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MAKING GOVERNMENT WORK FOR THE POOR -THE CASE OF INDONESIA
 

MAKING GOVERNMENT WORK FOR THE POOR -THE CASE OF INDONESIA

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Graduate School of Asia and Pacific Studies University of Waseda, Tokyo-JAPAN 2008

Graduate School of Asia and Pacific Studies University of Waseda, Tokyo-JAPAN 2008

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    MAKING GOVERNMENT WORK FOR THE POOR -THE CASE OF INDONESIA MAKING GOVERNMENT WORK FOR THE POOR -THE CASE OF INDONESIA Presentation Transcript

    • PUBLIC ADMINISTRATION: CONCEPTS AND PRACTICE IX. MAKING GOVERNMENT WORK FOR THE POOR THE CASE OF INDONESIA Graduate School of Asia and Pacific Studies University of Waseda, Tokyo-JAPAN 2008
    • CONTENTS POVERTY IN INDONESIA SALIENT FEATURES OF POVERTY IN INDONESIA THREE WAYS TO FIGHT POVERTY MAKING ECONOMIC GROWTH WORK FOR THE POOR MAKING SERVICES WORK FOR THE POOR MAKING PUBLIC EXPENDITURE WORK FOR THE POOR SOCIAL PROTECTION SYSTEM MAKING GOVERNMENT WORK FOR THE PEOPLE MONITORING AND ASSESSMENT CONCLUSION GSAPS-2008 www.ginandjar.com 2
    • POVERTY IN INDONESIA 45 40.1 40 33.3 35 Crisis 28.6 30 Povert Headcount (%) 26.9 ty 23.4 25 21.6 17.6* 18.2 20 17.4 17.4 16.7 16.0 17.8 15.1 13.7 15 11.34* 10 5 * Revised Method 0 1976 1978 1980 1981 1984 1987 1990 1993 1996* 1999 2002 2003 2004 2005** 2006 GSAPS-2008 www.ginandjar.com 3
    • THE CHALLENGE OF REDUCING POVERTY REMAINS ONE OF THE COUNTRY’S MOST PRESSING ISSUES. THE NUMBER OF PEOPLE ISSUES LIVING BELOW US$2-A-DAY IN INDONESIA COMES CLOSE TO EQUALING ALL THOSE LIVING ON OR BELOW US$2-A-DAY IN ALL OF THE REST OF EAST ASIA BESIDES CHINA. GSAPS-2008 www.ginandjar.com 4
    • ANALYSIS INDICATES THAT THERE IS LITTLE THAT DISTINGUISHES THE POOR FROM THE NEAR-POOR, SUGGESTING THAT POVERTY REDUCTION STRATEGIES SHOULD FOCUS ON IMPROVING THE WELFARE OF THE LOWEST TWO QUINTILE GROUPS. GSAPS-2008 www.ginandjar.com 5
    • INDONESIA CAN LEARN FROM ITS OWN PAST ECONOMIC GROWTH, GOVERNMENT POLICIES AND SOCIAL PROGRAMS. PROGRAMS INDONESIA HAS HAD REMARKABLE SUCCESS IN REDUCING POVERTY SINCE THE 1970S. THE PERIOD FROM THE LATE 1970S TO THE MID-1990S IS CONSIDERED ONE OF THE MOST ‘PRO-POOR GROWTH’ ‘PRO POOR EPISODES IN THE ECONOMIC HISTORY OF ANY COUNTRY, WITH POVERTY DECLINING BY HALF. (WORLD BANK, 2006) GSAPS-2008 www.ginandjar.com 6
    • IN ADDITION TO THE MILLENNIUM DEVELOPMENT GOALS (MDGS) FOR 2015, IN ITS MEDIUM TERM MEDIUM-TERM PLAN THE GOVERNMENT HAS LAID OUT ITS OWN KEY POVERTY REDUCTION OBJECTIVES FOR 2009. THIS INCLUDES AN AMBITIOUS TARGET OF REDUCING THE POVERTY HEADCOUNT RATE FROM 18.2 PERCENT IN 2002 TO 8 2 PERCENT BY 2009 8.2 2009. GSAPS-2008 www.ginandjar.com 7
    • Poverty definitions and measures Poverty headcount index (Po): This is the share of the population whose consumption is below the poverty line. The headcount index, sometimes referred to as the ‘poverty incidence’, is the most popular poverty measure. However, this poverty incidence , measure fails to differentiate between sub-groups of the poor and does not indicate the extent of poverty. It remains unchanged even if a poor person becomes poorer or better off, provided that they remain below the poverty line. Therefore, in order to develop a comprehensive understanding of poverty, it i i d l h i d t di f t is important t complement th t t to l t the headcount index with the other two poverty measures of Foster, Green and Thorbecke (FGT). Poverty gap index (P1): The mean aggregate consumption shortfall relative to the o e ty de ( ) e ea agg egate co su pt o s o t a e at e t e poverty line across the whole population, with a zero value assigned to those above the poverty line. The poverty gap can provide an indication of how many resources would be needed to alleviate poverty through cash transfers perfectly targeted to the poor. Thi i d b tt d This index better describes th d th of th poverty b t d ib the depth f the t but does not i di t th t indicate the severity of poverty. However, it does not change if a transfer is made from a poor person to someone who is even poorer. GSAPS-2008 www.ginandjar.com 8
    • POVERTY DEFINITION AND MEASURES Poverty severity index (P2): This measure gives more weight to the very poor by y y ( ) g g y p y taking the square of the distance from poverty line. It is calculated by squaring the relative shortfall of per capita consumption to the poverty line and then averaging across population while assigning zero values to those above the poverty line. When a transfer is made from a poor person to someone who is poorer this registers a poorer, decrease in aggregate poverty. US$1 and US$2 PPP per day poverty measures: To compare poverty across countries, the World Bank uses estimates of consumption converted into US dollars , p using purchasing power parity (PPP) rates rather than exchange rates. The PPP exchange rate shows the numbers of units of a country’s currency needed to buy in that country the same amount of goods and services that US$1 would buy in the US. These exchange rates are computed based on prices and quantities for each country collected in benchmark surveys, which are usually undertaken every five years. Chen and Ravallion (2001) present an update on world poverty using a US$1-a-day poverty line. According to their calculations, in 1993 the US$1-a-day PPP poverty line was g , $ y p y equivalent to Rp 20,811-a-month (US$2). The PPP poverty lines are adjusted over time by relative rates of inflation, using consumer price index (CPI) data. So in 2006, the US$1 PPP poverty line is equivalent to Rp 97,218 per person per month while the US$2 PPP poverty line is equivalent to Rp 194 439 per person per month 194,439 month. GSAPS-2008 www.ginandjar.com 9
    • SALIENT FEATURES OF POVERTY IN INDONESIA POVERTY IN INDONESIA HAS THREE SALIENT FEATURES. FIRST, MANY HOUSEHOLDS ARE CLUSTERED AROUND THE NATIONAL INCOME POVERTY LINE OF ABOUT PPP US$1.55-A-DAY, MAKING EVEN MANY OF THE NON-POOR VULNERABLE TO POVERTY. SECOND, SECOND THE INCOME POVERTY MEASURE DOES NOT CAPTURE THE TRUE EXTENT OF POVERTY IN INDONESIA; MANY WHO MAY NOT BE ‘INCOME POOR’ COULD BE CLASSIFIED AS POOR ON THE BASIS OF THEIR LACK OF ACCESS TO BASIC SERVICES AND POOR HUMAN DEVELOPMENT OUTCOMES. THIRD, GIVEN THE VAST SIZE OF AND VARYING , CONDITIONS IN THE INDONESIAN ARCHIPELAGO, REGIONAL DISPARITIES ARE A FUNDAMENTAL FEATURE OF POVERTY IN THE COUNTRY. GSAPS-2008 www.ginandjar.com 10
