This year's Local Economic Governance Survey provides a fascinating look into the dynamics of local governance and business development in Indonesia nearly a decade after regional autonomy. More than ever, citizens and businesses are pressing to know how well local governments are using their authority to provide better public services and improve their business climates.
This is the sixth survey of a research program begun in 2001 by KPPOD, with support from the Asia Foundation. Each year the scope has expanded, beginning with 90 districts (2001), then 134 districts (2002), 200 districts (2003), 214 districts (2004), 228 districts (2005) and finally 243 districts this year. With more than 12,000 respondents, the survey is the largest of its kind in Indonesia and one of the largest economic governance surveys in the world. The goal has been to help to spur competition among districts and highlight the importance of local business climates in the era of decentralization.
Since the beginning of this project, Indonesia has seen dramatic changes in the political and economic landscape, with the advent of competitive local elections and efforts by national, district and city governments to improve the investment climate. This year's survey has been revised to better reflect these changes. In particular, it now focuses on measuring the quality of local economic governance rather than a district's endowments of natural, physical or human resources. It also concentrates on those aspects of economic governance which are under the control of local governments.
The survey results are used to create the Economic Governance Index (EGI) that ranks 243 districts in 15 provinces on the quality of economic governance. The results are provocative and challenge many commonly held assumptions about what matters to business and the ability of government to respond. We hope that this report can inform policy discussions and empower the broader civil society community to advocate for more responsive local economic governance in Indonesia.