Decentralization in East Asia Dr John Walsh, Mekong Institute, November 2009

The Weberian State Ideal type of government in which actions are governed by rules, control is through a hierarchy and public officials are trained, work exclusively in their official job and act impartially Named after Max Weber ( )

Elements of the Weberian State Fixed and official jurisdictional areas, ordered by laws or administrative regulations Activities required to run the state are distributed as official duties Authority is distributed in a stable way and is delimited by rules Only people who are qualified are employed An office hierarchy and graded authority, resulting in super- and sub-ordination in a mono-cratic structure Distinction between the private and the public spheres Office management requires training Official activity requires the full time occupation of the official Management of the office follows general, stable, exhaustive rules

Why Does Decentralization Matter? Intergovernmental reforms adopted in the process of decentralization are important because they inevitably affect broader country performance in three critical, interrelated areas:  economy  service delivery  governance

What Drives Decentralization? Structural factors (e.g. urbanization) Political factors (e.g. democratization) Three approaches:  Fast starters (Philippines and Indonesia)  Incrementalists (China and Vietnam)  Cautious Movers

Varieties of Decentralization Deconcentration: decentralization of central government ministries and arrangements whereby subnational governments act as agents of the centre; Delegation: subnational governments rather than branches of central government are responsible for delivering certain services, subject to some supervision by the central government Devolution: independent or semi-independent and, typically, elected subnational governments are responsible for delivering a set of public services and for imposing fees and taxes to finance those services

Early Impacts Spending envelopes: generally positive impact on finances, mixed for infrastructure Outputs and outcomes: positive health outcomes Service delivery to the poor: not yet well understood

Expenditure Shares and Functional Allocations CountrySubnational expenditure (% of total) EducationHealthSocial welfare Cambodia17Provincial China69Local Indonesia32Local Philippines26Central, provincial, local Thailand10Central, provincial Vietnam48Provincial, local

Frameworks and Processes

Subnational Levels of Government CambodiaTwo levels in two parallel systems: (i) provincial administrations (20) and municipalities (4) with provincial status divided into districts and khans; (ii) elected communes and sangkat (urban commune) governments (1,621) divided into villages ChinaFour levels: (i) provinces (22), autonomous regions (5) and large cities; (ii) prefectures and cities (300); (iii) counties (2,100); (iv) townships (44,000+) IndonesiaThree levels (de jure): (i) provinces (33), special regions (2) and capital city (1); (ii) local governments: kotamadya (cities) and kabupaten (districts) (440); (iii) desa (villages) PhilippinesFour levels: (i) provinces (79); (ii) cities (112); (iii) municipalities (1,496); (iv) barangays/villages (41,944) ThailandFour levels with top three formally empowered: (i) provinces (75); (ii) districts and municipalities; (iii) tambons (subdistricts) (6,744); (iv) villages (67,000+) VietnamThree levels: (i) provinces (58) and municipalities (3); (ii) districts (600); (iii) communes (10,000+)

Decentralization Policy CambodiaHybrid case, with deconcentration to provinces and devolution to communes; commune system new and given greater emphasis but provinces are more significant in terms of public expenditures ChinaMain focus on deconcentration to provinces and larger cities, although lower levels have larger public expenditure role and elements of de facto devolution have emerged in some areas; provinces have considerable regulatory control over lower levels IndonesiaFocus on substantial devolution to cities and districts, which replaced earlier emphasis on deconcentration to provinces; limited formal role at lowest levels; 2004 reforms increased the role of higher levels PhilippinesFocus on devolution to subprovincial units, but provinces still play a significant role ThailandHistorical focus on deconcentration to provinces and districts, but 1997 framework shifts toward devolution to municipalities, districts and subdistricts; implementation has been limited VietnamFocus mainly on deconcentration with stronger role for provinces, including regulatory control over subprovincial levels; subnational governments have been allocated rights over specific functions, approaching devolution

Decentralization Frameworks CambodiaLegal and administrative basis: Provincial Budget Law (1997) gives limited functions to provinces; Law on Commune/sangkat Administrative Management (2001) and Election Law (2001) establish commune system; all legislation clarified in numerous administrative decrees ChinaNo constitutional or dedicated legal basis: Comprehensive Fiscal Reform (1994), Budget Law (1995) and Tax Sharing System (1994) relevant for roles of subnational governments IndonesiaLegal basis and constitutional amendment: Law 22 on Regional Government (1999) amended as Law 32 (2004), Law 25 on Fiscal Balance between Central Government and Regions (1999) amended as Law 33 (2004), and Law 34 on Regional Taxes/Levies (2000) (to be amended) provide a framework for decentralization; constitutional amendment (2000) strengthens basis for decentralization

PhilippinesConstitutional and legal basis: Constitution (1987) provides for local government autonomy; Local Government Code (1991) and various Marcos-era and post-Marcos laws define aspects of the intergovernmental system ThailandConstitutional and legal basis: Constitution (1997) specifies principles of local autonomy and elected local government; Provincial Administrative Act (1997) codifies deconcentration policies; Decentralization Act (1999) defines functions and decentralization process VietnamLegal and administrative basis: Law on Organization (1994), Ordinance on Concrete Tasks (1996), Budget Law (1998) and revised Budget Law (2002) assign functions and resources to subnational governments

Decentralization Strategies CambodiaLimited elements of a strategy for commune system, but weakly developed and short term ChinaNo formal strategy; some asymmetric treatment of subnational governments IndonesiaNo formal strategy; some attention to key reforms after “Big Bang” such as defining functional assignments more clearly but approach largely fragmented PhilippinesBroad three-stage strategy for implementing Local Government Code, now in last phase; unclear how carefully the country followed the strategy ThailandDetailed master plan with three phases approved by Parliament in 2002; progress modest (phase one finished in 2004 without meeting key goals) VietnamAd hoc strategy in that reform has been slow and controlled; some asymmetric treatment of larger cities through pilot programs

Building Decentralization Capacity CambodiaMassive, basic program run by central government for developing commune system ChinaNo specific decentralization-related training; most is organized at subnational level; some temporary posting of higher-level staff to lower levels IndonesiaSignificant transfer of staff to lower levels; much capacity building driven by central government, although some demand from lower levels PhilippinesSignificant transfer of staff to lower levels; subnational governments responsible for training, which typically focuses on councilors rather than civil servants ThailandSome transfer of staff to lower levels; subnational capacity building driven by national agencies VietnamTraining programs for subnational staff driven by central government

Challenges Improving the organization of the intergovernmental system  Clarifying the expenditure assignments and functional roles  Rationalizing vertical and horizontal organization of the intergovernmental system  Developing systems to facilitate cooperation Strengthening local fiscal and financial structures

Developing functional systems  Deepening and enhancing accountability  Improving the performance of intergovernmental functional and management systems  Building capacity

The End Source: East Asia Decentralizes: Making Local Government Work (World Bank, 2005), chapters 1 and 2. EU Concept Paper N° 1 Public Sector Reform An Introduction March 2009