    • INCOME POVERTY WHILE NATIONAL POVERTY RATES MAY BE CLOSE TO PRE-CRISIS LEVELS, THIS STILL MEANS THAT ABOUT 40 MILLION PEOPLE ARE LIVING BELOW THE NATIONAL POVERTY LINE. MOREOVER, ALTHOUGH INDONESIA IS NOW A MIDDLE- INCOME COUNTRY THE SHARE OF THOSE COUNTRY, LIVING ON LESS THAN US$2-A-DAY IS SIMILAR TO THAT OF THE REGION’S LOW-INCOME COUNTRIES SUCH AS VIETNAM VIETNAM. GSAPS-2008 www.ginandjar.com 11
    • FORTY-TWO PERCENT OF INDONESIA’S POPULATION LIVES ON BETWEEN US$1- AND US$2-A-DAY (2004) GSAPS-2008 www.ginandjar.com (WORLD BANK, 2006) 12
    • THIS ALSO MEANS THAT THE VULNERABILITY TO FALLING INTO POVERTY IS PARTICULARLY HIGH: WHILE ONLY 16.7 PERCENT OF INDONESIANS SURVEYED WERE POOR IN 2004, MORE THAN 59 PERCENT HAD BEEN POOR AT SOME TIME DURING THE YEAR PRECEDING THE SURVEY. RECENT DATA ALSO INDICATE A HIGH DEGREE OF MOVEMENT IN AND OUT OF POVERTY OVER TIME: OVER 38 PERCENT OF POOR HOUSE HOLDS IN 2004 WERE NOT POOR IN 2003. GSAPS-2008 www.ginandjar.com 13
    • NON-INCOME POVERTY NON-INCOME POVERTY IS A MORE SERIOUS PROBLEM THAN INCOME POVERTY. WHEN ONE ACKNOWLEDGES ALL DIMENSIONS OF HUMAN WELL BEING ADEQUATE WELL-BEING—ADEQUATE CONSUMPTION, REDUCED VULNERABILITY, EDUCATION, HEALTH AND ACCESS TO BASIC INFRASTRUCTURE— THEN ALMOST HALF OF ALL INDONESIANS WOULD BE CONSIDERED TO HAVE EXPERIENCED AT LEAST ONE TYPE OF POVERTY. GSAPS-2008 www.ginandjar.com 14
    • INDONESIA HAS MADE GOOD PROGRESS IN PAST YEARS ON SOME HUMAN CAPITAL OUTCOMES. THERE HAVE BEEN NOTABLE IMPROVEMENTS IN EDUCATIONAL ATTAINMENT AT THE PRIMARY SCHOOL LEVEL; BASIC HEALTHCARE COVERAGE (PARTICULARLY IN BIRTH ATTENDANCE AND IMMUNIZATION); AND DRAMATIC REDUCTIONS IN CHILD MORTALITY. BUT IN SOME MDG-RELATED INDICATORS INDONESIA HAS FAILED TO MAKE SIGNIFICANT PROGRESS AND LAGS BEHIND OTHER COUNTRIES IN THE REGION REGION. GSAPS-2008 www.ginandjar.com 15
    • REGIONAL DISPARITIES REGIONAL DISPARITIES IN POVERTY ARE CONSIDERABLE. WIDE REGIONAL DIFFERENCES CHARACTERIZE INDONESIA INDONESIA, SOME OF WHICH ARE REFLECTED IN DISPARITIES BETWEEN RURAL AND URBAN AREAS. RURAL HOUSEHOLDS ACCOUNT FOR ABOUT 57 PERCENT OF THE POOR IN INDONESIA AND ALSO FREQUENTLY LACK ACCESS TO BASIC INFRASTRUCTURE SERVICES: ONLY ABOUT 50 PERCENT OF THE RURAL POOR HAVE ACCESS TO AN IMPROVED SOURCE OF WATER COMPARED WITH 80 PERCENT WATER, FOR THE URBAN POOR. BUT IMPORTANTLY, ACROSS THE VAST INDONESIAN ARCHIPELAGO, IT IS ALSO REFLECTED IN BROAD SWATHES OF G O O O REGIONAL POVERTY, IN ADDITION TO S O SMALLER POCKETS O OC S OF POVERTY WITHIN REGIONS. FOR EXAMPLE, THE POVERTY RATE IS 15.7 PERCENT IN JAVA/BALI AND 38.7 PERCENT IN MORE REMOTE PAPUA. GSAPS-2008 www.ginandjar.com 16
    • SERVICES ARE ALSO UNEQUALLY DISTRIBUTED ACROSS REGIONS, WITH AN UNDERSUPPLY OF FACILITIES IN REMOTE AREAS. IN JAVA THE AVERAGE DISTANCE OF A HOUSEHOLD TO THE NEAREST PUBLIC HEALTH CLINIC IS 4 KILOMETERS KILOMETERS, WHEREAS IN PAPUA IT IS 32 KILOMETERS. WHILE 66 PERCENT OF THE POOREST QUINTILE IN JAVA/BALI HAVE ACCESS TO IMPROVED WATER, IT IS 35 PERCENT FOR , KALIMANTAN AND ONLY 9 PERCENT FOR PAPUA. ANOTHER CHALLENGE IS THAT ALTHOUGH POVERTY INCIDENCE IS FAR HIGHER IN EASTERN INDONESIA AND IN MORE REMOTE AREAS, MOST OF INDONESIA’S POOR LIVE IN THE DENSELY POPULATED WESTERN REGIONS OF THE ARCHIPELAGO. FOR EXAMPLE, WHILE THE POVERTY INCIDENCE IN JAVA/BALI IS RELATIVELY LOW THE ISLAND IS LOW, HOME TO 57 PERCENT OF INDONESIA’S TOTAL POOR, COMPARED WITH PAPUA, WHICH ONLY HAS 3 PERCENT OF THE POOR POOR. GSAPS-2008 www.ginandjar.com 17
    • THREE WAYS TO FIGHT POVERTY AN ANALYSIS OF POVERTY AND ITS DETERMINANTS IN INDONESIA, AS WELL OF INDONESIA’S HISTORY IN REDUCING POVERTY TO DATE, POINTS TO THREE WAYS TO FIGHT POVERTY THE THREE MEANS FOR POVERTY. HELPING PEOPLE LIFT THEMSELVES OUT OF POVERTY ARE ECONOMIC GROWTH, SOCIAL SERVICES, AND PUBLIC EXPENDITURES EXPENDITURES. EACH OF THESE PRONGS ADDRESSES ONE OR MORE OF THE THREE DEFINING FEATURES OF POVERTY IN INDONESIA: VULNERABILITY, MULTIDIMENSIONALITY, AND REGIONAL DISPARITIES. IN OTHER WORDS, AN EFFECTIVE POVERTY WORDS REDUCTION STRATEGY FOR INDONESIA HAS THREE COMPONENTS: GSAPS-2008 www.ginandjar.com 18
    • AN APPROACH FOR ADDRESSING INDONESIA S POVERTY PROBLEMS INDONESIA’S Vulnerability Dimension of Indonesian Regional poverty Multidimensionality disparities Economic growth ○ • Social services • ○ Public expenditure • ○ ○ Note: ● Indicates principal link between thematic area and the aspect of poverty; ○ indicates an important linkage. (WORLD BANK, 2006) GSAPS-2008 www.ginandjar.com 19
    • MAKING ECONOMIC GROWTH WORK FOR THE POOR FOR INDONESIA, GROWTH THAT BENEFITS THE POOR HAS BEEN, AND WILL CONTINUE TO BE, THE MAIN ROUTE TO POVERTY REDUCTION. FROM THE 1970S THROUGH TO THE LATE 1990S, GROWTH WAS RAPID AND IT REACHED THE POOR POOR. EACH PERCENTAGE POINT INCREASE IN AVERAGE EXPENDITURE RESULTED IN A 0 3 PERCENT 0.3 REDUCTION IN THE POVERTY HEADCOUNT. EVEN SINCE THE CRISIS, GROWTH HAS BEEN THE , PRIMARY DETERMINANT OF POVERTY REDUCTION. GSAPS-2008 www.ginandjar.com 20
    • HOWEVER GROWTH WILL NEED TO ACCELERATE AND BENEFIT THE POOR MORE IF INDONESIA IS TO MEET ITS POVERTY REDUCTION TARGETS. IF THE CURRENT RATE AND PATTERN OF GROWTH CONTINUES, INDONESIA WILL NOT MEET ITS POVERTY REDUCTION TARGET OF 8.2 PERCENT BY 2009. IN FACT, IF THE CURRENT PATTERN OF GROWTH CONTINUES, THE MEDIUM-TERM POVERTY REDUCTION TARGET WILL NOT BE MET EVEN IF GROWTH WERE ACCELERATED TO THE PROJECTED RATE OF 6.2 PERCENT. TO MEET THE POVERTY TARGET, GROWTH MUST BECOME MORE PRO-POOR. FOR EXAMPLE, IF THE INCOMES OF THE POOR GROW AT THE SAME RATE AS THOSE OF THE RICH THEN THE MEDIUM-TERM TARGET CAN BE BROADLY MET. GSAPS-2008 www.ginandjar.com 21
    • MAKING GROWTH WORK FOR THE POOR WILL REQUIRE GETTING THE POOR ONTO EFFECTIVE PATHWAYS OUT OF POVERTY. THIS WILL MEAN POVERTY HARNESSING THE STRUCTURAL TRANSFORMATION THAT IS ONGOING IN INDONESIA—ALBEIT AT A SIGNIFICANTLY SLOWER RATE THAN PRE-CRISIS. GSAPS-2008 www.ginandjar.com 22
    • THIS TRANSFORMATION IS CHARACTERIZED BY TWO PHENOMENA. THERE IS AN ONGOING SHIFT FROM MORE RURAL- BASED TO MORE URBAN-BASED ACTIVITIES. INDONESIA HAS EXPERIENCED RAPID URBANIZATION URBANIZATION, WITH THE POPULATION OF INDONESIA’S CITIES NEARLY TREBLING IN 25 YEARS. THIS HAS STIMULATED A SHIFT FROM RURAL TO MORE URBAN-BASED ACTIVITIES, EVEN WHEN HOUSEHOLDS HAVE NOT IN FACT CHANGED LOCATION (SOME 35 TO 40 PERCENT OF URBANIZATION). URBAN MARKETS ARE THUS URBANIZATION) BECOMING INCREASINGLY IMPORTANT FOR BOTH THE RURAL AND THE URBAN POOR. GSAPS-2008 www.ginandjar.com 23
