A Decade of Development Aid
and the Role of Non-State Actors
in Indonesia
Authors Herryadi Adun, Jim Toar Matuli, Mickael B. Hoelman, Sugeng Bahagijo
Editors Mickael B. Hoelman, Sugeng Bahagijo
A Decade Of Development Aid and
The Role of Non-state Actors in Indonesia
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ii
A Decade Of Development Aid and
The Role of Non-state Actors in Indonesia
Authors
Herryadi Adun, Jim Toar Matuli
Mickael Bobby Hoelman, Sugeng Bahagijo
Editors
Mickael Bobby Hoelman, Sugeng Bahagijo
iii
National Library of Indonesia : Cataloguing in Publication (CiP)
A Decade of Development Aid and The Role of Non-State Actors
in Indonesia / Editors: Mickael B. Hoelman, Sugeng Bahagijo
--- Jakarta : Tifa Foundation, 2012
41 pages +viii ; 25,5x17,5 cm2
ISBN 978-602-7590-02-1
First Published, July 2012
Also available in Bahasa Version :
Perpustakaan Nasional: Katalog Dalam Terbitan (KDT)
Satu Dekade Bantuan Pembangunan dan
Peran Kelompok–kelompok Masyarakat Sipil Di Indonesia
Penyunting: Mickael B. Hoelman, Sugeng Bahagijo
— Jakarta : Yayasan Tifa, 2012, 41 halaman+xi ; 25,5x17,5 cm2
ISBN 978-602-7590-01-4
Published by : Tifa Foundation
Jln. Jaya Mandala II / 14E Menteng Dalam
Jakarta Selatan 12870 - INDONESIA
Telp. (021) 829-2776, Fax (021) 837-83648
e-mail : public@tifafoundation.org
Layout and cover design : Ayoenk
iv
Contents
Contents
Preface
Executive Summary
1
2
3
4
5
6
v
vi
vii
Introduction
1
Indonesia According to the Perspective of
Development Aid Agencies
7
Priority Issues Identified by Development
Aid Agencies
13
Development Aid Agency Strategies
19
Implications for Non-State Actors in Indonesia
29
Recommendations and Path Ahead
35
References
About the Authors and Editors
39
41
List of Tables and Illustrations
Table 1 Analysis Matrix of Development Agencies
Table 2 Strategy Matrix
Table 3 Two Strategy Options
9
25
32
Illustration 1 Focus Areas and Priority Issues of Development Agencies
Illustration 2 Funding Scale
Illustration 3 Method of Aid Distribution
16
20
21
v
Preface
T
he initiative to perform this review arose from a stocktaking study conducted from
April to June 2011 with the intention to inform the formulation process of Tifa
Foundation Strategy for 2011-2014. The stocktaking study was carried out through a
literature review mainly of strategic planning documents, program documents, as well as
project and evaluation outcomes from different development aid agencies. In addition, a
series of interviews were also conducted with the leaders and staff of development aid
agencies based in Jakarta.
The stocktaking study was built on the premise that new opportunities and possibilities are
open for development aid cooperation in Indonesia. Keeping this in mind, a stocktaking
study is therefore crucial to glean information on past and present efforts implemented by
various relevant parties. Furthermore, it is also aimed at gaining insight on how
development support and assistance works to engender more beneficial impact primarily
for the people. It is meant to draw valuable lessons that can systematically be applied as new
institutional strategies for the coming years.
During the course of time, the stocktaking study has developed into a more in-depth
assessment, mainly in relation to its findings on the role of non-state actors in Indonesia in
the years to come. In line with this, an advanced study was conducted from March to May
2012 through in-depth interviews with several leaders and staff representing development
aid agencies, especially bilateral development institutions. Every piece of the selected
literature is reexamined to ensure updated information of stocktaking study outcomes.
The authors are indebted to Imam Cahyono for his unstinting assistance in ensuring the
implementation of this study in the early stages. Sincere appreciation also to those who have
been willing to be interviewed and offer comments and feedback throughout the stocktaking
study for the enrichment of this publication.
Head of Research Team,
Michael Bobby Hoelman
vi
Executive Summary
F
or more than a decade since the “Reformasi” movement in Indonesia, international
development aid has flowed incessantly into the country under varied circumstances
and intentions. Unlike the situation that unfolded during the 1998 crisis and earlier, the
significance and amount of foreign development aid (ODA) on average was relatively
negligible compared to the national budget at less than 1 percent of Gross Domestic Product.
Nonetheless, development assistance has played a pivotal, catalytic role in initiating,
hastening and spurring reform and changes across public sectors and governance systems in
Indonesia.
The current key strategy of foreign development aid is to foster closer cooperation with the
government, rather than with civil society as non-state actors. International development
aid needs to conform to national priorities, or its workings must depend on cooperation with
the government, including therein the channeling of funds into state coffers. This approach
can be considered as the Governance Strategy.
