Like many developing countries Indonesia has made massive gains in population health since obtaining independence, and life expectancy at birth is now estimated to be just over 70 years compared with just under 40 half a century ago. In important areas of health, however, the rate of improvement has slowed since the mid-1990s. The secular decline in the infant mortality rate, for example, appears to have stalled in recent years at just over 30 deaths per 1,000 live births, and the proportion of underweight children (among those under five years old) has stagnated at around 25 per cent. According to a joint review by the Indonesian government and the World Bank, the Indonesian health system is ‘underperforming’ (World Bank 2008: 2), especially when it comes to serving the poor. The question is, why?

Several reasons have been suggested for the recent poor performance in the health sector. Some commentators point to the level of government funding. However, while still relatively low by international standards, public health expenditures have actually risen considerably since the mid-1990s: they increased more than fourfold during 1995–2007 (in constant 2000 rupiah prices), and from 0.5 per cent to 1.1 per cent as a proportion of GDP (World Bank 2008: 42).

Another explanation, popular with central government officials in Jakarta, is that the poor performance is a consequence of decentralisation. Responsibility for providing basic health services was transferred to the districts and municipalities at the beginning of 2001. Understandably there was a lot of confusion to begin with regarding the precise allocation of responsibilities across the three main levels of government (central, provincial and district) and it took time to build up the capacity of district-level governments so they could perform their new functions adequately (McLeod and MacIntyre 2006). These limitations are still far from fully resolved. In many areas local elites have taken advantage of the situation to ‘capture’ many public resources and consolidate their own power, further undermining the equity and effectiveness of service provision to local communities (Buehler 2010). However, ‘decentralisation’ in the context of the present discussion serves more as a characterisation of the problem than an objective explanation. After all, it was the central government that introduced decentralisation, arguing at the time that this would make services more responsive to local needs.