Getting bureaucratic reform right

Getting bureaucratic reform right Alex Yap ;  Managing Director of ASPEC Consultancy, Purmerend, The Netherlands

JAKARTA POST, 04 Oktober 2012

When it comes to reforming its bureaucracy, Indonesia would do well to take a close look at what has been happening recently in the European Union. The situation in the EU is almost a paraphrase of Indonesia’s bureaucratic reform challenge. 

In 2010, at the height of the sovereign debt crisis in Europe, German chancellor Angela Merkel and former French president Nicolas Sarkozy were convinced that the only way to save the euro was to force a breakthrough on the fiscal reform question, and get some kind of consensus between the EU member countries. 

Almost by default, a single currency must be underpinned by a single consistent fiscal policy. There can be no monetary union without a political union and that implies fiscal policy integration. At the current time, what with the euro about to collapse and the financial markets whipping themselves into a frenzy, something had to be done to bring them into line. 

The EU countries needed to agree to act as one to implement fiscal reform to improve competitiveness and create financial market stability for the euro. 

However, with 27 countries, notoriously difficult to administer as a unit because of their diversity, this is easier said than done. For them, relinquishing control of fiscal policy was tantamount to surrendering sovereignty. 

In a sense, the current sovereign debt crisis has been a blessing in disguise. Under extreme duress from the debt crisis, Merkel and Sarkozy managed to get the EU countries to agree firm fiscal targets with penalties for failure. The endorsement in 2011 of the Euro-Plus-Pact (Euro+ Pact) was the result. 

However, simply agreeing firm targets and penalties is no guarantee that fiscal reform will actually be achieved.

To ensure the signatories stuck to the letter of the law, the “open method of coordination” (OMC) was called in to monitor compliance. This process of intergovernmental consultation has been successfully applied in the EU since 2004 to policy areas such as employment strategy, social inclusion and health and long term care. 

So why not fiscal policy?

The success of the OMC lies in the fact that it allows clear targets to be formulated for each of the member countries, results to be measured and monitored according to a strict schedule and then discussed by the parties involved with adjustments made to the process where necessary.

 Discussion is completely open at all times and the results made public. Targets and benchmarks are defined in advance and the resulting performance evaluated yearly or every six months by the participant group. A scoreboard is thus created that can be used for multilateral surveillance. Clearly it was the ideal solution for keeping track of compliance with fiscal reforms agreed. 

For the EU read Indonesia and for the 27 EU member countries read the 33 provinces of Indonesia.

Like it or not, Indonesia will eventually be in the same position when it comes to coordinating bureaucratic reform nationwide. The mechanisms of reform may be important but they really are of secondary importance when it comes to coordinating them in a consensual climate. 

Last August President Susilo Bambang Yudhoyono, again, declared bureaucratic reform and good governance to be a top priority of government policy. The objectives are clear enough; an administration free of corruption, collusion and nepotism that provides an excellent, efficient service to the public and can be held to account. 

The target is also clear; the reform of central government in the form of ministries and institutions (kementrian/lembaga) and provincial governments (pemda).

What is less clear however, is how the reform process is to be carried out to achieve the objectives. How can we, for example, reach a consensus about the method to be used to accomplish bureaucratic reform in local governments that have different cultural, historical and traditional backgrounds? A system of Open Coordination could be the solution. 

Which checks and balances are the most suitable for the problems raised by bureaucratic reform across the 33 provincial administrations of Indonesia? It is not an easy question to answer but it is clear that each can gain much by consultation and sharing their experience in areas of common interest. 

Doing so could encourage them to improve the design and implementation of their own policies, to develop joint initiatives and to identify areas where they can work together for the common good. 

Whatever form it takes, the process needs to be transparent at all times to gain broad public support. As the World Bank recently noted, in the case of Indonesia, a mechanism is lacking which “measures the impact and outcomes of bureaucratic reform. And without transparency, citizens are unable to follow or comment on reform outcomes”. 

Greater transparency has benefits for all concerned and creates feedback. The public, seeing the system is there to help them rather than obstruct them, will respond more positively, viewing reform changes as improvements in the overall process of governance that impacts on their lives. 

Government officials working in the bureaucracy, seeing their efforts openly acknowledged, will have greater self-esteem and take pride in delivering a better service.

The OMC, highly effective in the EU case, is nothing new to Indonesia anyway. It is almost identical to the system of musyawarah (deliberation) and mufakat (consensus) that has already been in place for centuries. 

The mechanism has been used in village assemblies to develop general agreement and consensus with the parties adjusting their viewpoints or integrating contrasting viewpoints into a new conceptual framework that everyone is comfortable with. 

It also has the virtue of equally respecting the views of everyone involved in the process so the majority cannot impose their views on the minority.

That there was an existing need in the EU for a system such as OMC can be distilled from its motto: Unité dans la diversité (united in diversity) adopted in 2000. 