    • THERE HAS BEEN A MARKED SHIFT FROM FARM TO MORE NON-FARM ACTIVITIES. IN RURAL AREAS IN PARTICULAR, THIS HAS MEANT SUBSTANTIAL GROWTH IN THE SHARE OF EMPLOYMENT IN RURAL (OR PREVIOUSLY RURAL) NON-FARM ENTERPRISES (4 PERCENT PER YEAR BETWEEN 1993 AND 2002) THIS 2002). TRANSFORMATION SUGGESTS TWO IMPORTANT PATHWAYS THAT HOUSEHOLDS HAVE TAKEN OUT OF POVERTY IN INDONESIA INDONESIA. GSAPS-2008 www.ginandjar.com 24
    • THE FIRST PATHWAY: IMPROVED AGRICULTURAL PRODUCTIVITY. THIS COULD COME FROM INCREASING PRODUCTIVITY IN SMALL-SCALE AGRICULTURE OR AN INCREASED SHIFT TO COMMERCIAL FARMING. AGRICULTURAL PRODUCTIVITY GAINS FROM THE GREEN REVOLUTION WERE ONE OF THE MAIN DRIVERS OF GROWTH IN THE THREE DECADES COMMENCING WITH THE 1970S. MORE RECENTLY, HIGH WORLD COMMODITY PRICES HAVE RECENTLY SUSTAINED OUTPUT GROWTH, WHILE THE SHIFT OF LABOR OUT OF THE SECTOR HAS MAINTAINED THE GROWTH OF LABOR PRODUCTIVITY IN AGRICULTURE AS A RESULT, AGRICULTURE. RESULT RECENT POVERTY DIAGNOSTICS SHOW THAT INCREASES IN AGRICULTURAL INCOMES CONTINUE TO BE AN IMPORTANT DRIVER OF REDUCTIONS IN POVERTY. PANEL DATA BETWEEN POVERTY 1993 AND 2000 SHOW THAT 40 PERCENT OF AGRICULTURAL WORKERS IN RURAL AREAS ESCAPED POVERTY WHILE STAYING IN RURAL AGRICULTURE AGRICULTURE. GSAPS-2008 www.ginandjar.com 25
    • THE SECOND PATHWAY: INCREASING NON-FARM PRODUCTIVITY. THE TRANSITION THROUGH RURAL NON- FARM ENTERPRISES IS AN IMPORTANT STEPPING-STONE TO MOVING OUT OF POVERTY, EITHER BY CONNECTING RURAL POVERTY ENTERPRISES TO URBAN GROWTH PROCESSES OR, IMPORTANTLY, BY THESE ENTERPRISES IN THE RURAL FRINGE BEING SUBSUMED INTO URBAN AREAS. BETWEEN 1993 AND 2002, THE EMPLOYMENT SHARE OF NON-POOR WORKERS IN RURAL NON-FARM EMPLOYMENT INCREASED BY 6.7 PERCENTAGE POINTS, SUGGESTING THAT INCREASING , NON-AGRICULTURAL PRODUCTIVITY IN RURAL AREAS WAS AN IMPORTANT PATHWAY OUT OF POVERTY. MOREOVER, MANY OF THESE ‘RURAL’ AREAS WERE URBAN BY THE END OF THE PERIOD, SHOWING THE COMPLEMENTARY ROLES OF URBANIZATION AND PRODUCTIVITY ENHANCEMENTS. GSAPS-2008 www.ginandjar.com 26
    • THE GOVERNMENT CAN CONTRIBUTE TO INCREASING PRODUCTIVITY THROUGH: 1) ) BOOSTING INVESTMENT IN KEY INFRASTRUCTURE, NOTABLY , FARM-TO-MARKET ROADS AND IRRIGATION, WHILE WIDENING LOCAL WATER MANAGEMENT; 2) ENCOURAGING AND SUPPORTING DIVERSIFICATION INTO HIGHER VALUE-ADDED CROPS; 3) WORKING WITH THE PRIVATE SECTOR TO ENSURE THAT EXPORTS MEET WORLD STANDARDS; 4) BOOSTING EXPENDITURE ON AGRICULTURAL RESEARCH; AND 5) REDESIGNING THE DECENTRALIZED EXTENSION SERVICE TO ALLOW FOR GREATER INVOLVEMENT OF THE PRIVATE SECTOR AND CIVIL SOCIETY. GSAPS-2008 www.ginandjar.com 27
    • ENCOURAGE THE DEVELOPMENT OF THE PRIVATE SECTOR DURING THE 1980s, THE PRIVATE SECTOR EXPANDED GREATLY, CONTRIBUTING SIGNIFICANTLY TO GROWTH. HOWEVER THE GROWTH OF THE PRIVATE SECTORS WAS NOT SUPPORTED BY A STRONG LEGAL SYSTEM TO PROVIDE THE CERTAINTY AND STRUCTURE FOR PRIVATE-SECTOR CONFIDENCE (HOFMAN ET AL, 2004). APART FROM A CHRONICALLY INEFFECTIVE JUDICIARY (AND THUS ANY LEGAL RECOURSE), THE BASIC LEGAL FRAMEWORK DATING BACK TO THE COLONIAL PERIOD GAVE INADEQUATE PROVISIONS TO PROMOTE BUSINESS CONFIDENCE AND A LACK OF COOPERATION CONFIDENCE, BETWEEN RESPONSIBLE INSTITUTIONS LED TO POOR SEQUENCING OF UPDATED REGULATIONS AND LEGAL CODES FOR ECONOMIC ACTIVITY. GSAPS-2008 www.ginandjar.com 28
    • THIS WEAK ENABLING ENVIRONMENT HAD (AND CONTINUES TO HAVE) PROFOUND LONG-TERM LONG TERM IMPACTS ON INVESTOR CONFIDENCE AND THE SUSTAINABILITY OF PRIVATE-SECTOR INVESTMENT IN A NUMBER OF SECTORS VITAL TO CONTINUED GROWTH. GSAPS-2008 www.ginandjar.com 29
    • A STRATEGY TO HELP THE POOR TAKE ADVANTAGE OF ECONOMIC GROWTH. FIRST, FIRST MAINTAIN MACROECONOMIC STABILITY KEY STABILITY. TO THIS ARE ENSURING LOW INFLATION AND A STABLE AND COMPETITIVE EXCHANGE RATE. COUNTRIES THAT HAVE HAD MORE MACROECONOMIC SHOCKS EXPERIENCE SLOWER GROWTH AND POVERTY REDUCTION THAN THOSE WITH BETTER MACROECONOMIC MANAGEMENT (WORLD BANK, 2005A). INDONESIA KNOWS BETTER THAN MOST COUNTRIES THE DREADFUL POVERTY IMPACT OF MACROECONOMIC CRISES. GSAPS-2008 www.ginandjar.com 30
    • SECOND, CONNECTING THE POOR TO OPPORTUNITIES FOR GROWTH. BETTER ACCESS TO ROADS, TELECOMMUNICATIONS, CREDIT AND FORMAL SECTOR EMPLOYMENT ARE ASSOCIATED WITH SIGNIFICANTLY LOWER POVERTY THE POVERTY. BENEFIT OF BEING ‘CONNECTED’ IS LARGE, PARTICULARLY IN THE CASE OF FORMAL SECTOR EMPLOYMENT OUTSIDE OF AGRICULTURE AGRICULTURE. GSAPS-2008 www.ginandjar.com 31
    • THIRD, INVEST IN THE CAPABILITIES OF THE POOR. , PART OF THE STRATEGY FOR GROWTH MUST BE TO INVEST IN THE POOR SO THAT THEY ARE WELL PREPARED TO BENEFIT FROM THE OPPORTUNITIES FOR INCOME GROWTH THAT PRESENT THEMSELVES. IN BOTH RURAL AND URBAN AREAS, HIGHER LEVELS OF EDUCATION OF HOUSEHOLD HEADS ARE ASSOCIATED WITH HIGHER LEVELS OF CONSUMPTION. INVESTING IN EDUCATION FOR THE POOR WILL BOOST THE CAPABILITY OF THE POOR TO PARTICIPATE IN GROWTH. FOURTH, IMPROVE THE ECONOMIC AND BUSINESS CLIMATE AND ENVIRONTMENT TO ENABLE THE GROWTH OF A STRONG AND COMPETITIVE PRIVATE S C O SECTOR GSAPS-2008 www.ginandjar.com 32
    • MAKING SERVICES WORK FOR THE POOR MAKING SERVICES WORK FOR THE POOR REQUIRES IMPROVING INSTITUTIONAL ACCOUNTABILITY SYSTEMS AND INTRODUCING INCENTIVES TO IMPROVE SERVICE DELIVERY IN ORDER TO IMPROVE HUMAN DEVELOPMENT OUTCOMES. CURRENTLY, POOR SERVICE DELIVERY LIES AT THE CENTER OF WEAK HUMAN DEVELOPMENT OUTCOMES OR NON- OUTCOMES, NON INCOME ‘MULTIDIMENSIONAL’ POVERTY, SUCH AS POOR QUALITY OF HEALTH AND EDUCATIONAL CARE. ACCORDING TO S CCO G O SURVEY DATA, 44 PERCENT O C OF HOUSEHOLDS IN THE POOREST QUINTILE WITH CHILDREN ENROLLED IN SCHOOL REPORTED DIFFICULTIES IN FINANCING JUNIOR SECONDARY EDUCATION. GSAPS-2008 www.ginandjar.com 33
    • EDUCATION THE POOR PAY 7.2 PERCENT OF THEIR TOTAL EXPENDITURE FOR EACH ENROLLED STUDENT AT JUNIOR SECONDARY LEVEL. ON THE DEMAND SIDE, TO ADDRESS THIS ISSUE THE GOVERNMENT SHOULD CO S OG SO CONSIDER PROGRAMS OF TARGETED TRANSFERS, G S S SUCH AS SCHOLARSHIPS OR CONDITIONAL CASH TRANSFERS LINKED TO ATTENDANCE TO JUNIOR SECONDARY SCHOOL (AND VOCATIONAL SCHOOLS) SCHOOLS). JUNIOR SECONDARY SCHOOL CAPACITY IN INDONESIA PROVIDES LEARNING OPPORTUNITIES ON AVERAGE TO ONLY SOME 84 PERCENT OF POTENTIAL STUDENTS IN THE 13 TO 15 AGE GROUP. GSAPS-2008 www.ginandjar.com 34