This strategy has become one of the contributing factors that has instigated the gradual
process of marginalizing the role of non-state actors in Indonesia. An obvious indication is
waning support for civil society elements and organizations, primarily those dedicated to
human rights and democratization. Nevertheless, this marginalization process is not purely
influenced by external factors. It is also induced by internal processes with regard to a rightsbased relationship between the state and civil society, and even within the inner circle
pertaining to leadership and organizational structure.
It is now time for development aid strategy to shift to a Democratic Strategy. The core
assumption of a democratic strategy is that civil society is a movement in its own right with
its own dynamics that embraces diverse actors, initiatives and institutions, all of which
contribute to the creation of a good, democratic government and society based on the rule of
law that respects human rights.
------Keywords:
development aid; non-state actors; development cooperation; Indonesia; quality of
democracy; quality of governance.
vii
Introduction
I. Introduction
Introduction
Development assistance can be distinguished into three different forms: international
development aid from which funds are derived from foreign governments (Official
Development Assistance/ODA), humanitarian relief from which funds are drawn directly
from communities in advanced countries, and funds sourced from private foundations (e.g.
Ford Foundation, Bill & Melinda Gates Foundation).
Development aid originally emerged when the Marshall Plan economic assistance package
was introduced in 1947 by the United States to help the people and cities of Europe ravaged
by the Second World War. Development aid came not only in the form of monetary
assistance but also technical support and human resource expertise. In 1961, the Marshall
Plan office later transformed into the Organization for Economic Cooperation and
Development (OECD). Do not be mistaken; development aid does not only appear in the
form of grants, but also as loans that must be repaid.
In terms of political economy, development aid, specifically ODA, is a double-edged sword
that not only extends a helping hand seen as a manifestation of humanitarian solidarity, but
also embraces both political allies and rivals within the realm of international relations.
Over time, development aid is not only driven by humanitarian purposes and international
politics, but also oriented to economic development (market expansion) and the national
security of a region. Regardless of motive, these practices have been observed for more than
60 years.
Throughout that time period, development aid has earned both accolades and sparked
denunciations. Concerns and criticisms over development aid were thrown by proponents
and opponents, particularly in developed countries. One such criticism noteworthy of
consideration emerged in 2006 through a book entitled The White Man's Burden: Why the
West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good authored by former
World Bank executive and professor of economics at New York University, William Easterly.
The book puts forward evidence on reservations against the benefits and outcomes of
development aid.
Three years later another book was published titled Doing Good or Doing Better,
Development Policies in a Globalizing World that seeks to counterbalance and offer answers
to Easterly's concerns on development aid. The book was edited by Monique Kremer, Peter
Van Lieshout and Robert Went, and published by the Scientific Council for Government Policy
(WRR) in the Netherlands. It examines the paradigms and strategies of development aid
adopted by different continents in a span of six decades, including the constraints and
challenges, and the need for a new approach to better achieve development aid goals and
objectives.
In reality, development aid is inextricably linked to shifts in development policies. According
to Kremer (2009), this six decade of shifts in development policies can be examined from
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1
Introduction
different time intervals. From the 1950s to 1960s, the main approach was the financial push
paradigm. Based on this paradigm, external financial aid is considered as the key solution
for development. As a consequence, core issues confronting poor countries are viewed
simply as the result of funding constraints or lack of financial capital. Loan from the World
Bank, International Monetary Fund (IMF) and advanced countries was the main option for
infrastructure development, industrialization and educational advancement required by
the national economy and to build a prosperous society.
Over the course of time, the paradigm was eventually abandoned among others because of
the swelling debt burden of poor countries. Between the 1970s and 1980s, the financial push
paradigm was swept aside to usher in the market paradigm with slight involvement or
intervention from the state and later became the favored approach across continents.
Nevertheless, this approach also failed to generate satisfactory development results and in
many places has even led to economic turmoil and stagnation.
From the 1990s to 2000s, the development paradigm experienced a gradual shift. Failure of
the market paradigm was mainly attributed to the poor quality of governance in developing
and poor countries. In short, the paradigm presumes that the absence of an appropriate
governance structure to enforce policies renders development aid futile. Governance
becomes a key variable in predicting the effectiveness of development aid. Funding shortfall
or constricted market freedom is now no longer a key problem as weak legal systems,
unbridled corruption and an authoritarian government have become the main cause of
concern. In other words, if the development paradigm in the previous decade was
dominated more by market significance and bureaucratic pruning, the current approach has
shifted to the importance of state involvement particularly in combating corruption,
applying the principle of transparency and building democracy. Governance becomes
essential for both developing and poor countries in order to bolster institutional
weaknesses and move towards a democratic state.
