Introduction to the mini special issue: understanding governance in Indonesia

ABSTRACT

This is the first of a series of mini special issues of Policy Studies which investigate different aspects of governance in developing areas. This issue investigates the changing nature of Indonesian governance focusing on: (1) the allocation of roles and responsibilities between different tiers of governance at the centre of the political domain; (2) the implementation of the conditions of ASEAN Economic Community reform; and (3) the role of academic administrative entrepreneurs in facilitating processes of administrative change. It draws on the multi-level governance literature developed in the study of the European Union providing unique insights into the emergence of new modes of governance in a period of democratic transition paying specific attention to the interaction between domestic and international sources of policy change.

KEYWORDS:

• Academic administrative entrepreneurs
• decentralization
• governance
• Indonesia
• multi-level governance
• reform

Introduction

The purpose of this introductory article is threefold: (1) to provide an understanding of the concept of governance and a description of its use in the study of development administration; (2) to highlight particular problems in development governance that constrain reform efforts; and (3) to introduce the three articles that form the content of this mini special issue. We begin by defining what we mean by governance and multi-level governance in particular and evaluating its use in a developing country context.

What is governance?

Governance is a highly contested concept that is understood differently depending on one’s disciplinary perspective. For example, in the study of International Relations, the concept of governance is used interchangeably with the notion of interdependence – referring to the empirical observation that all nation-states are interdependent in economic and geopolitical terms and this interdependence leads to the creation of international regimes and organizations (see Rosenau 2000). Hence the logic of the existence of external sources of power (e.g. the European Union, the G8, the World Trade Organisation) that constrain sovereign decision-making processes within nation states has become a key understanding of governance. In the study of public administration, attention is focused primarily on understanding governance in the context of the changing form and function of the state and attempts by the centre to improve its’ capacity to steer (Richards and Smith 2004).

We adopt the perspective of public administration which sees the study of public administration and the study of governance as a common enterprise. However, we emphasize the importance of distinguishing between the field of action and the field of theory. The field of action focuses on the methods by which societies determine, deliver and regulate public goods and services; while the field of theory focuses on the ways in which these methods are studied and understood at global, macro and micro levels of governing.

The “new” features of the field of action are generally seen to lie in the following areas:

• sharing the task of regulating modern society across several tiers of governance both within and beyond the nation state – this is termed multi-level governance;

• the inclusion of the institutions of domestic and global civil society in the process of governing;

• collaboration between public, private and voluntary sectors in the delivery of public goods and services through partnerships and networks;

• the state as “enabling” rather than “rowing” i.e. that it is the role of the state to ensure the delivery of public goods and services but not necessarily deliver them;

• the role of markets in public service delivery via the New Public Management (NPM);

• and, the use of new regulatory instruments to help regulate multi-level governance.

This mini special issue focuses primarily on multi-level governance as an axiomatic but understudied feature of development governance. The conceptualization of systems of government within a multi-level scheme is not new given the historic territorial management of the modern nation-state through federated, unitary or mixed forms. However, it is argued that the process of governance is being institutionalized in new ways through new actors and rules of the game. In this context, multi-level governance is understood as a process by which authority and decision-making is dispersed to a wide range of bodies through a process of negotiation, in order to enhance the chances of achieving politically defined goals (Richards and Smith 2004). Hooghe and Marks (2003) identify two contrasting types of multi-level governance which cut across the traditional distinction between federal and non-federal systems (see Table 1). This distinction is particularly appropriate to development governance.

Table 1. Types of multi-level governance.

Type I	Type II
General purpose jurisdictions	Task specific jurisdictions
Non-intersecting memberships	Intersecting memberships
Jurisdictions organized in a limited number of levels	No limit to the number of jurisdictional levels
System-wide architecture	Flexible design

Source: Hooghe and Marks (2003).