    • THE OTHER AREA OF FOCUS IS IMPROVED ACCESS OF THE POOR TO SERVICES TO REDUCE REGIONAL DISPARITIES IN HUMAN DEVELOPMENT INDICATORS. THE VARIABILITY IN ACCESS TO SERVICES ACROSS THE COUNTRY IS A FUNDAMENTAL DRIVER OF REGIONAL INEQUALITIES IN POVERTY-RELATED OUTCOMES. OUTCOMES WHILE IN SOME REGIONS, SUCH AS CENTRAL JAVA, SCHOOL CAPACITY EXCEEDS 100 PERCENT, IN EAST NUSA TENGGARA AND SOUTH SUMATRA THE AVERAGE COVERAGE OF SCHOOL CAPACITY IS BELOW 60 PERCENT OF THE NUMBER OF POTENTIAL STUDENTS, INDICATING A LOWER DEGREE OF ACCESS. GSAPS-2008 www.ginandjar.com 35
    • AND THE AVERAGE DISTANCE TO JUNIOR SECONDARY SCHOOLS IN JAVA IS 1.9 KM WHILE IN PAPUA THE AVERAGE DISTANCE IS 16.6 KM (PODES, 2005). 2005) OF THE JUNIOR SECONDARY SCHOOLS AVAILABLE, A MINISTRY SURVEY IN 2004 FOUND 27.3 PERCENT OF THEIR CLASSROOMS TO BE DAMAGED IN SOME WAY MORE JUNIOR SECONDARY WAY. CLASSROOMS AND SCHOOLS NEED TO BE MADE AVAILABLE, AND ONE WAY THIS CAN BE ACHIEVED IS BY CONVERTING PRIMARY SCHOOLS WHERE THERE IS EXCESS SUPPLY. GSAPS-2008 www.ginandjar.com 36
    • PRIMARY HEALTH CARE BETTER PRIMARY HEALTHCARE REQUIRES BETTER INCENTIVES FOR BOTH THE POOR AND FOR PROVIDERS. CHAUDHURY, ET AL (2005) FOUND THAT ABSENTEEISM AMONG HEALTH WORKERS IN INDONESIA IS 40 PERCENT, EVEN HIGHER THAN IN BANGLADESH AND UGANDA. ONLY 30 PERCENT OF PRIMARY HEALTH CLINICS VISITED HAD COMPLETE STOCKS OF MEDICINES. FOR HIGHER-LEVEL HEALTHCARE, AFFORDABILITY IS AN ISSUE AND TARGETED PROGRAMS WOULD MAKE SENSE, SUCH AS A HEALTH INSURANCE PROGRAM. GSAPS-2008 www.ginandjar.com 37
    • MATERNAL MORTALITY RATE PROGRESS IN REDUCING MATERNAL MORTALITY LIES IN INCREASING THE PROPORTION OF BIRTHS ATTENDED BY SKILLED PROFESSIONALS, INCREASING THE PROPORTION OF INSTITUTIONAL DELIVERIES AND IMPROVING ACCESS TO 24- HOUR OBSTETRIC CARE. CURRENTLY, ONLY 72 PERCENT OF BIRTHS ARE ATTENDED BY SKILLED PERSONNEL IN INDONESIA NATIONALLY, COMPARED WITH 97 PERCENT IN MALAYSIA AND CHINA AND 99 PERCENT IN THAILAND. INCREASING DELIVERIES WITH SKILLED STAFF IN ATTENDANCE IN HEALTH CLINICS WILL REQUIRE ACTION ON FOUR FRONTS: INCREASING THE AVAILABILITY OF SKILLED MIDWIVES IN REMOTE AREAS; IMPROVING THE AFFORDABILITY OF CARE BY SKILLED PROFESSIONALS; INCREASING AWARENESS ESPECIALLY AWARENESS, AMONG WOMEN, OF THE IMPORTANCE OF SKILLED MIDWIFERY AT BIRTH; AND IMPROVING THE QUALITY OF SKILLED BIRTH ATTENDANT SERVICES. GSAPS-2008 www.ginandjar.com 38
    • SAFE WATER AND SANITATION AN ESTIMATED 50 MILLION RURAL POOR ARE NOT CONNECTED TO PIPED WATER AND OF THAT NUMBER SIX MILLION PAY HIGHER RATES (IN EXCESS OF THOSE CHARGED THE STATE WATER UTILITY COMPANY). FOR RURAL AREAS, THE EXISTING COMMUNITY MANAGEMENT SUPPLY MODEL THAT HAS BEEN SHOWN TO WORK SHOULD BE EXPANDED. THIS CURRENTLY COVERS 25-30 PERCENT OF THE RURAL POPULATION, BUT COULD BE EXPANDED TO COVER THE 50 MILLION PEOPLE CURRENTLY WITHOUT ADEQUATE WATER SUPPLY. GSAPS-2008 www.ginandjar.com 39
    • CONSIDERATION NEEDS TO BE GIVEN TO DESIGNING APPROPRIATE TARIFF STRUCTURES FOR THE POOR WHO BENEFIT FROM CURRENT CONNECTIONS, CONNECTIONS OR WHO WILL HAVE FUTURE CONNECTIONS. THE COVERAGE OF SANITATION SERVICES IN INDONESIA IS THE WORST IN THE REGION, WITH LESS THAN 1 PERCENT OF ALL INDONESIANS ACCESSING PIPED SEWERAGE SYSTEMS. SURVEY DATA SHOW THAT 80 PERCENT OF THE RURAL POOR AND 59 PERCENT OF THE URBAN POOR HAVE NO ACCESS TO ADEQUATE SANITATION. IT IS ESTIMATED THAT THE COST OF POOR SANITATION IS ABOUT 2.6 PERCENT OF GDP, WHILE PUBLIC SPENDING ON WATER AND SANITATION TOGETHER IS LESS THAN 0.2 PERCENT OF GDP. GSAPS-2008 www.ginandjar.com 40
    • FUNCTIONAL RESPONSIBILITIES THE LACK OF CLARITY OF RESPONSIBILITIES IS PARALYZING SERVICE DELIVERY THE FINANCING AND PROVISION OF DELIVERY. SERVICES IS BASED ON BUREAUCRATIC INSTRUCTIONS, PROVIDING RELATIVELY LITTLE ACTUAL AUTONOMY TO EITHER PROVIDERS OR BENEFICIARIES. A TYPICAL GOVERNMENT HEALTH CLINIC HAS EIGHT SOURCES OF CASH INCOME AND 34 OPERATIONAL BUDGETS, MANY OF WHICH ARE PROVIDED IN KIND BY THE CENTRAL OR LOCAL GOVERNMENT. THE CENTRAL GOVERNMENT SHOULD LIMIT ITS ROLE TO POLICY-MAKING, STAFFING ISSUES, INFORMATION AND O C G, S G SSU S, O O DEVELOPING CORE NATIONAL SERVICE-DELIVERY STANDARDS. GSAPS-2008 www.ginandjar.com 41
    • PROVINCIAL LEVEL GOVERNMENTS SHOULD FOCUS ON FIXING REGIONAL STANDARDS, BUILDING CAPACITY AT THE DISTRICT LEVEL AND IMPLEMENTING CROSS-DISTRICT SERVICES, WHILE AT THE DISTRICT LEVEL LOCAL GOVERNMENTS SHOULD BE RESPONSIBLE FOR PLANNING AND BUDGETING, AND ENSURING IMPLEMENTATION OF SERVICE DELIVERY. COMMUNITIES SHOULD BE EMPOWERED TO PROVIDE FEEDBACK TO SERVICE PROVIDERS, POSSIBLY EVEN MANAGING THEIR OWN TARGETED PROGRAMS AND HELPING TO BUILD/ MAINTAIN LOCAL INFRASTRUCTURE. GSAPS-2008 www.ginandjar.com 42
    • IMPROVE CIVIL SERVICE IN SOCIAL SECTORS WHILE CIVIL SERVICE REFORM IS NOT EASY, IT IS A VITAL COMPONENT TO ‘UNSTICKING’ SERVICE DELIVERY. DELIVERY A RECENT STUDY INVOLVED MAKING SURPRISE VISITS ON MORE THAN 100 PRIMARY SCHOOLS AND HEALTH CENTERS IN INDONESIA. THE STUDY FOUND ABSENTEEISM RATES OF 10 PERCENT AMONG TEACHERS AND 40 PERCENT AMONG HEALTH WORKERS. GSAPS-2008 www.ginandjar.com 43
    • INDONESIA HAD THE HIGHEST HEALTH-WORKER ABSENTEEISM RATE OF ALL THE COUNTRIES INCLUDED IN GLOBAL STUDY. NOT ONLY DOES HIGH ABSENTEEISM REDUCE QUALITY BUT IT ALSO QUALITY, REDUCES THE DEMAND FOR PUBLIC HEALTH SERVICES. CREATING MORE ROBUST AND PREDICTABLE INCENTIVES FOR STAFF WILL ALSO HELP, AS HAS BEEN PROVEN IN THE CASE OF SOME FRONTLINE SERVICE PROVIDERS. GSAPS-2008 www.ginandjar.com 44
    • STRONGER INCENTIVES FOR SERVICE PROVIDERS THE PROVISION OF CLEAR, PREDICTABLE REWARDS AND CLEAR SANCTIONS IS NECESSARY TO PROVIDE A FRAMEWORK THAT WILL SYSTEMATICALLY PROMOTE GOOD BEHAVIOR AND OUTCOMES BY SERVICE PROVIDERS INCENTIVES PROVIDERS. CAN TAKE THE FORM OF PERFORMANCE CONTRACTS OR INCENTIVE PAYMENTS FOR GOOD RESULTS. ONE SPECIFIC OPTION IS TO PILOT THE USE OF SERVICE AGREEMENTS—A CONTRACT BETWEEN A PUBLIC SERVICE PROVIDER AND LOCAL GOVERNMENT THAT SPECIFIES THE SERVICES THAT WILL BE DELIVERED, AND THE RESOURCES THAT WILL BE PROVIDED TO DO SO. GSAPS-2008 www.ginandjar.com 45
    • IN ADDITION, LOCAL GOVERNMENTS CAN WORK WITH PRIVATE PROVIDERS AS PARTNERS IN DELIVERING GOOD QUALITY SERVICES TO THE POOR. FOR EXAMPLE, ALMOST 60 PERCENT OF ALL HEALTHCARE VISITS WERE TO PRIVATE FACILITIES OR PROVIDERS IN 2004. THE POOR USE PRIVATE SERVICES NOT ONLY BECAUSE THEY ARE OFTEN CHEAPER, BUT THEY ARE PERCEIVED TO BE OF HIGHER QUALITY. MANY LOCAL GOVERNMENTS ARE WORKING CREATIVELY TO PROVIDE INCENTIVES FOR IMPROVED EDUCATIONAL OUTCOMES AND HEALTHCARE. GSAPS-2008 www.ginandjar.com 46
