximately half of the ATET
value— the difference in HDI achievement between the two groups is statistically
significant.
This fact suggests that, except for Java-Bali and Sulawesi, jurisdictions
that do not opt for pemekaran perform better than jurisdictions that opt for
it. The three techniques are generally consistent in reporting the ranks of the
achievement differences. The biggest difference in the achievement is found in
Papua, where the DOBs are lag far behind the non-DOBs, followed by Sumatera
and Kalimantan. In Maluku and Nusa Tenggara, although the difference is not
as great, the non-DOBs still perform better than their counterpart does.
The weak overall HDI performance of the DOBs can also be scrutinized via
the HDI components, although they are not always statistically significant. Peo-
ple living in the DOBs generally have a shorter life expectancy. Also, compared
to the non-DOBs, fewer people are able to ‘read, write, and understand simple
sentences’ in the DOBs. At the same time, (non-oil and gas) per capita income
in the proliferated jurisdiction is also smaller. In short, if HDI could be regarded
as a picture of human development quality, the DOBs are not yet able to show
their capability to increase the people’s quality of life.
31
The value of ATET is the difference between the social-economic achievements of the treated
and control groups as a matched pair. The negative sign implies that the achievement in the
treated group is lower than that in the control group.

26
Education: Schooling Years and School Participation
Better education participation is clearly needed to have better educated society.
This naturally begins by sending more children to school. There has to be more
students in the school class rooms when the bell rings. There has to be more
children at school age taking part in their own school grades. Education also
determines the quality of human development.
Two indicators for education sector are schooling years and school partici-
pation. Schooling year explains how long a community can pursue education in
formal institutions. Considering that to a certain extent this can reflect the level
of education, schooling years can also provide a rough description on ‘how high’
a community involves in the existing education institutions. Meanwhile, school
participation refers to how many children at school age are absorbed by the edu-
cation system in accordance with their grades. Appendix A disaggregates school
participation into several education levels. Moreover, Appendix A also presents
student competency level as an indicator for the ability of students from various
groups and grades to pass both national-and-school-level exams.
Table 2.2 records a gloomier picture of education performance in the prolif-
erated jurisdictions than in the counterpart. First, for overall Indonesia, people
living in the proliferated jurisdictions are educated 4.5-6 months shorter than
those in the comparable jurisdictions. This difference may not be meaningful
in substance, but statistically it is significant. This means that the finding is
systematic, not a ‘random’ chance; that is, the probability to find the worse
performance of DOBs is higher than that of the non-DOBs.
Second, fewer children go to school in the treated jurisdictions than that in
the control ones. The difference in school participation at the elementary school
between the treated and control groups is relatively small, 1-3 percent. However,
at the junior high school this gap widens, ie., 3-5 percent. This difference is higher
as the education level increases. At senior high level school participation in the
treated group is 10-17 percent lower than that in the control group. Considering
that the age structure of Indonesia’s regency-municipality population swells in
the middle part, the 10-17 percent gap brings a very serious policy message.
The same story of backwardness repeats itself in the indicator for student
competency. Appendix A shows that the performance of students in the prolif-
erated jursidictions is behind the performance of those in the non-proliferated
jursidictions. Students in the proliferated jursisdictions consistently show lower
scores on the national-and-school level exams than those in the counterpart jus-
risdictions. Similar to the rate of school participation, the difference in student
competency is intensified along with the level of education. This is also added
by the fact that the worst scores for all exam levels are found in the students
living the proliferated jurisdictions, while the highest scores are found the non-

27
proliferated jurisdictions —with an exception for the elementary school exam.
Students in the treated group still have to study harder to catch up with the
performance of their colleagues in the control group.
In short, for the overall regency-municipality performance, the picture of
education sector in the new jurisdictions is not as good as than that in the
counterpart jurisdictions. The option to create new jurisdictions is not a fruitful
choice for the education sector. Nevertheless, considering that there are still
some new jurisdictions that perform relatively well, a policy mimicking among
the left-behind new jurisdictions needs to be done.
Health Vaccination and Women’s Confinement
Health sector is clearly an important sector in development. An attention to a
particular demographic cohort in the health sector, namely toddlers or childer
under five, is also equally important as in the long run those in this cohort will be
the decisive new generation. The mothers who give birth to this new generation
cannot be cast aside as well, particularly those in confinement. Confinement is
a very critical time for mothers and their babies. Therefore, medical assistances
during this time deserve attention.
The new jurisdictions again fail to perform in the health sector. The ability
of infant vaccination program to reach the target group in these jurisdictions is
lower than that in their counterpart. Although in limited cases they perform well,
the new jurisdictions in general are 3-4 percent lag behind their counterpart.
Maluku and Papua need a very serious attention to infant vaccination
achievement. In the eastern sky horizon of Indonesia, the new jurisdictions are
left far behind. The option to create new jurisdictions has absolutely no im-
pact on infant vaccination. Babies born in the new jurisdictions get no more
vaccination than those born in the counterpart jurisdiction.
In the new jurisdictions of Maluku, the ability of vaccination program to
reach the target is 10-12 percent lower than that in the counterpart jurisdictions.
In the new regencies-municipalities of Papua, babies still suffer from the lack of
health services thus have to cry harder since the paramedics are only able to
reach them 11-15 percent lower than those in the counterpart jurisdictions. The
new jurisdictions of Sulawesi, however, show an opposite picture. In this island,
vaccination needles in the proliferated regions reach more babies. Along with the
achievements in HDI and education, the new jurisdictions in Sulawesi are ahead
of their counterpart in infant vaccination.
In the new jurisdictions, the ability of paramedics to assist mothers in
confinement is limited. The new jurisdictions are 8-9 percent lower in assisting