Type I multi-level governance involves the devolution of authority to each tier of government to pursue its own programmes relatively autonomously from other tiers. US scholars of intergovernmental relations might recognise this approach as a “layer cake” (Grodzins 1966), whereas Hooghe and Marks relate this form of multi-level governance to: “a Russian Doll set of nested jurisdictions, where there is one and only one relevant jurisdiction at any particular territorial scale” (2003, 236). In contrast, Type II multi-level governance “describes an intermingling of roles and responsibilities such that different sectors are governed in some way by more than one and perhaps all tiers of government at the same time” (Entwistle et al. 2012, 2), or as Grodzins would say, a “marbled cake” (1966).

How does this apply to developing areas such as Indonesia?

Box 1 presents an overview of the key structures, systems and administrative cultures that underpin traditional government and governance. It is observed that many developing countries have attempted to affect a shift from government to governance over the past two decades partly as a consequence of the influence of international organisations and Good Governance credos and partly as a consequence of processes of policy-oriented learning and continuous improvement. However, the recent academic literature suggests that four main governance problems tend to emerge and thwart reform efforts (see Evans and Barakat 2015).

Firstly, institution building of this type impacts upon and often seeks to reconstitute or remove existing power structures. It is, therefore, a wholly political process that meets significant internal resistance. Secondly, the crafting of Good Governance – i.e. the pursuit of accountable, transparent, competent and responsive public administration underpinned by the rule of law – needs to be understood as a culturally defined aspiration. It will mean different things in different places reflecting the state of development of the country, existing norms and values and institutional capacity. Reform is therefore as much a behavioural challenge as a problem of institutional design and structural reform is often used to mask deep-seated cultural problems and a failure to confront reality. Thirdly, NPM is simply a toolkit used to varying degrees by public organizations in developed countries; it is certainly not the panacea to all the problems of administrative development. Moreover, its success is determined by a range of conditions that we would normally associate with the ability to affect rational forms of policy transfer from overseas such as feasibility of cultural assimilation into existing administrative systems, evidence of technical compatibility, capability to deliver the objects of transfer, appropriate resources and so forth (see Evans 2004 and Marsh and Evans 2012).

Fourthly, the success of administrative reform in transition contexts rests on the establishment of strategic purpose in relation to the direction of the reform process forged through an inclusive change management strategy. This is rarely achieved in practice.

Box 1. Government and governance

	Traditional Government	Governance
Structures	State-centred, bureaucratic, hierarchical, centralized	Minimal state, international policy agendas, decentralization of functions, centralization of key power instruments, steering not rowing
Systems	Central “hands-on” control, detailed oversight exercised through multiple tiers, bureaucratic mechanisms for allocating resources	Entrepreneurial Government, Quangos, New Public Management, market mechanisms for allocating resources, harnessing of public, private and voluntary sectors Key role for networks
Dominant Culture	Keynsian demand management, welfarism, pursuit of full employment, interventionary state.	Neo-liberal, managing the network environment and beyond, increasing the productive capacity of the state

Multi-level governance in practice in Indonesia

Current practice in multi-level governance in Indonesia emerged as a policy fix for the growing threat of territorial disintegration triggered by the 1997 Asian Financial Crisis. This led to the “big bang” decentralization to the regions in 2001 (World Bank 2001). Thus, there are two related justifications for the use of multi-level governance in Indonesia. Formulated in the context of pacifying secession challenges by resource-rich provinces during the crisis, central authority was devolved directly to the third district/city level tier of governance, bypassing the second provincial level whose territory was considered large enough to mount separatist challenges (Crouch 2010, 92). Given the pressure to act at the time, the decentralization process was developed through “top-down” decision-making with little political or regional engagement.