    • MAKING PUBLIC EXPENDITURE WORK FOR THE POOR TO DATE, PUBLIC EXPENDITURE HAS NOT ALWAYS BEEN SUCCESSFUL AT EFFECTIVELY ADDRESSING THE CONSTRAINTS THAT STILL HINDER THE POOR AND KEEP THEM MIRED IN POVERTY. PUBLIC SPENDING THAT CAN HAVE A DIRECT IMPACT BY BOOSTING INCOME LEVELS WILL HAVE A COMMENSURATE IMPACT ON POVERTY. ONE PRIORITY THAT STANDS OUT IS THE SCALING-UP OF COMMUNITY DRIVEN DEVELOPMENT (CDD). GSAPS-2008 www.ginandjar.com 47
    • WHILE THE CDD APPROACH WILL ALLOW FOR A BROAD FOCUS IN ADDRESSING WIDESPREAD VULNERABILITY, IT WILL ALSO BE VITAL TO USE PUBLIC EXPENDITURE TO TARGET THE VERY POOREST, WHO LAG BEHIND IN TERMS OF THE OO S O G SO NON-INCOME, MULTIDIMENSIONAL ASPECTS OF POVERTY. POVERTY GSAPS-2008 www.ginandjar.com 48
    • ON EXAMPLE IS THE RURAL ROADS PROGRAM PROGRAM. ACCESS TO INFRASTRUCTURE AND ROADS IS SHOWN TO BE A KEY CORRELATE OF POVERTY. HAVING ALL-YEAR PASSABLE ROADS IS ASSOCIATED WITH HIGHER EXPENDITURE LEVELS IN BOTH URBAN (7.7 PERCENT HIGHER) AND RURAL (3.1 PERCENT HIGHER) AREAS. THE LESS WELL CONNECTED REGIONS OF EASTERN INDONESIA WILL SEE PARTICULARLY STRONG GAINS FROM IMPROVED CONNECTIONS. THE CRITICAL IMPORTANCE OF INFRASTRUCTURE IS ALSO REFLECTED IN RESPONSES FROM SMALL RURAL ENTERPRISES. IN A FIRM-LEVEL SURVEY, ROAD ACCESS, THE COST OF TRANSPORTATION AND THE QUALITY OF ROADS ALL FEATURE STRONGLY IN THE TOP CONCERNS OF RURAL ENTERPRISES SURVEYED. GSAPS-2008 www.ginandjar.com 49
    • IMPROVING THE QUALITY OF ROADS WOULD BE ASSOCIATED WITH A RISE IN THE AVERAGE PROPORTION OF INCOME IN A VILLAGE COMING FROM NON-FARM ENTERPRISE INCOME AND NON-FARM SALARIES AND WAGES BY 33 PERCENTAGE POINTS. YET, ONLY 61 PERCENT OF POOR HOUSEHOLDS HAVE ACCESS TO ALL YEAR PASSABLE ROADS (WHILE 76 PERCENT OF ALL-YEAR NON-POOR HOUSEHOLD ACCESS THESE ROADS). GSAPS-2008 www.ginandjar.com 50
    • SOCIAL PROTECTION SYSTEM THERE IS A NEED TO ESTABLISH A COHERENT AND COORDINATED SOCIAL PROTECTION SYSTEM THAT EFFECTIVELY AUGMENTS THE SET OF OPTIONS HOUSEHOLDS HAVE TO MANAGE SHOCKS AND HELPS IN THE BROADER POLICY DRIVE TO ELIMINATE POVERTY. GSAPS-2008 www.ginandjar.com 51
    • SIMILAR TO MANY LOWER-INCOME COUNTRIES, INDONESIA LACKS A STRUCTURED AND COHERENT SOCIAL PROTECTION SYSTEM. EAST ASIA IN GENERAL AND INDONESIA IN PARTICULAR RELY LESS ON SOCIAL PROTECTION INSTRUMENTS RELATIVE TO OTHER COMPARABLE COUNTRIES. GSAPS-2008 www.ginandjar.com 52
    • FROM THE CRISIS TO 2005, INDONESIA’S SOCIAL PROTECTION SYSTEM WAS CHARACTERIZED PRIMARILY BY (I) CRISIS-ERA SAFETY NET PROGRAMS; AND (II) LARGE COMMODITY PRICE SUBSIDIES AND TRANSFERS, PARTICULARLY THROUGH RICE AND FUEL PRODUCTS. PRODUCTS UNIVERSAL COMMODITY PRICE SUBSIDIES MAY BE CONSIDERED A ‘FIRST GENERATION’ SOCIAL PROTECTION APPROACH, HAVING BEEN THE INSTRUMENT OF CHOICE USED BY MANY DEVELOPING COUNTRIES IN THE 1960s AND 1970s 1970s. GSAPS-2008 www.ginandjar.com 53
    • THE TARGETED PROGRAMS UNDERTAKEN DURING THE CRISIS PERIOD MAY BE CONSIDERED AS AN ATTEMPT AT ‘SECOND GENERATION’ TYPE SAFETY NET PROGRAMS. ‘ ’ IN INDONESIA SHOULD BE READY TO MOVE TO A ‘THIRD GENERATION’ SYSTEM THAT IS MORE COMPREHENSIVE GENERATION AND MATCHED TO THE ACTUAL RISKS AND VULNERABILITIES FACED BY ITS MORE SUSCEPTIBLE CITIZENS. GSAPS-2008 www.ginandjar.com 54
    • INDONESIA’S CRISIS-ERA SOCIAL SAFETY NET Safety Net Objective S f t N t Obj ti Specific Program S ifi P Food security Special Market Operation (operasi pasar khusus, or OPK) program: sales of subsidized rice to targeted households, currently known as Raskin. Employment creation A collection of ‘labor-intensive’ programs executed by various government departments Education Scholarships to elementary, secondary and upper secondary school students and block grants to selected schools Health Funding for: Medical services Operational support for health centers Medicine and imported medical equipment Family planning services Nutrition Midwife services Community empowerment Regional Empowerment to Overcome the Impact of Economic Crisis (PDM- DKE): block grants directly to villages for either public works or subsidized credit Source: Sumarto, Suryahadi and Widyanti, 2004 GSAPS-2008 www.ginandjar.com 55
    • THE OBJECTIVES OF INDONESIA’S CRISIS-ERA SOCIAL SAFETY NET (JPS) ARE GENERALLY WELL ALIGNED WITH INTERNATIONALLY RECOGNIZED GOALS OF SOCIAL PROTECTION POLICY: (I) TO ALLEVIATE THE POVERTY OF THE CURRENT POOR, BY RAISING THEIR CONSUMPTION LEVEL; (II) TO PREVENT THE NEAR-POOR NEAR POOR FROM FALLING INTO POVERTY AND (III) TO HELP POVERTY; HOUSEHOLDS—BOTH NEAR-POOR AND NON-POOR—MITIGATE THE FALL IN INCOME IN THE WAKE OF SHOCKS. THE THREE OBJECTIVES ARE IN LINE WITH WHAT SOCIAL PROTECTION SYSTEMS ARE COMMONLY EXPECTED TO ACHIEVE. HOWEVER, THE CURRENT STRUCTURE OF THE SAFETY NET FAILS TO DIFFERENTIATE THESE OBJECTIVES. GSAPS-2008 www.ginandjar.com 56
    • WHILE THE STRUCTURES OF SOME OF THE COMPONENT PROGRAMS OF THE SAFETY NET ARE BEST SUITED TO RAISING THE CONSUMPTION OF THE CURRENT POOR, , THEY DO NOT PERFORM WELL IN KEEPING THE NEAR- POOR OUT OF POVERTY. LOOKING AHEAD, IN EXPLORING OPTIONS FOR A NEW SOCIAL PROTECTION SYSTEM, SYSTEM ALTHOUGH THE THREE ABOVE ARE ADEQUATE, GREATER CLARITY ON HOW EACH IS BEST PURSUED IS REQUIRED. GSAPS-2008 www.ginandjar.com 57
    • MAKING GOVERNMENT WORK FOR THE POOR INDONESIA'S PAST EXPERIENCE SHOWS THAT IT HAS TO MAKE GOVERNMENT WORK FOR THE POOR. THE HISTORICAL RECORD HERE IS MIXED AT BEST. ON ONE HAND, HISTORY REINFORCES THE POINT THAT A STRONG CENTRAL GOVERNMENT FULLY COMMIITED TO POLICIES THAT REDUCE POVERTY AND WITH THE TECHNICAL CAPACITY TO FORMULATE AND IMPLEMENT THESE POLICIES CAN BE KEY TO POVERTY REDUCTION. GSAPS-2008 www.ginandjar.com 58
    • ON THE OTHER HAND, HISTORY ALSO TELLS THE STORY OF HOW WEAK ACCOUNTABILITY AND INSTITUTIONAL CAPACITY TO DELIVER SERVICES—AND NOT INVESTING IN SUCH SERVICES AND CAPACITY—CAN ITSELF UNDERMINE DEVELOPMENT. INDEED, POOR GOVERNANCE, CAN CAUSE A COLLAPSE IN THE ENTIRE DEVELOPMENT EFFORT EFFORT. MOREOVER, WEAK ACCOUNTABILITY, CAPACITY, AND INSTITUTIONS AT ALL LEVELS OF GOVERNMENT MAKE THE TASK OF ‘DELIVERING ON POVERTY REDUCTION’—WHETHER IT BE THROUGH GROWTH, SPENDING, SOCIAL PROTECTION- EXTREMELY DIFFICULT. GSAPS-2008 www.ginandjar.com 59
    • DESPITE THE STRONG CONNECTIONS THAT WERE ESTABLISHED BETWEEN THE POOR AND THE COUNTRY’S GROWTH, THE PROCESS WAS STRAINED BY THE DYSFUNCTIONALITY OF GOVERNMENT INSTITUTIONS, ESPECIALLY IN THE SECTORS AND AT LOWER LEVELS OF GOVERNMENT. GSAPS-2008 www.ginandjar.com 60