28
mothers in confinement than the counterpart. This is consistently found from one
island to another. The gap between the new jurisdictions and their counterpart
in assisting birth is big as big as the west from the east of Indonesia.
The new jurisdictions in Sulawesi, which performed well in the previous
indicators, now fall far behind. Situation in Sumatera and Kalimantan is no
different, ‘six of one, half dozen of the other.’ The new jurisdictions in these
islands are 10 percent behind their counterpart in assiting mothers bringing new
lives on earth. Java is shocking. In the new jurisdictions women must fight
on their own in delivering babies. Meanwhile, Papua again fails to supply the
good news since the choice to create new jurisdictions does not result in positive
impacts. Compared to their counterpart, the new jurisdictions are 24-30 percent
behind in assisting birth.
The above situation is not yet a full picture as it needs to be complemented
by the worse performance of new jurisdictions in sanitation sector. People living
in the treated group cannot catch up with those living in the control group
in having access to a toilet. The gap between the two groups ranges between
2.5 to 6.5 percent of the population. Access to a toilet might not be a serious
concern for some. However, such a finding is surprising as many people in the
new jurisdictions fail to meet this kind of necessity. Having access to a toilet is
a serious issue if seen from the perspective of sanitation quality, which up to a
certain degree determines the quality of human development.
Access to clean water is no different —it is even worse. Percentage of people
having access to clean water is 13-15 percent lower in the treated group compared
to that in the control group (Appendix A). In the treated jurisdictions clean water
cannot be smoothly supplied to the houses. For those living in these jurisdictions,
some more efforts are needed to get water for their daily life. In short, health and
sanitation remain to be serious problems for people the new jurisdiction. More
hard works are needed to prove that the creation of new region is a right option
that benefits the greater public, to make the objectives of pemekaran are down
to the earth, not flying in the sky.
Infrastructure: Road Development
Road is not only important to connect one economic locus to another. More
than that, road also stimulates and generates various related economic activities.
Road development that opens the isolation and remoteness of an area contributes
significantly to narrow the regional price differentials of goods and services, as the
price levels differ from one geographical point to another. This difference widens
when the existence of this physical infrastructure becomes the major bottleneck
of inter-region goods and services trasnport.

29
In road development, whether measured in absolute or relative length of
distance, the treated group fails to compete with the control group. Jurisdictions
in the treated group are 240-250 kilometers behind in road development compared
to those in the control group. In all groups of islands, none of the new jurisdictions
is able to build longer roads.
Measured as the relative distance to the geographical size, the ability of
new jurisdictions to build road is not better than that in the control group. The
new jurisdictions perform better only in relative Kalimantan and Nusa Teng-
gara. From Sumatera to Papua, even in Java, the new jurisdictions do not build
longer roads than their counterpart. This situation is akin to the ability of new
jurisdictions to generate electricity. Once again, the new jurisdictions cannot
demonstrate better performance. Power generation in the treated jurisdictions is
much lower than that in their counterpart. This difference is systematic as shown
by its significant statistics.
Counter-Factual Analysis
Up to this point, the administrative choice to create new jurisdictions is not
effective to attain the people’s welfare. Existing social-economic indicators paint
a gloomy picture: the new jurisdictions cannot show a better performance than
their counterpart. The indicators demonstrate that the difference in development
achievement is systematic. Hence, the probability to claim that this phenomenon
was empirically ‘true’ is much higher than the probability to reject it.
Definition
This report treats the creation of new jurisdiction as an administration option
vis-á-vis the opposite option, while defines policy scenario as any injection to
the policy variables determining the regional achievements. Also, it presents a
series of counter-factual analyses on the behavior of the administrative options,
eg., taking or not taking pemekaran. The question now is that, given the char-
acteristics of socio-economic determinants of regional achievements, what would
have happened if there were no pemekaran daerah? What if the opposite? How
much the difference in regional development achievements would be? Stated dif-
ferently, what would have happened if the DOBs acted like the non-DOBs, or
the other way around? What if the opposite? Also, what would have happened
if the policy scenarios that directly stab into the heart of regional development
problems, such as anti-poverty and technocracy capacity improvement policies,
were conducted with and without pemekaran?