Two decentralization laws were issued in 1999. The first government law specifies the authority given to districts to engage in all fields not specifically reserved for the central government. The second fiscal law, granted financial support for the regions and was seen to be a major breakthrough for resource-poor regions but also acted as an incentive for resource-rich regions not to break away. However, in hindsight, it has proved the key policy instrument for the central government to retain its control over the regions (World Bank 2010). However, these original laws were gradually viewed from the centre as taking decentralization too far. Hence a revised version of the laws was issued in 2004. While the new laws provided more authority to the regions through establishing direct local elections, the laws reconstituted hierarchical regional government by re-instating the provinces or the “missing middle” (Ostwald, Tajima, and Samphantharak 2016, 146) as coordinating agencies over the districts, and enhancing the supervisory powers of governors over sub-national government. Thus, the new law gave the centre substantial legal powers that could potentially be used at the regional level. Overall, the new law shifted the balance of authority from the regions back to central government.

Nonetheless, the failure of both Suharto’s authoritarianism and centralized administration to address the 1997 Asian Financial Crisis strengthened the view that decision-making should be devolved closer to the people it serves (Dwiyanto 2011, 253). Thus, after decades of the use of a command and control approach by central government, and despite recentralization efforts by central government during the decentralization process, the regions embraced and speedily exercised their newly found authority. The democratization environment provided opportunities for stakeholder and citizen participation in local policy making, particularly for civil society organisations whose involvement was suppressed by the previous authoritarian government (Antlöv, Brinkerhoff, and Rapp 2010). Hence despite attempts at recentralization, regional interests that had emerged since the crisis were by now too deeply entrenched to be brushed aside (Crouch 2010, 109).

In practice, the central government has left most administrative responsibilities in the hands of the regions which control a significantly increased share of public expenditure. Moreover, the enhanced local legitimacy of regional heads acquired through direct elections in the revised law appears to balance the centralizing tendencies of other parts of the law (Crouch 2010, 109–110). We can also observe other features of multi-level governance at work at the regional and local levels such as greater and more transparent cooperation between the public and private sectors, and with the international community.

Nonetheless, there are two aspects of the new governance that provide a source of concern for future governance. The first is that the central government continues to conduct regional programmes that overlap with local programmes and undermine local needs, priorities and accountabilities (Crouch 2010). This leads to duplication, over supply and waste. Secondly, the “big bang” decentralization reform and subsequent refinements have ignited an intensive period of institution building which have increased the complexity of multi-level governance and made it more difficult to affect meaningful change. At the same, there have been some progressive changes. For example, as individual ministries lost their previous direct power over the regions, an advisory body within the government specifically dealing with the regions, namely the Regional Autonomy Advisory Board (DPOD), was established. In line with the new spirit of inclusion, the body consists of representatives from all levels, both central and local: representatives from heads of regencies (APKASI), cities (APEKSI), and provinces (APPSI), and the ministers of Home Affairs, Finance, and State Administrative Reforms (World Bank 2001, 9). Efforts by DPOD to harmonize the unwieldy and conflicting strands of the decentralization framework is on-going.

These developments are in keeping with broader findings on the impact of multi-level governance in the European Union. For example, Bache and Flinders (2004, 2) found that the transition from government to governance increases inter-organizational complexity and the institutional hybridity of the state. The process of devolution, in particular, while forming multi-level governance and transferring competencies, also creates gaps, and provokes conflict between different levels of governance. This is crucial because devolution is a dynamic process rather than an event, so the state is unlikely to reach a stable equilibrium. Here, multi-level governance provides a space for understanding the changing nature of politics and government. As we have seen from the Indonesian example, the onset of an era of multi-level governance does not necessarily imply that central state power has been removed. Instead, new strategies and mechanisms are being developed to maximize central state power in this changing context. State actors are seeking to bridge the “hollowing out” of strategic state capacity through the creation of new structures, processes, institutions, and even cultures to increase their steering power. Most significantly, governing via complex networks rather than traditional hierarchies demands not formal command and control processes but more conciliatory methods stressing coordination and cooperation (Hooghe and Marks 2003). Thus, there is a crucial need for recognition and acceptance by the central government of both the challenges of operationalizing devolution and the need for new steering mechanisms in the context of multi-level governance (Marks and Hooghe 2004, 21).