    • DECENTRALIZATION CERTAINLY ENHANCES THE OPPORTUNITY TO IMPROVE GOVERNMENT’S ABILITY TO DELIVER ON POVERTY REDUCTION BY MOVING O O UC O O G DECISION-MAKING POWER CLOSER TO CITIZENS AND ALLOWING EFFORTS TO BE TAILORED TO REGIONAL ISSUES. ISSUES BUT, AT LEAST INITIALLY, DECENTRALIZATION ALSO MAKES THE TASK MORE COMPLEX AND INDONESIA NEEDS TO WORK ON SORTING OUT THE SPECIFICS OF ITS DECENTRALIZATION FRAMEWORK. GSAPS-2008 www.ginandjar.com 61
    • THIS REFORM HAS CREATED ENORMOUS OPPORTUNITIES FOR LOCAL INITIATIVES IN TACKLING LOCAL PROBLEMS, AND DESIGNING DEVELOPMENT STRATEGIES THAT BEST MEET LOCAL NEEDS. SO A KEY QUESTION FOR POVERTY REDUCTION THEN SO, IS: HOW CAN INDONESIA BETTER MAKE GOVERNMENT WORK FOR THE POOR? GSAPS-2008 www.ginandjar.com 62
    • GOOD GOVERNANCE IS A CRITICAL INGREDIENT FOR SUCCESSFUL POVERTY REDUCTION. IT IS NOT JUST REDUCTION THE LEVEL OF SPENDING OR THE FOCUS OF THAT SPENDING THAT DETERMINES IMPACT, BUT ALSO THE WAY GOVERNMENT SPENDS THAT MATTERS: HOW DECISIONS ARE MADE, HOW EFFECTIVELY THE FUNDS MOVE, MOVE HOW DELIVERY PROCESSES ARE ALIGNED AND HOW WELL PROGRAMS ARE MONITORED. GSAPS-2008 www.ginandjar.com 63
    • THREE KEY AREAS OF GOVERNMENT ACTION Incentives I ti Clarity f Cl it of and Skills Functions Better align policy, planning, and budgeting systems Strengthen institutional accountability Enhance assessment and monitoring of poverty reduction Results Information, Information Orientation Participation and Consultation
    • POLICY, PLANNING AND BUDGETING SYSTEMS THE ALIGNMENT OF POLICY, PLANNING AND BUDGETING , SYSTEMS HAS A MAJOR IMPACT UPON POVERTY REDUCTION OUTCOMES. THE SYSTEMS FOR PLANNING AND BUDGETING AT THE NATIONAL LEVEL HAVE FACED CHALLENGES. MOREOVER, SINCE DECENTRALIZATION, IT HAS BECOME MORE COMPLEX TO COORDINATE BOTH THESE PROCESSES AMONG DIFFERENT TIERS OF GOVERNMENT. THE RESULT HAS BEEN A GOVERNMENT LESS PREDICTABLE ENVIRONMENT FOR SECTOR AND LOCAL SPENDING CHARACTERIZED BY AD HOC DECISION-MAKING AND BOTH OVERLAPS AND GAPS IN EFFORTS TO ALLEVIATE POVERTY POVERTY. GSAPS-2008 www.ginandjar.com 65
    • AT PRESENT, THE GEOGRAPHIC ALLOCATION OF REVENUE TO PRESENT REGIONS IN INDONESIA IS NOT PRO-POOR. ALTHOUGH ABOUT ONE-THIRD OF CENTRAL GOVERNMENT SPENDING IS ALLOCATED GEOGRAPHICALLY ACROSS INDONESIA THROUGH TRANSFER PAYMENTS TO SUB-NATIONAL GOVERNMENTS, THIS FUNDING IS NOT EFFECTIVELY USED FOR POVERTY. GIVEN THAT 40 PERCENT OF TOTAL PUBLIC SPENDING IS NOW THE RESPONSIBILITY OF SUB-NATIONAL GOVERNMENTS, DISTRICT AND MUNICIPAL SPENDING PATTERNS AND PROCESSES ARE CRITICAL. THE PRO-POOR FOCUS OF PUBLIC SPENDING IN INDONESIA IS CONTINGENT ON THE PERFORMANCE OF LOWER LEVELS OF LOCAL GOVERNMENT, , AND EXPERIENCE SINCE DECENTRALIZATION PROVIDES SOME SOBERING LESSONS. GSAPS-2008 www.ginandjar.com 66
    • TO DATE, PLANNING AND BUDGETING AT THE PROVINCIAL DATE AND DISTRICT LEVELS HAVE NOT BEEN AS PRO-POOR AS THEY COULD HAVE BEEN, ALTHOUGH TOTAL SPENDING ON HEALTH AND EDUCATION IN RICHER PROVINCES INCREASED IN THE POST-DECENTRALIZATION PERIOD OF 2000-03. EVIDENCE FROM THE EDUCATION SECTOR, FOR , EXAMPLE, SUGGESTS THAT INCREASED INEQUALITY IN SPENDING STEMS FROM SUB-NATIONAL SPENDING BECOMING MORE UNEQUAL GSAPS-2008 www.ginandjar.com 67
    • CLARITY OF FUNCTIONS BETWEEN CENTRAL AND SUB-NATIONAL GOVERNMENT UNITS MANY OF THE CURRENT ARRANGEMENTS GOVERNING PUBLIC SERVICE PROVISION ARE UNCLEAR ON WHAT PROVIDERS ARE TO DELIVER AND HOW MUCH THEY ARE TO RECEIVE FOR DOING SO. THE FINANCING AND PROVISION OF SERVICES IS BASED ON BUREAUCRATIC INSTRUCTIONS, PROVIDING RELATIVELY LITTLE AUTONOMY TO PROVIDERS OR BENEFICIARIES. A TYPICAL GOVERNMENT HEALTH CLINIC (PUSKESMAS) HAS EIGHT SOURCES OF CASH INCOME AND 34 OPERATIONAL BUDGETS, MANY OF WHICH ARE PROVIDED IN KIND BY THE CENTRAL OR LOCAL GOVERNMENT (WORLD BANK, 2005B). THE ( , ) SYSTEM IS CHARACTERIZED BY OVERLAP SAND GAPS, AND IT IS INEVITABLY THE POOREST WHO FALL THROUGH SUCH A COMPLEX SYSTEM. GSAPS-2008 www.ginandjar.com 68
    • LACK OF CLARITY REGARDING CENTRAL AND LOCAL FUNCTIONS IMPACTS DIRECTLY UPON THE PROVISION OF EDUCATION AND HEALTH SERVICES. FOR EXAMPLE, TEACHER MANAGEMENT—IN THE FORM OF DECISIONS REGARDING RECRUITMENT, DEPLOYMENT, PERFORMANCE EVALUATION, EVALUATION AND PAY—ARE MADE AT DIFFERENT LEVELS OF GOVERNMENT. HIRING DECISIONS ARE NOW DECENTRALIZED, BUT COMPENSATION STANDARDS ARE STILL CENTRALIZED. SIMILARLY, IT IS NOT CLEAR WHO HAS THE AUTHORITY TO OPEN AND CLOSE HEALTH FACILITIES. FACILITIES GSAPS-2008 www.ginandjar.com 69
    • THE CONSTRAINTS AT THE SUB NATIONAL LEVEL ARE SUB-NATIONAL SIMILAR TO THOSE AT THE NATIONAL LEVEL, ONLY MAGNIFIED DUE TO LOWER CAPACITY AND VARIABLE LEVELS OF LOCAL POLITICAL COMMITMENT. TO THE EXTENT THAT DECENTRALIZED SPENDING IS EXPECTED TO MORE DIRECTLY ADDRESS THE NEEDS OF LOCAL COMMUNITIES, THE PLANNING AND BUDGETING PROCESS AT THE LOCAL LEVEL IS ALL THE MORE IMPORTANT. IMPORTANT STRUCTURAL PROBLEMS WITH DISTRICT/MUNICIPAL LEVEL PLANNING AND BUDGETING SYSTEMS ARE COMPOUNDED BY THE WEAK CAPACITY IN LOCAL GOVERNMENT TO MANAGE THESE PROCESSES. 1) PLANS AND BUDGETS ARE NOT USUALLY SUPPORTED BY LOCAL LEVEL LOCAL-LEVEL POVERTY DIAGNOSTICS AND WHERE AND, DIAGNOSTICS DO EXIST, THESE ARE NOT USED FOR DECISION-MAKING. GSAPS-2008 www.ginandjar.com 70
    • 2) PREPARATION OF MEDIUM-TERM PLANS AT THE LOCAL LEVEL HAVE BEEN FREQUENTLY ‘CONTRACTED OUT’ TO UNIVERSITIES OR OTHER ORGANIZATIONS WITH THE RESULT THAT THEY ARE COMPLETED FOR OFFICIAL PURPOSES BUT HAVE LITTLE OWNERSHIP BY GOVERNMENT OFFICIALS OFFICIALS. 3) THE DISCONNECT BETWEEN PLANS (PREPARED BY THE LOCAL PLANNING OFFICER) AND BUDGETS (PREPARED BY FINANCE UNITS) IS EQUALLY PROBLEMATIC AT THE LOCAL LEVEL. GSAPS-2008 www.ginandjar.com 71
    • INSTITUTIONAL ACCOUNTABILITY THE CONFUSION OVER FINANCING AND RESPONSIBILITIES LIES AT THE HEART OF THE PROBLEM OF EFFECTIVE AND COORDINATED SERVICE DELIVERY (WALLACE ET AL, 2006). IN ADDITION, HOWEVER, LOCAL GOVERNMENTS HAVE ONLY JUST STARTED TO CONSIDER THE BEST WAYS TO DELIVER THE SERVICES FOR WHICH THEY ARE RESPONSIBLE. GSAPS-2008 www.ginandjar.com 72
    • BLOCKAGES IN SERVICE DELIVERY OCCUR ON BOTH THE DEMAND AND THE SUPPLY SIDES: THE GOVERNMENT AND DELEGATED PROVIDERS DO NOT ALWAYS PERFORM THEIR FUNCTIONS, FUNCTIONS AND THE USERS OFTEN DO NOT DEMAND ACCOUNTABILITY FROM THEM. THERE ARE A NUMBER OF FACTORS CHARACTERIZING SERVICE DELIVERY OVER A RANGE OF SECTORS IN INDONESIA: 1) BASIC SERVICES (HEALTH, EDUCATION AND WATER, FOR ( , , INSTANCE) ARE PREDOMINATELY PUBLIC; 2) THEY ARE POORLY COORDINATED ACROSS A RANGE OF AGENCIES AND TIERS OF GOVERNMENT; 3) AND, THESE PUBLIC AGENCIES ARE NEITHER ACCOUNTABLE FOR THE QUALITY OF THE SERVICE THEY DELIVER, NOR FOR THE OUTCOMES OF THEIR INTERVENTIONS. GSAPS-2008 www.ginandjar.com 73
