Wanted: A democratic plus effective government

In a paper I wrote two years ago for a seminar on "Ten Years of Asian Crisis", I presented the World Bank's "Government Indicators" as a snapshot for Indonesia's story of institutional changes.

The indicators were calculated based on the survey responses of business players and academics. The indicators consist of six components: voice and accountability, political stability, effectiveness of government, regulatory quality, law enforcement and control of corruption.

If we compare the data in 1996 -the last available year prior to the crisis, Indonesia's scores in 2005 were lower for all components except voice and accountability. This can neatly summarized by the institutional change in post-crisis Indonesia. There has been more democratic government, greater freedom, and less centralized power. However, the process has yet to lead to an effective government.

That explained why, compared to Korea or Thailand, economic recovery in Indonesia was slower, at least for the fi rst fi ve years after the crisis. Things have been much better in the second half of the decade. But still we can't conclude that we already have a really effective government.

Why such a paradox - democracy but not an effective government? Let us identify some major changes in the institutional landscape and power distribution.

First, the balance of political power moved from an executive to legislative heavy one. During Soeharto we had merely a rubber-stamp parliament. After the crisis, the dominant power shifted to the parliament. This was more obvious before 2004, when the MPR had the power to appoint and dismiss the president. Since 2004, the president has been elected by popular vote, and the constitution has been amended to make impeachment more dif-fi cult. But in reality the parliament members still possess signifi cant political power. At the same time they have been heavily criticized for their lack of productivity, effectiveness and cleanliness.

Second, political power has been signifi cantly fragmented. Before 1997, power was concentrated around Soeharto's inner circle. Identifying all patron-client relations used to be easy. After the 1999 election it has become a very diffi -cult task as the multi-party system has made the power more fragmented. As the consequences, during the periods of Abdurrahman Wahid, Megawati Soekarnoputri and Susilo Bambang Yudhoyono (SBY)-part 1, policy decision-making has been driven more by accommodating various political interests. This has also affected how coordination within the government, within departments, even within units in the same department could take place.

Third, fiscal and political decentralization has also shifted the power to local governments. Decentralization has its own benefi ts, but it has resulted in complexities. Inconsistent and often confl icting local regulations and unclear division of authority between levels of government are the most popular complaints.

And fourth, the gap between decision-making at the elite level (ministers) and the bureaucracy at the lower levels. A number of reform initiatives have been stalled in the bureaucracy, which seem to have its own world and logic.

Making the government run more effectively without forgoing democracy and accountability is a big challenge for the SBY-Boediono administration. Two out of four challenges above are under the (central) government's control: bureaucratic reform and decentralization fine tuning. They have to consistently become the government's policy agenda.

The other two circumstances are exogenous to the government: the executive-legislative balance and fragmentation of political power. The government clearly doesn't have the authority to change the current conditions without deviating from the current democratic corridors. But what they need is more an art than science: how to deliver good, effective policies, given the political reality and constraints.

Does the new administration have the capacity to play the game?

Honestly I find it hard to read the proper signals from the recent cabinet announcement. I expected the President would use his huge political capital - 60 percent of popular votes and the majority support in the parliament - to create a no-nonsense and no-compromise cabinet. The cabinet line up is fully what I expected. However, I have to admit that as a columnist who lives outside of the country, I don't have full information on the profi le of the new ministers except a few "old cracks". I have no access to inside stories behind the decision of the appointments either. So I will avoid judging the competence of this cabinet based on inaccurate information.

However, I see two interesting things, at least regarding how economic policies will be decided.

First, Hatta Rajasa's appointment as the coordinating economic minister. This was a surprising decision. I predict we will see a new model on the role of Hatta as the coordinating minister. In the past, this minister who held this position used to play a more technocratic role (except Aburizal Bakrie in the pre-reshuffl e SBY's fi rst term). Hatta may play a more political role as the bridge and communicator between the presidential office, line ministries and the parliament.

Second, the role of Presidential Delivery Unit (UP4), led by Kuntoro Mangkusubroto. Its role will be to set development targets and evaluate the ministers' performances. Many concerns this unit could grow to become a super body. I don't know how valid those concerns are. Of course we all need to make sure that the unit will not conduct its day-to-day business without public accountability. But my impression is that on paper the role if the unit is similar to the National Economic Council (NEC) in the US.

The NEC is responsible for coordinating economic policies and advice to the resident regarding economic issues, making sure that the economic policies and programs are in line with the White House agenda, and monitoring the achievements of the president's economic goals. The current NEC director is Larry Summers, a Harvard Professor and former Secretary of Treasury. It is unusual that such a high profi le academic has become the NEC director. Most of its previous directors were politicians or private sector figures.

A combination of CEM with more political role and UP4, which is responsible directly to the president, is indeed an interesting experiment. Will it be a successful one? I don't know, but I do hope it will. For sure, there is a need to fi nd a new model in making and delivering policies under the more fragmented political power.

If it fails, we will need to worry about the future direction of the institutional reform.
Source : THE JAKARTA POST
By : Ari A. Perdana , MELBOURNE | Sun, 11/08/2009 2:10 PM | Opinion
The writer is a Ph.D. student in Economics at the University of Melbourne, Australia.