Development Aid in Indonesia
In Indonesia, international development aid and philanthropy has made its entrance since
President Soekarno's administration. Private philanthropic organizations such as the Ford
Foundation and various bilateral institutions have made their presence felt by setting up
operations. Through such development aid, a considerable number of socio-economic
institutions have emerged in Indonesia. Furthermore, the many improvements and
innovations in different lines of business, government and civil society in Indonesia have
also been extensive due to the availability of technical and financial support from a wide
range of institutions, mainly bilateral agencies, private foundations and international bodies
that derive their funds from communities in developed countries.
Entering the era of the New Order, development aid became increasingly essential. The
transition from Soekarno's rule to the Soeharto regime has left behind an economy in ruins
primarily due to the Dutch military aggression and uprisings in a number of regions. Political
instability has led to economic decline, soaring inflation and budget deficit upsurge. The
newly established government on the other hand, is in dire need of development funds to
stabilize and rehabilitate the economy. To overcome this situation, early on in his
administration, Soeharto entered into a debt commitment with the United States and
rejoined the World Bank as a member state (Toussaint, 2004). In addition, Soeharto pushed
2
| A Decade of Development Aid and the Role of Non-State Actors in Indonesia
Introduction
for the establishment of the Intergovernmental Group on Indonesia or IGGI, an international
cooperation group chaired by the Netherlands to coordinate multilateral development aid to
Indonesia. IGGI's initial assistance was intended for the formulation of the first program of
the country's five-year development plan (REPELITA I).
The New Order administration also introduced the Development Trilogy concept of stability,
growth and equitable development. Alas, in reality, the New Order regime showed a twofaced personality. On one hand, it has treated the people with an iron fist in return for the
provision of low-cost basic necessities including housing and food, while on the other hand
to the international world, Soeharto projected a friendly countenance through promises of
investment protection against legal uncertainty and political instability. With regard to
development aid, Soeharto had provided more opportunities, even for the growth and
fragmentation of different forms of new development aid, either for economic reasons or
political imperatives.
For more than two decades, this two-faced approach continued simultaneously until it led to
contention in the early 1990s, particularly with the emergence of issues related to
democratization and the inability to uphold human rights. This was also a turning point for
development assistance as Soeharto halted Dutch aid in objection against the criticism
leveled by the Dutch Prime Minister also IGGI Chairman, Jan Pronk, concerning human rights
abuse in Dili, East Timor in 1991. However, it was purely Soeharto's political tactic. Instead of
rejecting international aid, Indonesia had continued to forge development aid cooperation
and requested the World Bank to act as coordinator for the international aid coordination
forum known as CGI (Consultative Group on Indonesia), a consortium of aid-giving (grants
and loans) countries and institutions for Indonesia established in 1992 to replace IGGI.
It is not surprising when non-governmental organizations and civil society actors in
Indonesia later hurled a fusillade of criticisms at CGI for its continued support for Soeharto
and not being critical of the New Order regime. The World Bank for example, had turned a
blind eye to the country's rampant corruption by justifying that such unscrupulous practices
are the internal affairs of Indonesia and has nothing to do with the World Bank. In a classified
report prior to Soeharto's downfall, the World Bank had estimated that at least 20% - 30% of
Indonesia's development budget has been misappropriated (World Bank, 1997). This
leakage was also evident in loans from the World Bank itself. The World Bank then also paid
attention to human rights violations in projects that it funds. An attitude that later changed
after Indonesia embarks on its “Reformasi” movement.
The combination of an authoritarian regime and development aid has contributed to the
consolidation of reform initiatives. Legal aid and human rights, the consumer and
environmental movement and, and other social movements are local initiatives and seeds
sown and cultivated as a result of an authoritarian political system. Spearheaded by middle
class representatives concerned over the situation and yearning for change, these
movements found firm support from development aid agencies. Both parties aspire for a
democratic Indonesia based on the rule of law that respects human rights.
Despite the restricted movement of civil society groups during this particular period due to
the imposition of financial limits and political control within the country, these repressive
measures have failed to curtail the barrage of protests among intellectuals and the urban
middle class particularly amid skyrocketing prices of basic goods following the economic
crisis in Asia. The student's movement and the demand for reform in 1998 had succeeded in
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3
Introduction
toppling Soeharto's authoritarian regime. The embryo for these movements was in part
implanted and nurtured through the initiatives of leading non-state actors.
Ironically, the aftermath of the demise of Soeharto's authoritarian regime has instead
resulted in deterioration of cooperation between development agencies and non-state
actors, mainly during the 2000s (post-reformasi). Humanitarian aid and private
foundations continue to play a significant role, while ODA support to civil society elements
tend to decline in line with the shift in attention from development agencies to restore
relations and collaborative ties with the government of Indonesia. In addition, Indonesia
is increasingly seen as a democratic state, demonstrating relatively swift economic
improvements.