The structure of this mini special issue

Each of the articles that follow, explore attempts to navigate specific challenges in multi-level governance. Agus Pramusinto and Erwin Agus Purwanto assess the impact of the decentralization process on multi-level governance in Indonesia by focusing on the functional assignment of roles and responsibilities among central, provincial and district/city governments. The authors find that despite recent reforms aimed at deconcentration, the central government remains the dominant actor in the system of governance and the delivery of public services. Although in general local governments are allocated a large range of functions, they are not accompanied by sufficient budget allocation. In short, multi-level governance in Indonesia is performed in the shadow of hierarchy. In keeping with the thoughts of Hooghe and Marks (2003), this is an area that requires conciliatory methods stressing coordination and cooperation. In this case, Pramusinto and Purwanto recommend the creation of an independent institution that is responsible for functional assignment to regions in accordance with their respective capacity.

Gabriele Lele then evaluates Indonesia’s compliance with international commitments by looking at the dynamics of policy implementation in four Indonesian city governments in implementing the conditions of ASEAN Economic Community reform. Lele identifies an implementation gap between formal international commitments and their achievement in practice reflecting constraints on the capacity of the centre to steer international agendas in a multi-level governance setting.

In the final substantive contribution to the mini special issue, Ario Wicaksono investigates the role and resources of academics-turned-senior bureaucrats as key agents of policy transfer in Indonesian bureaucratic reform during the Reformation era (1998–2018). The study of policy transfer provides a rich source for investigating multi-level governance in practice; particularly the interaction between central domestic policy-makers and the institutions of global governance. Indonesia has a longstanding tradition of appointing academics into public office. In this research, the concept of Academic Administrative Entrepreneurs is introduced to better understand Indonesian administrative reform and the changing nature of Indonesian governance in a period of democratic transition. Wicaksono argues that forms of social, political and knowledge capital are key resources that enable Academic Administrative Entrepreneurs to influence processes of change governance and attract the support of the international community.

The mini special issue concludes with a series of reflections by the guest editors on the implications of the findings for the practice of multi-level governance in a young democracy.

Notes on contributors

Wahyu Sutiyono was Assistant Professor of Human Resource Management in the Faculty of Business, Government and Law, University of Canberra till mid-2018 (email: [email protected]). Researching in the areas of governance and reform with particular focus on HRM in the civil service, she currently works as a private researcher and consultant. Her recent journal publications include Mir, M., Harun, H., and Sutiyono, W. Evaluating the Implementation of a Mandatory Dual Reporting System: The Case of Indonesian Local Government. Australian Accounting Review. First published: 26 April 2018. https://doi.org/10.1111/auar.12232

Agus Pramusinto is Professor of Public Administration and Head of Department of Public Policy and Management, Faculty of Social and Political Sciences, Universitas Gadjah Mada, Yogyakarta, Indonesia. His recent chapter is “Case Study 2: Toward Surabaya Cyber City: From GRMS to e-Sapawarga (2004-2014) in Ayano Hirose, Masaei Matsunaga, Ikujiro Nonaka, and Kiyotaka Yokomichi (eds.), Knowledge Creation in Public Administrations: Innovative Government in Southeast Asia and Japan. Cham (Switzerland): Palgrave Macmillan 2018. Email: [email protected]

Eko Prasojo is Professor of Public Administration and Dean of Faculty of Administrative Science, Universitas Indonesia. His research interests include administrative reform, public policy, comparative public administration, decentralization and civil service management. His recent publication is “Leadership and Public Sector Reform in Indonesia” in Evan M. Berman and Eko Prasojo (ed), Leadership and Public Sector Reform in Asia, Bingley (UK): Emerald Publishing Limited 2018. Email: [email protected]

ORCID

Wahyu Sutiyono http://orcid.org/0000-0002-7292-2691

Eko Prasojo http://orcid.org/0000-0002-3904-0814