    • CIVIL SERVICE FUNCTIONS AND CONSTRAINTS THE STRENGTHS AND WEAKNESSES OF THE CIVIL SERVICE IN INDONESIA HAVE BEEN EXTENSIVELY ANALYZED, AND THERE IS BROAD AGREEMENT THAT SIGNIFICANT CHALLENGES EXIST IN REFORMING THE CIVIL SERVICE. THE MASSIVE GROWTH OF THE CIVIL SERVICE REFLECTED THE POLICY EMPHASIS ON SERVICE DELIVERY AND INFRASTRUCTURE DEVELOPMENT (ROHDEWOHLD, 1995), AND THE RECRUITMENT OF TEACHERS, DOCTORS AND ENGINEERS INCREASED THE OVERALL SIZE OF THE CIVIL SERVICE FROM 525,000 IN 1970 TO 2 MILLION IN 1990 AND OVER 4 MILLION IN 1993. GSAPS-2008 www.ginandjar.com 74
    • THIS REPRESENTED A FIVE-FOLD INCREASE FROM 4.1 TO 21.8 STAFF PER THOUSAND INHABITANTS BETWEEN 1960 AND 1993 (HOFMAN, 2004). THE PROBLEM WAS NOT SIZE BUT QUALITY QUALITY. THREE PRIORITY AREAS THAT WILL DRIVE REFORMS: IMPROVING RULES AND RESTRAINTS, , ENHANCING VOICE, AND STIMULATING COMPETITIVE PRESSURES. GSAPS-2008 www.ginandjar.com 75
    • RULES AND RESTRAINTS WEAK INCENTIVES AND A RIGID PERSONNEL SYSTEM MAKE SUCCESSFUL PROGRAM IMPLEMENTATION DIFFICULT. MANAGERS ARE IN MANY CASES NOT ACCOUNTABLE FOR THE OUTPUTS ASSOCIATED WITH SERVICE DELIVERY. THE LACK OF ACCOUNTABILITY IS EXACERBATED BY A CLOSED PROMOTION SYSTEM AND THE LACK OF A PERFORMANCE-LINKED SALARY PERFORMANCE LINKED STRUCTURE. PROMOTIONS ARE BASED ON SENIORITY, THERE IS NO LATERAL ENTRY (PROMOTING COMPETITION) AND, AS A CONSEQUENCE, AND CONSEQUENCE THERE ARE FEW INCENTIVES TO FOCUS ON RESULTS. THIS LACK OF ACCOUNTABILITY CREATES FEW INCENTIVES TO, FOR EXAMPLE, IMPLEMENT A POVERTY REDUCTION MANDATE, OR TO MOBILIZE STAFF TO ENGAGE IN POVERTY REDUCTION INITIATIVES. GSAPS-2008 www.ginandjar.com 76
    • FEW WITHIN THE CIVIL SERVICE SEE THE BENEFITS OF STRIVING FOR RESULTS IN TERMS OF POVERTY REDUCTION. INCENTIVES TO PERFORM DEPEND ON REWARDS (PAY AND ALLOWANCES), AS WELL AS INFORMAL INCENTIVES THAT COME WITH A MERITOCRACY (SUCH AS RECOGNITION FROM SUPERVISORS AND PEERS) AND PUNISHMENT FOR ) POOR PERFORMANCE OR FOR BREAKING THE RULES. GSAPS-2008 www.ginandjar.com 77
    • THE RIGIDITY OF THE STAFFING SYSTEM HINDERS THE FLEXIBLE HIRING, TRANSFER AND PROMOTION OF GOOD PEOPLE. PEOPLE FOLLOWING DECENTRALIZATION DECENTRALIZATION, OVERSTAFFING HAS BECOME MOST COMMON AT THE LOCAL LEVEL, WITH AN IMBALANCE FAVORING LEVEL GENERALISTS OVER MORE NEEDED TECHNICAL STAFF. TRANSFERS ARE THE EXCEPTION RATHER THAN THE RULE AND CIVIL SERVANTS WITH ILL-ADAPTED SKILLS FOR THEIR POSITIONS CAN STAY PUT FOR YEARS. GSAPS-2008 www.ginandjar.com 78
    • THE INTERGOVERNMENTAL TRANSFER SYSTEM NOW ENCOURAGES LOCAL GOVERNMENTS NOT TO REDUCE THE NUMBER OF CIVIL SERVANTS. THE GENERAL ALLOCATION FUNDS (DAU) ARE ALLOCATED TO PAY FOR STAFF AND THE CURRENT FORMULA MEANS THAT IF REGIONAL GOVERNMENTS REDUCE THEIR STAFF NUMBERS, THEIR GRANTS WILL ALSO BE REDUCED, RESULTING IN A STRONG DISINCENTIVE FOR THESE GOVERNMENTS TO CUT THEIR STAFF. GSAPS-2008 www.ginandjar.com 79
    • THE BASICS OF BETTER STAFFING OVERSTAFFING IN FRONTLINE INSTITUTIONS CAN PARTIALLY BE DEALT WITH BY MOVING EXCESS PERSONNEL TEMPORARILY TO A ‘POOL OF STAFF IN WAITING’. ‘POOL’ STAFF CAN RE-APPLY FOR POSITIONS ONCE A RE ORGANIZATION HAS BEEN COMPLETED AND RE-ORGANIZATION CLEAR JOB DESCRIPTIONS ARE IN PLACE. IF SKILL-SETS MATCH AND STAFF ARE TRAINABLE, EMPLOYEES CAN RETURN TO THE MAINSTREAM OF THE ORGANIZATION. THOSE WITHOUT POTENTIAL FOR RE- DEPLOYMENT CAN BE LEFT IN THE ‘POOL’ OR ENCOURAGED TO SEEK OPPORTUNITIES OUTSIDE GOVERNMENT. IF VOLUNTARY DEPARTURES DO NOT OCCUR, IT IS STILL BETTER TO KEEP SUCH STAFF IN A ‘POOL’. ENSURE THAT RECRUITMENT AND PROMOTION ARE OPEN AND TRANSPARENT, AND BASED ON CLEAR JOB DESCRIPTIONS. ALTHOUGH CANDIDATES PUT FORWARD FOR PROMOTION STILL HAVE TO FULFILL CERTAIN RANK CRITERIA, THE GOVERNMENT CAN USE SPECIALIZED COMPANIES TO CARRY OUT TESTS AND ASSESSMENTS OF CANDIDATES FOR RECRUITMENT AND PROMOTION TO RAISE PROFESSIONALISM. PROFESSIONALISM THE DRAFTING OF CLEAR JOB DESCRIPTIONS FOR THOSE RECRUITED OR PROMOTED IS ALSO IMPORTANT BECAUSE IT CLARIFIES AND SPECIFIES THEIR TASKS, ENABLES PERFORMANCE EVALUATION AND INTRODUCES PERFORMANCE-BASED INCENTIVE SCHEMES. GSAPS-2008 www.ginandjar.com 80
    • S SET PROPER TERMS AND CO O S O S O CONTRACT S CONDITIONS FOR CO C STAFF. CONTRACTING CO C G IS AT PRESENT USED TO HIRE A LARGE NUMBER OF LOW-SKILLED STAFF IN SUPPORT FUNCTIONS, BUT IF USED WISELY IT CAN ALSO BE USED TO IMPROVE THE SKILLS OF THE CIVIL SERVICE. THIS WILL EASE THE CONSTRAINTS POSED BY THE RIGID CIVIL-SERVICE RULES. CONTRACT EMPLOYMENT CAN ALSO INTRODUCE AN ELEMENT OF FLEXIBILITY WITHIN THE LOCAL HUMAN-RESOURCES PLANNING SYSTEM. PLAN THE USE OF HUMAN RESOURCES WISELY. BUILDING A DATABASE FOR HUMAN-RESOURCE PLANNING AND MANAGEMENT IS THE BASIS FOR PLANNING OF ORGANIZATIONAL AND PERSONNEL REFORMS. A MODERN DATABASE IS A TRANSPARENT AND ALTERNATIVE HUMAN-RESOURCE PLANNING AND MANAGEMENT TOOL AND IT WILL ENABLE REGIONS TO DO MORE INDEPENDENT AND TAILORED PLANNING OF PERSONNEL ACTIONS. DEVELOP PREDICTABLE INCENTIVES FOR GOOD PERFORMANCE AND SANCTIONS FOR BAD PERFORMANCE. WHILE SCHEMES TO ENFORCE PERFORMANCE ATTENDANCE AND DISCIPLINE ABOUND IN FRONTLINE INSTITUTIONS, GOVERNMENT SHOULD ADD PERFORMANCE-BASED INCENTIVES EITHER ON A GROUP OR INDIVIDUAL BASIS. REVAMPING POLICIES SO THAT THE PROVISION OF TRAINING OPPORTUNITIES AND MONETARY REWARDS PROMOTE GOOD PERFORMANCE AND A REGIME OF SANCTIONS DETER BAD PERFORMANCE WOULD GO A LONG WAY TOWARDS PROVIDING BETTER SERVICES. SUCH A SYSTEM SHOULD BE TRANSPARENT AND MONITORED CLOSELY. GSAPS-2008 www.ginandjar.com 81
    • CITIZEN AND CIVIL SOCIETY VOICE INVOLVING END-USERS AND POOR CITIZENS IN DEVELOPMENT EFFORTS IS CRITICAL, AS IT IMPROVES ACCOUNTABILITY AND THE LIKELIHOOD THAT INTERVENTIONS WILL BE DESIGNED TO MEET DEMAND. THE ROLE OF COMMUNITIES IN POVERTY REDUCTION PROGRAMS CAN VARY BOTH IN TERMS OF THE DEGREE OF THEIR INVOLVEMENT AND THE STAGE AT WHICH THEY BECOME INVOLVED IN THE PROCESS (PROJECT IDENTIFICATION, PLANNING, BUDGETING AND PROGRAMMING, MONITORING, DELIVERY AND IMPLEMENTATION). LOCAL GOVERNMENTS CAN SUPPORT USERS TO BECOME INVOLVED IN SERVICE DELIVERY BY PROMOTING THEIR PARTICIPATION IN THE ACTUAL DECISION-MAKING OVER THEIR PARTICIPATION,AND BY APPROPRIATELY ASSIGNING RESOURCES TO COMMUNITIES OR TO PARTNERSHIPS BETWEEN PROVIDERS AND COMMUNITIES. GSAPS-2008 www.ginandjar.com 82
