Regional Autonomy and Legal Disorder:
The Proliferation of Local Laws in Indonesia

 

Abstract

Since Soeharto’s fall in 1998, Indonesia has transformed from one of the world’s most authoritarian states to one of its most democratic and decentralised. Significant lawmaking powers have been devolved to around 1000 local legislatures and executive officials. The combined legal output of these lawmakers has added great bulk, complexity and uncertainty to Indonesia’s legal system. Many new local laws have been criticised for being misdirected or unclear, violating citizens’ rights, imposing excessive taxes, even breaching Indonesia’s international obligations... The article shows that bureaucratic and judicial review are flawed and are used largely to review and invalidate local laws imposing illegal taxation or user charges. Laws egregious for other reasons are, this research shows, likely to escape review altogether, or to be upheld by the Supreme Court without satisfactory explanation. This undermines the rule of law, may compromise the human rights provided to citizens in national laws and could affect Indonesia’s ability to comply with some of its international obligations.

 

Introduction

In 1999, Indonesia embarked upon an ambitious program of decentralisation, or ‘regional autonomy’ (otonomi daerah). This was the year following President Soeharto’s resignation amid social, political and economic unrest. Soeharto’s successor — his former Vice-President, Bacharuddin Jusuf Habibie — set in motion a process that, in little over one year, took Indonesia from being one of the world’s most authoritarian and centralised states to one of its most decentralised and democratic.

Under Soeharto, political power had been strongly concentrated within the central government (pemerintah pusat). The primary function of local governments — provincial, district, city and village — was loyally to support and implement national policies and directives. Well before Soeharto’s resignation, this system had become deeply unpopular. Many provinces had long complained that Jakarta’s economic, military and bureaucratic controls were excessive and that the fruits of Indonesia’s natural resources — largely located in outer regions — were channelled almost entirely to the centre, particularly to the Soeharto family. Other provinces, such as West Papua and East Timor, claimed on historical grounds that they should have never joined the Indonesian state. Some provinces, including Aceh, West Papua, East Timor and Bali, asserted that they were so ideologically, culturally or religiously distinct from the rest of Indonesia that they should not be part of it. Resistance to central control — by the Free Papua Movement (Organisasi Papua Merdeka, or OPM) and the Independent Aceh Movement (Gerakan Aceh Merdeka, or GAM) for instance — was often met with military force, leading to decades-long bloody civil wars.

The Soeharto regime was largely able to contain these objections to the parasitic and often brutal centralist state. But with Soeharto’s fall, they could no longer be suppressed. They became so strong and sustained that without regional autonomy, Indonesia faced serious threats of separatism and ultimately, disintegration. On one view, the only way the central government could retain any power at all was to devolve a significant portion of it.

Under decentralisation laws, authority was granted to two levels of regional government — provinces (propinsi) on the one hand, and districts (kabupaten) and cities (kota) on the other — to make their own policies and local laws. All of these tiers of local government received both legislative and executive lawmaking powers. One result of regional autonomy was therefore, an almost-immediate, drastic proliferation of lawmaking bodies, the numbers of which have continued to increase...

These new lawmakers have, through the laws they have passed, added great bulk and complexity to the Indonesian legal system — a system which, well before 1999, had been described as a ‘vast and extensive jungle of law’. Yet, it is impossible to estimate with certainty how many local laws have been produced because there is no central repository of them. As discussed below, local lawmakers are required to send all the laws they pass to the central government. By 2006, at least 12,000 had been sent. Yet, given the abundance of lawmakers and that many local governments do not send their local laws to the central government as required, the true number is likely to be much higher.

Many of those who favour decentralisation, including some foreign donors, espouse that decentralisation brings ‘government closer to the people’ and enhances government responsiveness to the needs of its citizens. Policy and lawmakers in many regions of Indonesia, however, are criticised for rarely consulting with their constituents to determine whether a particular law is necessary and, if so, what it should contain. Local governments also rarely formulate regulatory impact statements that consider the likely effects of proposed laws. Instead, laws are conceived and enacted almost in a vacuum; and then they are ‘socialised’ (disosialisasikan) — that is, the government subsequently attempts to inform citizens about the new law.