30
TABLE2.1.HumanDevelopmentIndex
NearestKernel
RegionTreatedControlStratiﬁcationTreatedControl
Neighbor
TreatedControl
Matching
Sumatera5659-2,4435627-1,2055659-2,346
Java-Bali6281,307661,7506281,148
NusaTenggara43-0,77552-0,28052-0,927
Kalimantan1714-2,205227-1,595229-1,761
Sulawesi15371,24322100,77722300,701
Maluku77-1,514113-1,182113-1,024
Papua1610-6,678175-5,353179-5,972
Indonesia139175-1,53713965-1,252139175-1,561
(-2,466)(-1,835)(-2,854)
Note:Figuresinbracketsarethet-statisticsforthediﬀerenceinachievementbetweenDOBsandNon-DOBs.

31
TABLE2.2.SchoolingYearsansSchoolParticipation
NearestKernel
Neighbor
TreatedControl
Matching
•SchoolingYear
Sumatera5659-0,8775627-0,5115659-0,830
Java-Bali6280,813660,9676280,769
NusaTenggara430,07552-0,020520,122
Kalimantan1714-0,453227-0,445229-0,491
Sulawesi15370,51722100,35922300,315
Maluku77-0,486113-0,336113-0,301
Papua1610-1,814175-0,959179-1,666
Indonesia139175-0,53013965-0,376139175-0,495
(-2,352)(-1,609)(-2,622)
•SchoolParticipation
Sumatera5659-1,10156271,8435659-0,644
Java-Bali628-1,759662,065628-1,788
NusaTenggara430,487524,53652-0,573
Kalimantan1714-0,556227-0,956229-0,900
Sulawesi15371,58022105,95022304,193
Maluku77-11,763113-10,172113-10,85
Papua1610-12,144175-14,991179-11,039
Indonesia139175-3,25913965-4,029139175-2,894
(-2,319)(-2,342)(-2,058)

32
TABLE2.3.VaccinationandMotherinConﬁnement
NearestKernel
Neighbor
TreatedControl
Matching
•InfantVaccinatin
Sumatera5659-1,10156271,8435659-0,644
Java-Bali628-1,759662,065628-1,788
NusaTenggara430,487524,53652-0,573
Kalimantan1714-0,556227-0,956229-0,900
Sulawesi15371,58022105,95022304,193
Maluku77-11,763113-10,172113-10,850
Papua1610-12,144175-14,991179-11,039
Indonesia139175-3,25913965-4,029139175-2,894
(-2,319)(-2,342)(-2,058)
•ConﬁnementbyParamedics
Sumatera5659-10,2485627-5,1455659-9,273
Java-Bali628-8,08266-0,340628-7,784
NusaTenggara43-9,930520,47652-9,598
Kalimantan1714-9,869227-4,701229-6,501
Sulawesi1537-5,0712210-11,2732230-7,532
Maluku77-7,744113-11,652113-11,751
Papua1610-23,691173-27,870179-29,504
Indonesia139175-9,92613965-7,825139175-9,332
(-2,462)(-2,232)(-3,034)

33
TABLE2.4.RoadDevelopment
NearestKernel
Neighbor
TreatedControl
Matching
•Road(Absolute,km)
Sumatera5659-237,4715624-264,3955659-217,66
Java-Bali628-95,12363-169,032628-97,589
NusaTenggara43-609,25051-609,25052-609,250
Kalimantan1714-82,297227-96,224229-84,584
Sulawesi1537-209,363228-342,0432230-308,739
Maluku77-186,563112-198,978113-200,426
Papua1610175-505,517179-193,067
Indonesia139175-249,96813965-237,109139175-255,074
(-2,975)(-2,325)(-2,873)
•Road(Relative)
Sumatera5659-1,1405624-0,5645659-1,141
Java-Bali628-0,35763-1,050628-0,564
NusaTenggara430,080510,080520,080
Kalimantan17140,0152270,0052290,001
Sulawesi1537-0,442228-0,3502230-0,561
Maluku77-0,032112-0,041113-0,045
Papua175-0,199179-0,118
Indonesia139175-0,60913965-0,328139175-0,600
(-2,575)(-1,542)(-2,781)
•EllectrictyProduction(mw)
Indonesia139175-8.65E+0713940-4.48E+07139175-6.78E+07
(-2.099)(-1.247)(-2.501)

