Conference Presentation

1. The State Retreats and Never
Returns: Consequences of
Neoliberal Reforms on
Administrative Law Protection
in Indonesia
Mohamad Mova Al’Afghani
Center for Water Governance
Universitas Ibn Khaldun Bogor
Putting Public in Public Services: Research, Action and Equity in the Global South
International Conference – Cape Town, South Africa
April 13-16, 2014

2. Administrative Law Protection in General
• Access to Justice, review of administrative decision by an
administrative court for general principles of good administration
“arbitrariness” or “abuse of authority”.
• Protection under Public Service Law: sanctions for public officials
includes removal from office, demotion, suspension of salary
raise, termination, revocation of license (unlikely for small matters)
• Guarantee of transparency through Freedom of Information Law
• Participation in Decision-Making Process
• Redress mechanism, guarantee of service quality and quantity
These are available under the traditional provider/positive state and
some advanced regulatory states.

3. What it supposed to be
The Positive/Developmental/Provider State The “Regulatory” State
Licensing
Licensing
Licensing
Water,
Energy,
Transport,
etc
Armed Forces
Judiciaries
Licensing
CivilRegistration
Armed Forces
Licensing
Judiciaries
CivilRegistration
Regulation of
water, energy, tra
nsport, etc
Redress
Mechanism, Transparency,
Access to Justice, Participation in
Decision Making, Allocation, etc
Reconfiguration
The state reconfigure itself into a “regulatory” state which, a move which have overarching impact on constitutional and administrative law

4. What happens in Indonesia
The Positive/Developmental/Provider State The Regulatory State Does Not Materialize
Licensing
Licensing
Licensing
Water,
Energy,
Transport, etc
Water,
Energy,
Transport,
etc
Armed Forces
Judiciaries
Licensing
CivilRegistration
Armed Forces
Licensing
Judiciaries
CivilRegistration
?
Non State Actors
ServiceDelivery
The Public
Privatization,
Contracting,
Outsourcing

5. Batam Case Study I
• 25 year concession contract awarded by the Batam Authority;
• Obligation to supply, finance, build water facilities and pay lease fee;
• Concession not accompanied by any regional by law or public law
regulation;
• In 2008, around 4500 houses which have already been
occupied, failed to be connected to the network. Private sector claims
for financial difficulties;
• Case lodged to Competition Commission (KPPU)

6. Batam Case Study II
Competition Commission Decision:
• discriminating business entities,
Problematic: are citizen in need of water “business entities”?
• abusing its dominant position and
Problematic: (condition for “abuse”: determining the conditions of trading with the
intention of preventing consumers from obtaining competitive goods and or
services, b. limiting markets and technology development; or c. bar other potential
business actors from entering the relevant market.). None of these are relevant for
water consumer.
• controlling the production and marketing of goods which results in monopolistic
practices.
Problematic: Water services are, by characteristics, a natural monopoly. This count
was upheld by Supreme Court. This is a misinterpration of the law.

7. Batam Case Study III
Important Lessons:
1. The contract was between Batam Authority and the Private
Sector, citizens are not directly a party. Thus, they do not have legal
standing;
2. Thus, they need to be described as “business entities” in order to claim
their right to water in order to make a claim in the competition
commission;
3. Although the claim is successful, water, here, is regarded as a pure
commodity by the Court and needs to be argued in accordance with
competition principles;
4. If the services remains to be delivered by Batam Authorities, they will be
liable under general administrative law and citizen will have a direct
claim.

8. Limits of the Public Service Law 1
• The Public Service Law enacted in 2009 is an achievement in the
reform era
• Article 13 of the Law: “An undertaker [of public service function] may
conclude cooperation in the form of delegation of parts of its public
service provision in with another entity …” Does not say anything
about “privatization”, but it is in fact a disguised privatization as
anything can be subjected to a delegation.

9. Limits of Public Service Law II: SanctionsBefore Delegation After Delegation
Licensing
Licensing
Licensing
Water,
Energy,
Transport, etc
Water,
Energy,
Transport,
etc
Armed Forces
Judiciaries
Licensing
CivilRegistration
Armed Forces
Licensing
Judiciaries
CivilRegistration
?
Non State Actors.
Sanctions to employees are
outside of government reach.
ServiceDelivery
The Public
Privatization,
Contracting,
Outsourcing
Sanctions for public officials: removal from
office, demotion, suspension from sallary raise
or termination

10. Limits of the Freedom of Information Law
Bodies FoI Applicable? Reason
Jakarta Provincial Government YES
PAM Jaya, State Owned Water
Utility (Contracting Party)
YES
Palyja
(Concessionare, Subsidiary of
SUEZ Env and Astra)
No FoI Law covers only branches of the executive,
legislative and judiciary; or those carrying out state
functions or those whose budget is derived from the
state budget.
Aetra (Concessionarire,
subsidiary of a shell company)
No FoI Law covers only branches of the executive,
legislative and judiciary; or those carrying out state
functions or those whose budget is derived from the
state budget.
Regulatory Body No Set-up under a contract (a regulation-by-contract), the
regulatory body is not a public body. They regard
themselves as either a private entity or NGO
Application of the FoI Law in Jakarta Water Concession

11. Two Explanations
Why is it that in the case of Indonesia’s delegation of essential
services, the state retreats and does not reconfigure itself?
First
Rejection of the “regulatory state” by judiciaries amidst “disguised
privatisation” by the executive.
According to the Court, the state has five functions: policy making
(beleid), administrative (bestuursdaad), managerial/share ownership
(beheersdaad), supervisory (toezichthoudensdaad) and regulation
(regelendaad). Share ownership has the first and foremost importance
in realizing “State Control” in vital public services as required by
Constitution. Thus, not only regulation, but also state ownership
through State Owned Enterprise. (But, what about corporatization?)

12. Two Explanations
Second
Good Governance advocated by civil societies have some success in
making state apparatus accountable. But Good Governance
reforms, through for example the Public Service Law or FoI Law does
not address delegation of public service to private sector
Armed Forces
Licensing
Judiciaries
CivilRegistration
?FoI Law
Public Service
Law,
Administrative Review
FoI Law and Public Service Law
are either inapplicable or
ineffective.
Administrative review no longer
applicable because it is now a
private law matter