Some critics point to the lack of legal drafting skills of a large proportion of local lawmakers, resulting in laws so unclear as to be unworkable; others highlight the propensity of local governments to pass laws about matters that really do not require regulation at all and might be better addressed with non-regulatory measures. Worse, some local laws exceed the lawmaking powers of those who create them, or contradict other local or national laws. In the words of a senior official from the national Finance Ministry:

Since regional autonomy was introduced, a phenomenon that has emerged is the tendency for regions to wish to regulate everything on the view that all objects and subjects within their territory fall within their jurisdiction and must, therefore, be subject to the wishes of the region as regulated in regional regulations. What happens next is a type of euphoria, where the region appears to no longer observe the applicable rules, including by enacting regulations which regulate issues outside of their jurisdiction.

...An effective review mechanism clearly is essential. If even a small proportion of local laws suffer from these reported flaws, then ‘problematic’ laws might number in the hundreds or thousands. If as commonly suspected, the proportion is higher, then regional autonomy is creating nothing short of legal chaos.

This article shows that the two currently available mechanisms for review of local laws — bureaucratic review by the central government, and judicial review by the national Supreme Court (Mahkamah Agung, or MA) — both appear to be deeply flawed. ...[U]nless a local law seeks to impose a tax or user charge, it is highly unlikely to be reviewed. This is so even if its content breaches fundamental principles of law including human rights, or has otherwise deleterious effects for citizens...

 

.............

VII Concluding Remarks

This study has revealed that many defects taint Perda review processes, both bureaucratic and judicial. Three defects are particularly deleterious to Indonesia’s legal order.

 

A. Unchecked Local Lawmaking, Unless Revenue Raising

The first defect is that, to date the MOHA and the Supreme Court have in practice allowed local governments to pass laws regulating any subject matter — regardless of their potential ill-effects for citizens or business, or their inconsistency with higher-level laws — provided that those laws do not seek to raise revenue for local governments. Perda may be detrimental to local and national economies; to standards of public services such as health and education; and to the fundamental constitutional human rights of citizens. But they will generally escape bureaucratic review, unless they also impose a fee. Bureaucratic review has been used exclusively to invalidate Perda requiring citizens or institutions to pay a local government an impost that the central government has prohibited by statute. All 500 of the MOHA’s invalidations from 2006–08 analysed in this research concerned Perda imposing such payments.

The central government’s rationale for targeting only tax and retribusi Perda is unclear. One plausible explanation is that it has the human resources or budget sufficient only to detect, review and invalidate limited numbers of Perda and, to protect its own revenue streams, has chosen to focus upon tax and retribusi. Alternatively, the choice might reflect a conscious policy decision to allow local governments to pass laws unhindered, except in these areas. After all, a primary purpose of regional autonomy is to empower regions to regulate their own affairs.

This study has also shown that the Supreme Court also strikes out only tax or retribusi Perda, sometimes picking up Perda that seem to have slipped through the MOHA review process. Unlike the MOHA, however, the court has reviewed Perda that do not raise revenue if applicants have so requested. In these cases, however, the Supreme Court has allowed the Perda to stand. And, in some of the cases studied, the Supreme Court upheld the Perda without attempting to test whether the Perda was consistent with higher-level laws and national legal standards. Rather, the Supreme Court seemed content merely to declare that regions have power to make policy and then encase them in the legal form of a Perda. Indeed, it is possible tentatively to argue that the Supreme Court has simply decided these cases in favour of the highest level of government involved: the central government in disputes between central and local governments, and local governments in disputes between local governments and citizens.

By doing so, the Supreme Court shirks the responsibilities that judicial review jurisdiction carries, heightened by its self-imposed 180-day limitation period for case lodgment mentioned above. Unless its decisions better explain why potentially illegal, non-revenue-raising Perda should remain on the books, and unless it removes this limitation period, citizens and government are likely to, if they have not already, discount the court as a viable forum for Perda testing. Local lawmakers will continue to pass thousands more laws unchecked and the Indonesian legal system will descend further into legal chaos.