During the post-reformasi era, civil society in Indonesia resembles a kite on a broken string,
confused and virtually without any direction, either in terms of funding or orientation of its
movement. The earlier tradition of having to confront an authoritarian regime is practically
no longer necessary. Political parties and representative bodies are now functioning and
beginning to exert formidable influence in shaping development policies. It is also within
this era that the relevance of non-state actors is being seriously questioned.
Furthermore, the revamp and restructuring of the earlier system (New Order) to a new
system (Reform) has failed to deliver the expected democratic dividends, except for freedom
of the press, freedom of speech and freedom of association. These outcomes indeed deserve
their fair share of appreciation but still insufficient to promote a more robust and
democratic role for civil society. For certain dimensions, no significant progress is evident in
the relationship between the state and civil society. Although non-state actors are no longer
being controlled, funding support from development agencies has recently become
increasingly restricted. The government of Indonesia has yet to initiate domestic financing
policies aimed at expanding the role of non-state actors. Political patronage (where political
elites are selective in allocating resources) and statist policies (the state dictates and owns
all) are still the norm. Cooperation and coalition among civil society elements meanwhile
appears to be tenuous as they compete with each other, thus the inability to deliver more
extensive impact of change (Antlov et. al., 2008). Solidarity and concern over issues related
to deficits, disparities and major weaknesses of political and economic systems have
previously been the collective concern of civil society elements, but have lately failed to bring
about a healthy exchange of reform actions and cooperation initiatives.
This paper shall delve into the issue of development assistance and non-state actors in
Indonesia. Development aid agencies under analysis cover the following: (i) multilateral
institutions, such as the World Bank, United Nations Development Programme (UNDP),
Asian Development Bank (ADB), and the European Union; (ii) bilateral institutions, such as
USAID, Ausaid, CIDA, DFID, GTZ, etc.; (iii) international non-governmental organizations
and/or grant-making institutions, such as Hivos, Oxfam, The Asia Foundation, etc.; (iv)
international private philanthropic organizations, such as Ford Foundation, etc.; and (v)
national grant-making institutions, such as Kemitraan, KEHATI, Tifa Foundation, etc.. Nonstate actors in Indonesia cover non-governmental organizations, community-based
organizations, universities, the mass media and business groups. This study places specific
emphasis on non-governmental organizations.
The main issue of this study concerns on how the pattern of development aid in the past ten
years has affected non-state actors in Indonesia. Will reform instigate stagnation or instead
4
| A Decade of Development Aid and the Role of Non-State Actors in Indonesia
TIFA Foundation, July 2012
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Introduction
prompt resurgence? Development aid pattern in this context not only refers to funding
trend, but also initiatives and approaches, as well as operational strategies and tendencies.
Based on these different aspects, a conclusion shall be drawn on implications toward the
existence and role of non-state actors in Indonesia.
5
Indonesia according
to the Perspective of
Development Aid Agencies
II. Indonesia according to the Perspective
of Development Aid Agencies
The Perspective
In a span of more than ten years since Indonesia shifted from an authoritarian political
regime to a democratic system, the rest of the world has also experienced considerable
changes. Among others include the economic crisis in 2008 that crippled the world's
economic powers, mainly the United States and European countries; political turbulence
and demands for democratization in Egypt and North African countries; and a string of
natural disasters across the globe including Japan and the United States.
After thirteen post-reform years or following the 1998 crisis, Indonesia also went through
numerous changes. These transformations, as noted and analyzed by various development
agencies, not only cover the political system, but also economic and governance systems.
Several key characteristics identified by these development aid institutions can be
summarized into the following three fundamental changes:
First, Indonesia is classified as a lower middle-income country at 3,000 dollars per capita
each year (2010). As part of the middle-income group, Indonesia now ranks among other
countries with a per capita income of 5,000 dollars, such as Malaysia, Brazil and South Africa.
Due to its economic growth and the size of its economic cake (GDP), Indonesia has joined the
G20 membership that consists of countries ranked among the twenty largest economies
worldwide. Being part of G20 means that Indonesia's economic cake is proportionate to that
of Sweden, Belgium and other members. Aside from membership at the International
Monetary Fund (IMF), World Bank and Asian Development Bank (ADB), Indonesia is now
also an observer at OECD, a club for the world's rich countries. The OECD office periodically
publishes a report on Indonesia. This implies that Indonesia shall soon be considered as a
driving force for global economic growth on par with the United States and Europe and
countries under BRICS (Brazil, Russia, India, China and South Africa).
Second, Indonesia has developed into the largest democratic system trailing behind India
and the United States. It is also a Moslem-majority nation that applies democratic values.
Democracy is implemented through a multiparty system whereby three fairly democratic
general elections have been held. Indonesia is now a decentralized state that confers
considerable power and resources to cities and districts. With the exception of foreign
politics, defense, security, judiciary, monetary and fiscal, and religion, Indonesia is currently
more in the control of sub-national leaders rather than those at the capital city of Jakarta.
