The Jakarta Post (original link)
Jakarta | Opinion | Tue, November 04 2014
President Joko “Jokowi” Widodo is in for considerable development challenges. Indonesian economic competitiveness has been declining due to overreliance on commodity exports, crumbling roads and bridges and an electricity supply shortage.
Despite the need for huge infrastructure investment, more than a quarter of central government expenditures are allocated for the energy subsidy as consumption grows.
Anne Booth from the University of London said that Indonesia’s development was a history of missed opportunities. Fail again and forget about becoming the next Asian Tiger. We will be in the same league as Vietnam and Myanmar instead.
It was the right move by Jokowi to move the National Development Planning Board (Bappenas) from under the oversight of the coordinating economics minister; it will now directly report to the President.
Development is more than economics and too important to be left just to economists. Thus, it is appropriate that the new national development planning minister, Andrinof Chaniago, has eclectic formal education with a Bachelors in political science, Masters in public policy and PhD in philosophy. He also has written a book entitled The Failure of in Indonesia Development.
If Andrinof has been reading up Law No. 25/2004 on national development planning system and the subsequent Government Regulation (PP) No. 40/2006 on mechanism of development planning formulation, then he knows that the law only gives him less than two months to table out a draft Medium Term Development Plan (MTDP) for 2015-2019 to the Cabinet.
The law also requires the draft be discussed in a National Medium Development Planning conference that includes major stakeholders and the legalization of the document in a Cabinet meeting before Christmas.
So the schedule is tight. How do you make the best possible strategy for the next five years under such constraints? The MTDP is supposed to be a master document that all ministries and government institutions refer to and implement in accordance to its role.
Strategic management experts say that if you fail to plan then you are planning to fail. The cycle of planning, implementation and monitoring/evaluation need to be strengthened amid a scarcity of resources and high stakes.
Andrinof does not have to start with a blank sheet of paper, though the outgoing government has prepared a technocratic draft for the new President and his Cabinet based on experience and evaluation of the last five years.
Andrinof is a close confidante of President Jokowi and he is going to need all the support he can. In the best-case scenario, he would sit down with other ministries to put challenging yet feasible indicators for each ministry in the MTDP.
The second round of meetings would be to tightly align strategic plans in each ministry with the MTDP. However, coordination of development planning with other national government institutions is the easy part.
The major problem in Indonesian development planning after the launch of regional autonomy is the misalignment and insufficient coordination between national and local governments.
Since local governments are locally elected and have a wide range of autonomy then there is not much that the national government can do if governors/regents or mayors prefer to pursue a different set of policies.
But if we look at countries with federal systems with strong authority in local governments such as Germany, United States and Malaysia, it seems they are not underdeveloped nor do they have disorderly governments. How do they deal with different priorities and policy at various levels of government?
There are two main strategies. The national government could have a national program that the local governments could opt to join. If they do, then it also means getting more transfer funds for their budget.
This is what US President Barack Obama does with national health insurance since the federal government could not force the local government to join.
The strategy is to set a goal (ex: secondary school enrolment rate) and reward local governments that reach it with additional transfer funds. To take into account differences in regions, a growth rate could be used instead of absolute number.
The current formula for general allocations of funds for regions only takes into account these factors: population, area, price level, human development and income per capita. No room for policy factor that can function as a carrot and stick. Changing the formula would strongly strengthen coordination and synergy between national and local governments.
Making development planning work for the people is not easy task. But as former US president Ronald Reagan famously said in 1981, “If not us, who? If not now, when?”
The writer is an economist and lecturer at the master of planning & public policy program at the University of Indonesia.