The same need for a process of deliberation and consensus can also be inferred from Indonesia’s motto of a much earlier date: Bhinneka Tunggal Ika (unity in diversity) introduced in 1945.  ●

The inevitable process of bureaucratic reform in Indonesia

The inevitable process of bureaucratic reform

in Indonesia

Alex Yap, the Managing Director of ASPEC Consultancy in Purmerend, the Netherlands

SUMBER : JAKARTA POST, 10 April 2012

Bureaucratic reform in Indonesia has been given a new impulse with the setup of the Administrative Reforms Ministry. However, in a recent article in The Jakarta Post on March 8, Professor Eko Prasojo indicated the enormous challenges that go with it.

Administrative reform is virtually senseless without clear goals and a well-defined path to reach them. Prof. Prasojo also noted that the changing of the guard in politics often means that any administrative reform program has no guarantee of continuity, particularly if a clear reform trajectory is lacking.

Any discussion of bureaucracy has various dimensions. Our approach here is purely macro-economical. Discussion of the complex issues and considerations involved is very often also highly controversial.

This is not just because of the political and social interests involved. The word itself is given nothing but negative connotations by the media and ultimately by the public.

Bureaucracies are envisaged as endlessly bigger but never smaller, synonymous with waste on a grand scale, inefficiency, poor service, inflexibility and costing the economy a fortune. Bureaucrats and bureaucracy, in other words, have no redeeming qualities.

It is a pity. Change the word “bureaucracy” to “administration” and we change our way of thinking. The modern state as we know it cannot exist without large-scale administrations to implement its programs.

Modern democratic governments are necessarily administrative entities. They create a better society for all of us. For the public, through the services they provide, and by giving businesses a safe context in which to operate.

Public administration is a process. It is an instrument for bringing social wellbeing and economic welfare to the nation.

Its alleged shortcomings — waste and corruption — are known well enough and definitely need to be addressed. But as an entity, its shortcomings and benefits cannot be measured and balanced like a profit and loss account.

Take the case of Indonesia. Today, it has a population of around 237 million people living in 33 provinces, comprising 399 regencies, 98 cities, 6,747 sub-districts and 78,198 villages spread over 17,504 islands with a total surface area of nearly 1.9 million square kilometers. The daunting task of administering these quantities is the job of 4.6 million civil servants.

Administering Indonesia well is an enormously complex task that demands a quality organization of committed staff who are proud of their jobs, well-trained and educated to handle it, no matter how complex it can be.

The administration’s tasks are to ensure conditions are present for the economy to flourish unhindered and safeguard the social welfare and the social wellbeing of the people. It needs to apply good public-governance guidelines to manage and govern the administrative process to achieve these goals.

In the past decade, the Indonesian economy has done quite well, growing by between 6 percent and 6.5 percent a year and facilitating an annual population growth rate of 1.5 percent.

In the last five years, inflation has been down from a 6 percent annual average to around 3.5 percent currently. The positive sentiment has also reflected in the Jakarta Composite Index outperforming peer countries in the region.

The upward trend of foreign direct investment (FDI) inflows into Indonesia resumed after the 1997/1998 economic crisis and has been rising more steeply since 2000. Foreign investors wanting to set up plants or businesses, or invest in the stock market, will only invest when the conditions are right and they are protected by the rules and regulations of the public administration.

Starting a business, dealing with construction permits and registering property have all become simpler in 14 cities of Indonesia, according to the World Bank’s recent report “Doing Business in Indonesia 2012”.

The contribution of the administration to this success may not be immediately apparent, but without the administration structuring and managing the space in which the economy operates, such an achievement is inconceivable.

It’s worth noting that total general-government expenditures have only been 8.5 percent of gross domestic product (GDP) each year for the past 10 years.

Social wellbeing, another major responsibility of the administration, has also improved in most areas over the last 30 years, according to the United Nation’s human development index.

The life expectancy at birth has risen by 11.8 years, expected years of schooling by 4.5 years, while income per capita has risen by 182 percent between 1980 and 2011.

The rising population-growth rate, the complexity of society, the impact of globalization, the trend toward further regionalization (ASEAN) and the responsibilities which go hand in hand with being the largest country in South East Asia and being a member of the G20 are all factors in the balance.

To handle the task, reform has to be built permanently into the structure and processes of the administration.

It is foolish to assume a task of this magnitude can be achieved quickly or even within a decade or two. According to the World Development Report 2011, transformations of society take a generation at the least. It took the 20 fastest-moving countries 20 years to achieve a quality functioning bureaucratic, 27 years to bring corruption under reasonable control and 36 years to have a “good enough” government that operates effectively.

This is not to suggest that such timeframes or benchmarks necessarily apply to Indonesia.

They merely demonstrate that the process of administrative reform never quite ends and the quicker the train is on the track the better.

With that in mind, the reform baton has to be passed on from one generation to the next, irrespective of changes of government and political leadership.

What can we realistically expect to achieve with such a reform process? The good public-governance guidelines of the National Committee on Governance (KNKG) are tailored to the national situation and anticipate a rapidly changing national and international environment.

These guidelines are already available and could be very useful as a reference during the reform process. In addition, a mapping and monitoring system for social and economic indicators can be set up fairly easily.

Indicators, like quality of education, healthcare, access to drinking water, electricity and crime solutions, could be used as proxies to see how well the process is being administered.

We can start at provincial level and work our way down to village level. With such an in-built monitoring system firmly in place, we can then track the process of administrative reform, signal deviations from the trajectory early on and correct them. ●