Third, despite the potential for positive and encouraging changes, Indonesia as viewed by
development aid agencies remains fettered by numerous impediments. At least seven issues
hamper progress in Indonesia today and in the future: (i) poverty and unemployment; (ii)
unsustainable economic growth; (iii) government's lack of effectiveness and capacity,
including constraints in decentralization; (iv)widespread and systemic corruption; (v) lack
of respect for human rights and democratic values; (vi) climate change and environmental
degradation; and (vii) unequal treatment between men and women (gender).
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7
The Perspective
Another issue that appears to have become a characteristic of Indonesia is its alarming
poverty rate. Indonesia still needs to seriously deal with the major challenge of alleviating
poverty. As many as 49 percent of the population still subsists below the daily income of 2
dollars. Based on 2007 government data on the country's poverty line, at least 17 percent of
the population lives below the poverty line. Poverty rates across regions also vary. For
example, on the island of Java the poverty rate is lower (5 percent) than figures in Papua and
West Papua (40 percent).
Despite an increasingly buoyant economic growth, it is not optimal enough to absorb
manpower (jobless growth). From a workforce of 20 million young-aged entrants into the
labor market, only 3 million are absorbed by the formal sector. The employment rate
normally ranges between 9 to 10 percent. A multilateral development agency for example
asserted that although Indonesia has made significant progress in maintaining its macroeconomic performance, it is still viewed to be a 'glass half full', mainly because Indonesia has
yet to translate such achievements into improvements for the well-being of the people.
Indonesia faces two scenarios for the future: Indonesia can either become a 'dynamic middle
class country' or a 'country in an uncertain situation with only half of its glass full’.
In the economic sector, Indonesia needs to ensure sustainable economic growth in order to
absorb a workforce of dozens of millions. In view of this, efforts to improve the investment
climate become a core concern. Several key issues related to the investment climate are as
follows: (i) complicated investment procedure at the central and local levels;(ii) weak law
enforcement; (iii) poor governance, specifically with regard to customs and excise and
taxation that have not been able to accumulate income for the government, and fair
treatment of investors; and (iv) unattractive labor market conditions.
Another prominent weakness directly affecting the daily existence of the people is
government effectiveness influenced either by its lack of capacity or weak accountability of
civil servants. Inadequate capacity is evident in many regions, particularly at the local
administration level. With regard to the accountability of government employees or
bureaucrats, despite the upbeat momentum for curbing and eradicating corruption through
the presence of the Corruption Eradication Commission (KPK) and the Anti-Corruption
Court (TIPIKOR), it is still very much hampered by weak law enforcement due to resistance
from law enforcement agencies themselves, particularly the police force, attorney's office,
judiciary and Supreme Court. The main weakness of the governance system lies in the lack of
coordination among different state bodies. This has led to delayed and even ineffective
drafting and implementation of policies.
Although decentralization has brought the decision-making process closer to the people,
during the course of time it also revealed technical and administrative flaws at the local
government level. A less than effective and democratic local government in public service
delivery and failure of the legal sector to root endemic corruption out and even inciting
public distrust has become a serious challenge for the consolidation of the democratic and
governance processes. Various threats of conflict in regions across Indonesia as well as
resistance from political elites and bureaucrats toward reform measures have made the
challenge even heavier.
Furthermore, corruption has also become a major obstacle in promoting economic policies
favorable to the poor, and that improves the investment climate and legal system. Corruption
profoundly impinges on Indonesia's effort to reform the police force and the Indonesian
8
| A Decade of Development Aid and the Role of Non-State Actors in Indonesia
Armed Forces (TNI), and natural resource management. Efforts to eradicate corruption are
hindered by a patronage system deeply entrenched for 50 years in the country's political
mechanism.
Several bilateral development agencies have also noticed drawbacks in efforts to uphold
human rights. Impunity for past human rights violations remains to be a serious issue as
judicial bodies and law enforcement agencies are institutionally weak.
The Perspective
Climate change has seized the attention of development agencies, chiefly multilateral
institutions such as the United Nations, as it can impede Indonesia's ability to meet its MDG
(Millennium Development Goal) targets. Indonesia is particularly vulnerable to rising sea
levels and flooding. Climate and seasonal changes can also destroy the production process of
small farmers and fishermen. In addition, the troubling rate of forest conversion and
environmental destruction has turned Indonesia into the third largest contributor of
greenhouse gas emissions.
Another major problem concerns unequal treatment between men and women (gender).