34
Having these questions at hand, the counter-factual analysis is run for two
purposes. First, to illustrate the relationship among the administrative options
and the relationship among the policy scenarios as well. Second, to estimate the
impacts of these policy scenarios.32 In the context of this study, the analysis is an
experiment to examine the effectiveness of a policy with pemekaran option and
without pemekaran option, by taking the whole set of socio-economic development
determinants into account. A set of technical policy scenarios are also conducted
within these two administrative options.
The following analysis depicts the results of policy scenario simulations run
under these the two administrative option. The selections over which policies
to be simulated are made using the statistical significance of the variables de-
termining regional achievements studied previously (See Technical Appendix for
the detail). These include policies like poverty reduction, development planning
capacity, and fiscal technocracy improvement.33
Comparison
General Welfare: HDI. Table 2.5 displays the results of counter-factual anal-
ysis. The first column explains the factual status of jurisdiction, either DOB or
non-DOB. The second column indicates the factual estimate of achievement by
the jurisdiction status. The third column shows the counter factual estimate if
the jurisdictions would have taken the opposite option of what they would have
taken. The fourth column portrays the difference in achievement, ie., the result-
ing gain or pain, between the two options: pemekaran and not pemekaran. The
last two columns test the implied statistics.
Table 2.5 pitches a substantial message: It is much better for the prolif-
erated jurisdictions (the factual status) if they would have not taken the option
(the counter-factual status). The counter-factual analysis shows that if these
jurisdictions would have not taken the option, it benefitted statistically very sig-
nificant gains. This means that the option to create the new jurisdictions is not
a wise decision from the HDI achievement point of view. The creation of new ju-
risdictions makes the jurisdictions to lose two points of HDI —a very substantial
loss knowing that HDI is a composite measure of economic, health and education
variables.
32
This analysis has controlled the confounding factors that may influence the measured im-
pacts or achievements.
33
For an illustrative purpose, the study take the rates of policy shock arbitrarily at 5 and 10
percent for poverty reduction and improving fiscal technocracy (ie., an increase in the ratio of
two sources of revenue, that is the revenue drawn from the central government and own revenue)
respectively. Meanwhile, the scenario of improving development planning capacity is stated as
a situation when the region has a politically-legitimated spatial development plan, called the
Rencana Tata Ruang Wilayah (RTRW)

35
New Jurisdictions in Lampung Get Many Red Grades. . .
In 1999, several new jurisdictions were created in Lampung. Central Lampung Re-
gency was split into Metro City, East Lampung Regency, and Central Lampung Re-
gency. North Lampung Regency was divided into the regencies of Way Kanan, Tulang
Bawang, West Lampung, and North Lampung. The main reason for this pemekaran
daerah was to reduce the span of control and to improve public services. “At the
time, taking pemekaran daerah as an option was right,” said Syafarudin, an observer
of regional autonomy from the Faculty of Social and Political Sciences at Lampung
University, said on Feb. 5.
After 10 years, Metro makes some progresses in physical infrastructure, economic
growth, health, and education. Particularly in the physical infrastructure, Metro
inherits the Dutch legacy of well-designed physical infrastructure, both in spatial
planning and urban management. The Government of Metro City also develops the
area as planned. Other jurisdctions, eg., West Lampung Regency and North Lampung
Regency, also perform quite well in term of physical infrastructure development, while
Tulang Bawang Regency develops a growth center.
Way Kanan Regency, however, is not sufficiently developed. The geographical location
is surrounded by plantations owned by private compaines, but the government has
no intiative to seek development breakthroughs. Central Lampung Regency has a
similar experience. Central Lampung fails to develop due to lack of technocracy
capacity to utilize natural resources left after the pemekaran. Another jurisdition, East
Lampung, is also stagnant because of the lack of governance capacity to utilize the
economic potentials. The Government of East Lampung only focuses on agricultural
development but neglects manufacturing industry development.
The creation of new jurisdictions have not resulted in the development achievements
as initially claimed. There are many red grades. Good public services in various sectors
are not enjoyed by the people, and there is no significant progress in development.
Also, the new governments have no qualified capacity to govern, and have no focus on
the development of growth-promoting sectors, such as physical infrastructure. More
than that, The creation of new jurisdictions in general merely becomes the political
projects of the elites. As a consequence, public positions in the government are
occupied by incompetent people due to cronyism. “These factors cause an imbalance
in government budget. About 70 percent of the budget is allocated to finance the
government officials, and only the remaining 30 percent is for the people,” Syafarudin
said.
Quoted with editing from
Kompas 11 February 2009.

UNDP BAPPENAS DSF Creation of New Jurisdictions and People’s Welfare

UNDP BAPPENAS DSF Creation of New Jurisdictions and People’s Welfare

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