    • CURRENTLY, THE PARADIGM OF AN AUTHORITARIAN STATE WITH UPWARD ACCOUNTABILITY STILL REMAINS STRONG: CITIZENS HAVE A VOICE, BUT LACK THE POWER TO ENFORCE THE ACCOUNTABILITY OF LAW- MAKERS, MAKERS OR TACKLE THE BUREAUCRACY. OVERSIGHT BY BUREAUCRACY AN ACTIVE CIVIL SOCIETY AND POLITICAL REPRESENTATIVES IS ESSENTIAL, BUT IS CURRENTLY MISSING IN THE TRIANGLE OF POLICY MAKER POLICY-MAKER– PROVIDER–CITIZEN ACCOUNTABILITY. GSAPS-2008 www.ginandjar.com 83
    • CIVIL-SOCIETY ORGANIZATIONS HAVE DEVELOPED CONSIDERABLY SINCE DECENTRALIZATION, AND CORRUPTION WATCHDOGS AND CONSUMER ASSOCIATIONS ARE EMERGING THAT WILL INCREASINGLY ACT AS A CHECK ON GOVERNMENT BEHAVIOR. HOWEVER, A GREAT DEAL OF SCOPE EXISTS FOR FURTHER EMPOWERING CIVIL SOCIETY AND THE PUBLIC. PUBLIC THE EXPERIENCE WITH THE SUB-DISTRICT (KECAMATAN) DEVELOPMENT PROGRAM (KDP) SUGGESTS THAT EMPOWERING COMMUNITIES TO MONITOR DEVELOPMENT PERFORMANCE AND FACILITATING THIS PROCESS THROUGH CIVIL SOCIETY AND MEDIA COVERAGE HAVE HELPED MODERATE CORRUPTION. CORRUPTION GSAPS-2008 www.ginandjar.com 84
    • THREE FACTORS IMPACT UPON THE ABILITY OF CITIZENS TO EFFECTIVELY EXERCISE THEIR VOICE. FIRST, THE DEGREE TO WHICH CITIZENS ARE INVOLVED IN AND INFLUENCE PLANNING AND BUDGETING BY THEIR LOCAL GOVERNMENTS; SECOND, GIVING COMMUNITIES THE POWER TO DELIVER SOME SERVICES THEMSELVES (FOR EXAMPLE, SMALL-SCALE EXAMPLE SMALL SCALE INFRASTRUCTURE); AND THIRD, THE PROVISION OF VOUCHERS TO THE POOR SO THAT THEY ARE FINANCIALLY EMPOWERED TO MAKE CHOICES. GSAPS-2008 www.ginandjar.com 85
    • COMPETITIVE PRESSURES THE PRIVATE SECTOR CAN BOTH PROVIDE COMPETITION TO THE PUBLIC SECTOR, SECTOR AND ALSO DELIVER SOME SERVICES MORE EFFICIENTLY AND EFFECTIVELY THAN PUBLIC SERVICE PROVIDERS. MUCH OF THE DIALOGUE REGARDING GOVERNMENT SERVICES AND ADMINISTRATION FOCUSES UPON HOW TO IMPROVE EFFICIENCY AND EFFECTIVENESS THROUGH INTERNAL REFORMS. HOWEVER, EQUAL ATTENTION SHOULD BE PAID TO USE OF THE PRIVATE SECTOR. THE PRIVATE SECTOR IS NOT ONLY MORE COST EFFECTIVE IN DELIVERING SERVICES IN SOME CASES, BUT THE MERE EXISTENCE OF CASES PRIVATE SECTOR COMPETITION CAN, UNDER THE RIGHT CONDITIONS, STIMULATE THE PUBLIC SECTOR TO DELIVER HIGHER QUALITY SERVICES TO CITIZENS. IN ADDITION, THERE ARE SOME TASKS THAT THE PUBLIC SECTOR CAN SUBCONTRACT TO THE PRIVATE SECTOR, AS THESE TASKS DO NOT FALL WITHIN THE CORE RESPONSIBILITIES AND/OR COMPETENCIES OF THE PUBLIC SECTOR. GSAPS-2008 www.ginandjar.com 86
    • MONITORING AND ASSESSMENT TO REDUCE POVERTY MORE EFFECTIVELY, IT IS NECESSARY TO EFFECTIVELY BUILD MORE KNOWLEDGE AND INFORMATION ON THE NATURE AND DETERMINANTS OF POVERTY AND THEN DEVELOP POLICIES AND PROGRAMS THAT RESPOND TO EMPIRICAL EVIDENCE. EVIDENCE TO DATE, THE GOVERNMENT HAS ASSESSED POVERTY THROUGH ANNUAL HOUSEHOLD SURVEYS THAT HAVE PROVIDED VERY SOUND QUANTITATIVE DATA AT THE NATIONAL LEVEL. INDONESIA HAS BEEN SUCCESSFUL IN COLLECTING GOOD QUALITY MONETARY INDICATORS, AND HAS ALSO DEVELOPED SOME USEFUL NON-MONETARY INDICATORS OF POVERTY ACROSS THE REGIONS THROUGH THE SUSENAS HOUSEHOLD SURVEY. THE NATIONAL SOCIO- ECONOMIC SURVEY (SURVEI SOSIAL EKONOMI NASIONAL, OR SUSENAS), SUSENAS) INITIATED IN 1963-64. 1963 64 BUT THEY NEED TO BE IMPROVED. GSAPS-2008 www.ginandjar.com 87
    • THE CHALLENGES • For some important non-monetary indicators, such as infant mortality, maternal mortality and nutritional status, data compiled by the Indonesian Demographic and Health Survey (DHS) are not collected on an annual basis and in most cases are only aggregated at the national level. level • Regional coverage of data is lacking. Unfortunately, most household surveys are only reliable at the regional/provincial level, but program design and budget allocations (including the DAK) require a more precise definition (below the kabupaten level) of where the poor reside. • Quantitative data are not supported by systematic qualitative assessment. Indonesia has some experience in participatory poverty assessment. However, this is far from widespread and is not mainstreamed at the local levels of government or in national approaches to poverty assessment. • Routine and administrative data at the district/municipal level are lacking. The lacking regional branches (Kanwil/Kandep) of the central government that previously collected and reported these data no longer exist. While some districts now collect data, these are not necessarily fed into national-level information systems. • Data collection efforts are not well coordinated across departments. There is no system to coordinate the collection of data by the BPS and line ministries. Incentives tend to foster independent data collection efforts (for example, data associated with individual programs or projects) and there are gaps in the development of the sorts of poverty diagnostics that are needed. GSAPS-2008 www.ginandjar.com 88
    • RECOMMENDATIONS 1. MAKE BETTER USE OF EXISTING AND EMERGING DATA SOURCES TO BOTH BETTER UNDERSTAND POVERTY AND PROGRAM IMPACT 2. LINK MONITORING FINDINGS MORE EFFECTIVELY WITH FEEDBACK TO, AND DESIGN OF, SECTORAL PROGRAMS AND FOR USE BY LOCAL GOVERNMENTS GSAPS-2008 www.ginandjar.com 89
    • CONCLUSION FIRST, AS IT GROWS, INDONESIA’S ECONOMY IS BEING TRANSFORMED FROM ONE WITH AGRICULTURE AS ITS MAINSTAY TO ONE THAT WILL RELY MORE ON SERVICES AND INDUSTRY. THE PRIORITY FOR MAKING THIS GROWTH WORK FOR THE POOR IS A FRIENDLIER RURAL INVESTMENT CLIMATE CLIMATE. GSAPS-2008 www.ginandjar.com 90
    • SECOND, AS DEMOCRACY TAKES HOLD, THE GOVERNMENT IS BEING TRANSFORMED FROM ONE WHERE SOCIAL SERVICES WERE DELIVERED CENTRALLY TO ONE THAT WILL RELY MORE ON LOCAL GOVERNMENTS. THE PRIORITY FOR MAKING SERVICES WORK FOR THE POOR IS STRONGER CAPACITY OF LOCAL GOVERNMENTS AND BETTER INCENTIVES FOR SERVICE PROVIDERS. GSAPS-2008 www.ginandjar.com 91
    • THIRD AS INDONESIA INTEGRATES THIRD, INTERNATIONALLY, ITS SYSTEM OF SOCIAL PROTECTION NEEDS TO BE MODERNIZED SO THAT INDONESIA IS BOTH SOCIALLY EQUITABLE AND ECONOMICALLY COMPETITIVE. FOURTH, THE PRIORITY FOR MAKING PUBLIC , EXPENDITURE WORK FOR THE POOR IS TO SHIFT FROM INTERVENING IN MARKETS FOR COMMODITIES THAT THE POOR CONSUME (SUCH AS FUEL AND RICE) TO PROVIDING TARGETED INCOME SUPPORT TO POOR HOUSEHOLDS, AND USING THE FISCAL SPACE TO IMPROVE CRITICAL SERVICES SUCH AS EDUCATION, HEALTH, SAFE WATER, AND SANITATION. GSAPS-2008 www.ginandjar.com 92