Women's access to health and education services has become a persistent problem. The
maternal mortality rate in Indonesia is still alarmingly high. Furthermore, women are under
represented in various public offices. Although the government has proclaimed its
commitment to deal with these pressing issues, more tangible and genuine efforts are crucial
specifically at the implementation level. Failure to do so will cause women to increasingly
bear the brunt as the result of discrimination, power abuse and corruption. Coupled with
weak democratic institutions, democratic consolidation requires more extensive efforts to
promote participation. Although the reform movement has paved the way for decentralized
governance, general elections and legislative improvements, many state policies and reform
programs have yet to completely address deep-seated problems such as poverty and
discrimination endured by marginalized social groups.
Table 1. Analysis Matrix of Development Agencies
INSTITUTION
ANALYSIS WITHIN THE INDONESIAN CONTEXT
Multilateral
development aid
agencies
? Successful political transition in modern history
? Emerges as a lower middle income country with the fastest HDI
improvement
? High poverty rates as well as unbalanced and inequitable growth or has
failed to ensure inclusive and sustainable growth
? Institutional capacity and accountability is the main obstacle.
Decentralization is not accompanied with adequate local government
capacity while corruption remains to be a serious issue.
? Impunity for past human rights abusers
? Climate change is a major problem as it profoundly affects the agricultural
and fisheries sector, and others
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9
The Perspective
Table 1. Analysis Matrix of Development Agencies ( cont. )
INSTITUTION
ANALYSIS WITHIN THE INDONESIAN CONTEXT
International
bilateral
development
agencies
? Political shifts and decentralization
? Poverty still a major challenge for Indonesia
? Democracy and economic growth has yet to result in improvements in
bilateral prosperity (jobless growth)
? Governance and corruption is a serious problem. RAN–PK (Rencana Aksi
?
?
?
?
Nasional Pemberantasan Korupsi or National Action Plan for Corruption
Eradication) has been drawn up but has not been effectively implemented
Investment shortfall in the national budget
Weaknesses of the local government in the delivery of public services
Gender inequality
Failure of the legal sector
International nongovernmental
organizations and
/or grant-making
institutions
? Decentralization still marked by weak local government capacity
? Negligible women's participation in the political as well as socio-
International
private
philanthropic
organizations
? Indonesia has succeeded in going through its transition from a military
economic realm
? Deep-seated gender inequality
? Environmental destruction and disaster mitigation
government to a democratic state
? State policies have not been reformed; discrimination and exclusion is still
faced by marginalized groups
? Support for marginalized groups is necessary in order to shape public
policies
National grantmaking agencies
? Democracy has yet to promote diversity and equality for citizens
? Impunity is still a major obstacle and challenge in post-reform Indonesia
? Decentralization remains mired in unscrupulous practices such as
corruption and lack of citizens' participation in policy-making
? Discrimination is still prevalent among minority groups, women, children
and the disabled
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| A Decade of Development Aid and the Role of Non-State Actors in Indonesia
The Perspective
TIFA Foundation, July 2012
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11
Priority Issues
Identified by Development
Aid Agencies
III. Priority Issues Identified by
Development Aid Agencies
Priority Issues
For three decades prior to the “Reformasi” movement, data from the Development
Assistance Committee (DAC) of OECD shows that Indonesia is consistently ranked first
(1999/ 2000) and second (1989/1990; 2009/ 2010) among ODA recipient countries. If
Indonesia has now become a middle-income country with an annual national budget
(APBN) exceeding Rp1,000 trillion and a G20 member country, why does aid from
development agencies remain necessary? To rephrase the question: if Indonesia is no
longer troubled by the scarcity or absence of funding, what are the reasons for Indonesia's
continued receipt of development aid?
According to Jonathan Gleenie (2011), a middle-class country such as Indonesia still
deserves to receive external development aid (ODA) because of the following reasons: (a)
funding facilitates the transition process of low-income countries (LICs) into becoming
middle-class countries through a gradual process and not in an abrupt manner; (b) aid
functions as a catalyst for promoting and/or consolidating ongoing or previous
improvements; and (c) the value of aid lies not in its amount or size, but in its role in creating
incentives (positive) for improvements or change. In light of this, according to development
agencies, aid is prioritized for efforts aimed at building a democratic, stable and more
prosperous Indonesia based on the rule of law and human rights.
Identifying policy and institutional issues that development agencies give priority to is the
marriage of two key aspects: the interest of Indonesia and development agencies. In other
words, Indonesia in the eyes of development agencies is considered as: (a) a client and
member that must and need to be served (this perspective is particularly held by the World
Bank, UNDP and ADB); and (b) a friendly country or partner state that must be respected as
appropriate for a mutually beneficial relationship within the international political order
and interaction, and also with regard to economic and trade ties.
As such, development aid agencies now generally make reference to the Indonesian
government's medium-term development plan (RPJM). In addition, they draw from
different priorities proposed by experts, private groups and citizens through consultation,
assessment and other procedures. Determining focus areas and priority issues by
development agencies is also guided by or adjusted to various international arrangements
on aid effectiveness that govern on cooperative ties between the giver and receiver of aid.