In the Indonesian context, this is catastrophic. Even before ‘regional autonomy’, Indonesia’s laws and its legal system were largely dysfunctional and disrespected by citizens and governments alike. Regional autonomy has put law at risk of becoming almost entirely irrelevant. It has, in effect, given free rein to local governments to do as they please — to act unrestrained by law provided that they do not seek revenue in so doing. It is undermining much of the progress Indonesia has made at the national level since Soeharto’s fall towards Negara Hukum (the rule of law) — under which the state, including local governments, must itself comply with the law when performing its functions.

 

B. No Mechanisms to Resolve Conflicts of Laws

The second defect, or rather category of defects, relates to the legal framework for regional autonomy. The legal mechanisms for the review of any type of Perda against other Perda are unclear or non-existent. Article 6(4) of MOHA Regulation [No 53 of 2007] allows provincial legislation to be invalidated on the grounds of public interest and breach of a higher-level law, but does not cover conflicts between legislation from different provinces such as might occur if two Perda from neighbouring provinces purport to regulate trade between those two provinces. Presumably, conflict between them would be abhorrent to the public interest, but the Regulation does not specify which provincial legislation should prevail over the other. Governor regulations and district/city legislation can be reviewed as against provincial Perda, but few of these laws would meet all three grounds for invalidation — public order, conflict with a Perda, and breach of a higher-level law — that arts 6(2) and 8(3) of MOHA Regulation [No 53 of 2007], discussed above, seem to require. Worse, in what appears to be a drafting error in art 8(2) of the MOHA Regulation, discussed above, it is unclear whether regent or mayor regulations are reviewable at all. In any event, the MOHA seems to have unbridled discretion, in respect of all of these types of laws except governor regulations, to allow local legislative and executive instruments to stand irrespective of their conflict with other laws or higher-order norms such as human rights.

This over-complexity is compounded by a lack of clarity within the legal framework for decentralisation as to the relative authority of provincial laws on the one hand, and district and city laws on the other. One cannot distil answers simply by presuming that the laws of provincial governments take precedence because they are larger administrations: after all, the Autonomy Law 1999 (Indonesia) gave the greatest lawmaking powers to district and city governments rather than the provinces. And even though the governor of a province is responsible for ‘clarifying’ the legislative output of district and city legislatures situated in that province, he or she lacks the power to invalidate those laws.

It might be argued that because provincial Perda are categorised above district and city Perda in art 7(2) of the Law on Lawmaking 2004 (Indonesia), provincial Perda are of a higher status. This is not a necessary implication, however, because the ‘hierarchy of laws’ is confined to art 7(1), which refers only to ‘Perda’ and does not distinguish between their various types.

 

C. Invalid Invalidations?

The final legal defect is perhaps the most fundamental. This study has shown that all Perda that the MOHA has revoked were deemed to conflict with a ‘higher law’. Yet, the legal instrument used to invalidate these Perda — a decision of the MOHA — is itself not mentioned in the hierarchy of laws. Although it is commonly presumed in Indonesian legal circles that because it comes from a senior central government official, a Ministerial Decision trumps a Perda. There is no legal basis for such a presumption. The Autonomy Law 2004 and the Regional Tax and User Charge Laws 2009 (Indonesia) explicitly require that Perda be invalidated by Presidential Regulation; and the legal instrument which purports to allow that Perda be invalidated by MOHA Decision — MOHA Regulation [No 53 of 2007] (Indonesia) — cannot override either the 2004 or the 2009 Law. The latter statutes are enacted by Indonesia’s national parliament and are, therefore, clearly of a higher legal status on the hierarchy. Ironically then, the very legality of all 500 Perda invalidations is itself highly questionable. Final determination of their legality would require adjudication by the Supreme Court. But, as this study has shown, that court can hardly be relied upon to intervene.

 

By Dr. Simon Butt, Senior Lecturer, Faculty of Law, University of Sydney, published in the SYDNEY LAW REVIEW Vol 32:177, July 2010. The complete original paper is available HERE.