VZCZCXRO6263
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJS #0057/01 1271045
ZNR UUUUU ZZH
R 061045Z MAY 08
FM AMCONSUL SURABAYA
TO RUEHC/SECSTATE WASHDC 0210
RUEHJA/AMEMBASSY JAKARTA 0196
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RHHMUNA/HQ USPACOM HONOLULU HI
RUEHWL/AMEMBASSY WELLINGTON 0109
RUEHBY/AMEMBASSY CANBERRA 0111
RUEHJS/AMCONSUL SURABAYA 0215

UNCLAS SECTION 01 OF 02 SURABAYA 000057 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/MTS 
 
E.O. 12958: N/A 
TAGS: PGOV ECON EAID PREL ID
SUBJECT: EAST JAVA: PRESIDENTIAL HOPEFULS DISCUSS DECENTRALIZATION 
AND ECONOMIC DEVELOPMENT BUT OFFER FEW DETAILS 
 
REF: SURABAYA 56 
 
SURABAYA 00000057  001.2 OF 002 
 
 
This message is sensitive but unclassified.  Please protect 
accordingly. 
 
¶1. (SBU) Summary: Four presidential hopefuls discussed the power 
of decentralization on economic development at an April 30 
seminar hosted by the Jawa Pos Group.  All four agreed that the 
central government had failed to transfer sufficient authority 
to regional governments and questioned the government's 
commitment to implement regional autonomy policies.  While they 
offered few specific examples, the prospective candidates 
emphasized the importance of "ekonomi kerakyatan" (pro-poor 
economic growth) policies and regional initiatives to stimulate 
local economic development.  End Summary. 
 
¶2. (SBU) At an April 30 seminar hosted by the Jawa Pos Group and 
the Jawa Pos Pro Otonomi Institute (JPIP), four presidential 
hopefuls discussed the importance of greater regional autonomy 
and emphasis on "ekonomi kerakyatan" (pro-poor economic growth 
policies).  Sri Sultan Hamengkubuwono XI, the Governor of 
Yogyakarta; Sutiyoso, the former governor of Jakarta; retired 
General Wiranto, Chairman of the Hanura party; and Hidyat 
Nurwahid, Chairman of the People Consultative Assembly from the 
Prosperous Justice Party (PKS), spoke at a session billed as an 
opportunity to learn more about the vision of presidential 
candidates on economic development and decentralization.  Only 
Hidyat Nurwahid disputed JPIP's description of him as a 
presidential candidate, insisting that he had no plans to run 
for president. 
 
Decentralization Handicapped by Central Government 
--------------------------------------------- -------------------- 
 
¶3. (SBU) All four participants agreed that the Indonesian 
government was too focused on macroeconomic development and had 
failed to adequately advance pro-poor economic policies.  Such 
pro-poor policies would center on equitable economic 
participation and empower individuals to improve the welfare of 
all citizens.  All four speakers agreed that decentralization is 
critical to achieving such economic empowerment.  They 
criticized the central government for failing to demonstrate a 
strong commitment to implement regional autonomy policies.  They 
stressed that local governments have the capabilities to improve 
and develop their regions, but are handicapped by central 
government politics.  Although decentralization has devolved the 
greatest authority to the regency/city level, all speakers 
focused on the dynamic between the central government and the 
provinces.  They concluded that the key to success of 
decentralization is the political will of the central government 
to allow regional autonomy to flourish. 
 
Sultan Hamengkubuwono -- Governor of Yogyakarta 
--------------------------------------------- ------------------- 
 
¶4. (SBU) Sultan Hamengkubuwono asserted that the concept of 
"ekonomi kerakyatan" was a wholesale reversal of the New Order's 
policies which emphasized growth, distribution, and stability, 
but not poverty reduction and regional development.  He 
reiterated that decentralization is the key to achieving these 
objectives by obligating local governments to empower residents. 
 As an example of successful initiatives, the Sultan described 
how Yogyakarta had offered its well-developed marketing networks 
within Asia to other provinces to help boost regional economic 
development.  He added, however, that while the central 
government has transferred administrative responsibilities to 
regional governments, it has yet to transfer real authority. 
 
General Wiranto -- Chairman, Hanura Party 
--------------------------------------------- ------- 
 
¶5. (SBU) General Wiranto, whose Hanura Party has been critical 
of the current administration, stated that the central 
government had failed to issue policies or recommendations to 
promote "ekonomi kerakyatan," which he described as the 
democratic involvement of citizens in the policy-making process. 
 Without offering examples, Wiranto said that there had been 
many problems and challenges during the nine-year implementation 
of the regional autonomy initiative, but decentralization had 
reached the point of no return and could not be reversed. 
 
Sutiyoso -- Former Governor of Jakarta 
--------------------------------------------- -- 
 
¶6. (SBU) The only speaker to acknowledge openly his presidential 
ambitions, Sutiyoso said that he would be a better president 
 
SURABAYA 00000057  002.2 OF 002 
 
 
than the five previous presidents because he had learned a lot 
during his numerous terms as Jakarta's governor.  He said that 
"ekonomi kerakyatan" had been poorly implemented because 
policies were capital intensive rather than labor intensive. 
Sutiyoso added that the central government should stop trying to 
act as regulator, controller, and operator at the same time. 
Sutiyoso pointed to 29 regulations which put regional issues 
such as land, investment, budgeting, education, and health under 
central government authority.  As an example, Sutiyoso noted 
that the central government had pulled back the provincial 
government's authority to issue investment permits, further 
complicating investment decision making.  Furthermore, 
provincial budgets must be approved by the Department of Home 
Affairs, creating delays and unnecessary bureaucratic 
interference.  Sutiyoso's comments reflect a common perception 
that the central government still retains significant authority 
at the local level, particularly due to its control of budget 
allocations. 
 
Hidayat Nurwahid -- Chairman, People's Consultative Assembly 
--------------------------------------------- -------------- 
------------------ 
 
¶7. (SBU) Hidayat Nurwahid was the only speaker to defend the 
central government's efforts, insisting that mechanisms existed 
to resolve the issues raised by other speakers.  He noted that 
local governments could request a judicial review from the 
Constitutional Court if it believed certain regulations were 
impeding their efforts to develop the local economy.  While he 
offered no economic examples, Hidayat described how a candidate 
for regent of Central Lombok requested revision of the election 
law on independent candidates after he failed to garner support 
from a political party.  Hidayat Nurwahid also observed that the 
economy must be growing because more people are able to go on 
the Hajj every year.  (Note: Hidayat's Islamic-oriented 
Prosperous Justice Party (PKS) is part of the ruling coalition, 
and Hidayat is being considered by all major parties as a vice 
presidential candidate in the 2009 elections, including for 
President Yudhoyono.) 
MCCLELLAND