Several of these international policies include the Paris Declaration on Aid Effectiveness
(2005) and the Jakarta Commitment (2009).
Multilateral development agencies place emphasis on economic growth, although fully
aware of other issues that influence the outcomes of economic progress. One such issue
concerns the institutional dimension. The World Bank for example focuses its attention on
this dimension through five core activities and two cross-cutting programs. The five core
activities are: (i) development of the private sector; (ii) infrastructure; (iii) community
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development and social protection; (iv) education; and (v) environment/disaster
mitigation. The two cross-cutting activities are: (a) system and institutional strengthening
of the central government; and (b) system and institutional strengthening of the local
government.
Priority Issues
The United Nations on the other hand, assumes a powerful position as a neutral
development agency that concentrates on four key aspects in Indonesia: (i) MDG
achievement and poverty reduction; (ii) the environment, energy and climate change; (iii)
democratic governance; and (iv) crisis prevention and recovery, including disaster
mitigation. Other multilateral development agencies focus on certain main sectors, such as:
(i) education, including the quality of primary, secondary and higher education; (ii) trade
and investment, including the investment climate; (iii) law enforcement and justice,
including corruption eradication, legal reform and implementation of the National Action
Plan on Human Rights; and (iv) cross-sectoral issues, including the environment,
governance and human rights, conflict prevention, social dimension of globalization and
gender justice.
On the other hand, bilateral international development agencies typically place priority in
supporting democratic consolidation and economic development. A bilateral institution for
example has identified five priority areas for support in the subsequent period for the
primary purpose of reducing poverty and global environmental threats. The following five
areas of concern were also selected by taking into account the bilateral relations of both
countries concerned: (i) education; (ii) natural resource management; (iii) democratic
governance; (iv) health; and (v) employment opportunities. Other international bilateral
development agencies award greater attention to what is known as the four pillars of
development aid: (i) economic development; (ii) pro-people investment; (iii) democracy,
justice and good governance; and (iv) peace and security.
Slightly different from multilateral and bilateral development agencies, certain private
philanthropic organizations normally focus on core issues that serve the overarching
purpose of advancing social justice. These priority issues include: planning and budgeting;
reproductive rights and women's participation; social protection for the poor; media that
serves public interest and active citizenship; and sustainable natural resource management.
Several other private charitable institutions concentrate on efforts to promote good
governance, democracy, the upholding of human rights, law enforcement and the
development of a market economy. Such support is normally provided through the capacity
building of key actors such as state officials (including local leaders), politicians (members of
parliament) and civil society. Apart from democracy, attention and support also highlights
on dealing with environmental issues and law enforcement among others through
cooperation for institutional strengthening.
International non governmental organizations and national grant-making institutions are
concerned over priority issues similar to those of private philanthropic agencies that
essentially seek to promote a better Indonesia in terms of the quality of governance and
democracy rather than on the democratic procedure. These institutions see the need to focus
improvements on the following aspects: (a) an increasingly citizen-oriented democracy and
governance in order to curb corruption in the public sector to the maximum extent possible
and bring an immediate end to the impunity of human rights abusers; (b) ensure
participatory governance and decentralization by involving citizens and improving public
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| A Decade of Development Aid and the Role of Non-State Actors in Indonesia
services; (c) urge the state to firmly enforce the law in a more vigorous manner to protect
diversity and social cohesion in Indonesia; and (d) strengthen the government and citizens
in preventing environmental destruction and natural resource depletion, including the
conservation of forests and clean water sources .
From the foregoing explanation it is evident that the solution and focus of attention for
various institutions differ with distinct characteristics. Thematically, bilateral and
multilateral development agencies as well as international and national grant-making
organizations and private philanthropic entities generally work on the following priority
issues or program focuses :
Priority Issues
First, on how Indonesia as a middle-income country can sustain and boost its economic
growth to become more sustainable and inclusive. Sustainable refers to: (a) strong
competitiveness; (b) healthy investment climate; and (c) adequate investment for
infrastructure. Inclusive means an economic growth that can become the engine for
reducing poverty and absorbing manpower.
Second, on how Indonesia's governance, legal and political systems can gain integrity, be
free from corruption and fairer for all. The government's lack of capacity and high corruption
rates slow down efforts to push Indonesia forward and detrimental to investors and the
people of Indonesia. Unfavorable investment climate and corruptible courts are among the
concerns of almost all development aid agencies.
Third, on how Indonesia's policies and institutions can be further strengthened to overcome
environmental issues, climate change and natural disasters. A well-conserved environment
in Indonesia offers tremendous benefit and impact for the global ecosystem. Such
improvements are crucial given the fact that Indonesia is the third largest contributor of
greenhouse gas emissions in the world.
