In 1999, the Indonesian Parliamentadopted two laws requiring that drastic decentralizationmeasures be implemented in fiscal 2001 in a "bigbang" fashion. Several lessons can be drawn fromIndonesia's experience. 1) Ideally, decentralizationshould be managed so that the devolution of fiscal resourcesoccurs in line with the devolution of spending. In reality,politics determines the devolution of resources, often withlittle regard for spending responsibilities. 2) Spendingresponsibilities can be devolved to a level of government inline with its administrative capacities. 3) Every effortshould be made to avoid delays in establishing regulationsthat detail the responsibilities of various levels ofgovernment. 4) Local governments should be assigned one or afew substantive taxes over which they have some rate ofautonomy, to ensure local accountability and fiscal discipline.
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