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Dr Harold Crouch
The concept of federalism - 'the F-word' as some Indonesians call it - was long identified with a Dutch scheme to thwart independence in the 1940s. It is only since the fall of Soeharto that federalism has re-entered legitimate political debate. In the past federalism was seen as a step towards national disintegration, but now its advocates see it as a means of preventing disintegration.
The new speaker of the People's Consultative Assembly, Amien Rais, has called for serious consideration to be given to a move to federalism but the major parties and the military are opposed. The wily new president, Abdurrahman Wahid, however, has pointed out that 'Actually we would like to have a federal system'. But, he says, Indonesians don't like to use the word 'federalism'. 'Doing things without naming them is the Indonesian way', he explained.
The departure of East Timor from the republic undoubtedly stimulated demands ranging from independence to greater autonomy. The pressure is greatest in Aceh where separatist rebels suffered brutal military repression for a decade. President Wahid at one point seemed to be endorsing the proposal to hold a referendum on independence for Aceh, but he now claims that the referendum should only decide whether to implement Islamic law in that province.
The demand for a referendum on independence is also strong in Irian Jaya. In several other provinces, however, it is hard to avoid the conclusion that, while calls for independence indicate a high level of dissatisfaction with the existing centralised system, local elites are more interested in getting a better deal than actually setting up independent states. And the case of Ambon, which is often mentioned in the same breath as Aceh and Irian Jaya, is actually a case of inter-communal conflict, not a movement for independence from Jakarta.
Last May the Habibie government's regional-autonomy legislation was adopted. In principle this legislation seems to provide wide autonomy for Indonesia's more-than-300 kabupaten - the level of administration below the provincial level. However, the legislation is stronger on principles than on details, which will only be finalised when it is implemented in 2001.
It is no surprise that the strongest demands for fiscal autonomy come from five resource-rich provinces. On the other hand, the new chairman of the National Economic Council, Emil Salim, has estimated that eleven poor provinces would be hit badly by fiscal autonomy while ten would probably just break even.
WATCHPOINT: Will current plans to implement regional autonomy be sufficient to assuage separatist demands? Does federalism offer a better alternative?
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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