Big-bang decentralization in 2001 after fall of Suharto in 1998 is the political choice of Habibie to sustain himself and safeguard the country from disintegration.
To get support from regional representatives in parliament and attenuate separatist tendencies.
It is not first attempt but recurrent.
1966 to 1998 experienced highly centralized regime characterized by high levels of corruption and low bureaucratic efficiency.
It is also a strategy to bypass provinces that are the center of regional unrest, sense of easy controlling of local governments
Local governments were given health, education, infrastructure, and environmental services. Provinces were given minor role.
Formula based general allocation grants replaced the earmarked funds, which form 95% of budgets of local governments
2/3rds of civil servants were transferred from the center to the local governments, whose expenses are to be born by them but cannot hire or fire.
Centre government can annul local laws and regulations if they conflict with national ones. The district head can be dismissed by regional legislatures. (6% of heads were dismissed in this fashion)
To study their effectiveness the indicators of citizen perception and public-service delivery are taken, significant improvements were found.
In recruitment of personnel corruption continued both at district and local level.
Perceptions of corruption and quality of governance were positively correlated with ethnic and political fragmentation but uncorrelated with local per capita income, inequality, poverty, or education levels.