Fourth, on how Indonesia can bolster its social investment for citizens (investing in people),
both as highly competitive economic investment and to generate economic benefits and
outcomes for improving welfare and alleviating poverty. Indonesia's investment in
education, health and social protection has become an emerging issue that has drawn the
attention of multilateral and bilateral development agencies and private charitable
organizations.
A priority issue that development aid institutions have yet to address more seriously is
discrimination. Only a handful of private philanthropic organizations have definitively
incorporated the issue of pluralism and citizenship into their focus area or priority issue.
This situation has been highly contextual for Indonesia in the past five years where religious
fundamentalism has further intensified, culturally and politically. Although religious
fundamentalism is not politically threatening, within the cultural context and inter-citizen
relationships, pluralism shall greatly influence the cohesiveness of the nation in years to
come. Lack of government capacity and accountability play a part in exacerbating the
situation. Anti-pluralism and diminishing civic awareness appears to be a tangible trend
that can pose a threat to Indonesia's democracy and stability.
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Multilateral
development agencies
International bilateral
development agencies
International
non- govt. organizations
and/or grant-making agencies
International private
philanthropic agencies
Priority Issues
National grant-making
agencies
Economic
Growth
Governance, Legal System
and Democracy
Social Investment
and Policies
Climate Change and
the Environment
Illustration 1. Focus Areas and Priority Issues of Development Agencies
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| A Decade of Development Aid and the Role of Non-State Actors in Indonesia
Priority Issues
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Development Aid Agency
Strategies
IV. Development Aid Agency Strategies
What changes do development aid agencies envision for Indonesia in order to become a
more democratic and accountable state based on the rule of law and human rights? How do
they implement such strategies and how much of their resources are invested? These two
elements shall be examined in this section. Explanations on these strategies shall revolve
around a particular priority issue – democratic governance. This emphasis is purposefully
selected as it has virtually become the focus or priority of all development aid agencies, be
they multilateral, bilateral, international or national. Nearly all of these entities for example
mention corruption as an impediment while law enforcement is considered as a challenge
for Indonesia.
Furthermore, several new studies on the trend and coordination of donor institutions in
Indonesia also revealed that these agencies focus more on governance programs, mainly
bureaucratic or personnel reform and anti-corruption (see Edi and Setianingtyas, 2007).
Strategies
The strategies of multilateral, bilateral, international and national development institutions
and private charitable organizations may be expressed differently with diverse
formulations, but they can best be represented by the following phrase embodied in a
document from a multilateral development agency: “that Indonesia's problem lies not in the
lack of funding, but rather on how institutions primarily in the public sector can work
towards harnessing these resources and turning them into concrete improvements that
affect the people's lives, such as with regard to public service delivery.”
For instance, the United Nations Development Programme has outlined governance into five
core areas: (i) integrity of political institutions, bureaucracy and the law; (ii) accountability
and representation of political institutions; (iii) public engagement in policy-making in a
transparent and inclusive manner; (iv) legal empowerment to protect ownership rights and
deal with power abuse; and (v) public service standard and bureaucratic reform. The World
Bank on the other hand, has set forth two core issues: (i) institutional capacity; and (ii)
institutional accountability for bureaucratic, legal and political bodies.
Although institutional change or improvement is the objective, this does not mean that
transformations are insubstantial. The process involves three levels of targeted change:
policy change (first order of change), institutional change (second order of change) and
operational change (third order of change). In other words, the intended change should
essentially encompass three types of innovation: product innovation, process innovation
and mindset innovation.
From various strategic documents and interviews with staff members implementing
programs funded by development agencies, several characteristics on the direction of
change can be encapsulated into the expression “the second generation of reform” or
“quality of democracy” in which the elements consist of the following :
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First, on how Indonesia as a middle-income country can sustain and boost its economic
growth to become more sustainable and inclusive. Sustainable refers to: (a) strong
competitiveness; (b) healthy investment climate; and (c) adequate investment for
infrastructure. Inclusive means an economic growth that can become the engine for
reducing poverty and absorbing manpower.
Second, changes in governance are mainly concerned on reform in various bureaucratic,
legal and political institutions, including the Supreme Court, attorney's office, parliament,
state ministries, local governments and DPRD (Regional House of Representatives).
Third, although multilateral and bilateral development institutions often combine reform
measures from the supply-side and demand-side by recognizing the role of civil society and
the mass media, there is a strong tendency for supply-side reform by working with
government partners for the purpose of ensuring that government, legal and political
institutions are well-functioning entities that work in an increasingly responsible and
responsive manner with unquestionable integrity.
Strategies
Fourth, changes cover efforts to strengthen, improve and empower government, legal and
political institutions through different methods and programs, including legislative,
institutional and operational changes. With regard to partners as the agents of change, most
development agency strategies revolve around government, legal and political institutions.
Only a few multilateral and bilateral development agencies embrace civil society as their
principal partners.
To achieve these change objectives, funding clearly becomes a fundamental factor. In terms
of funding size, various development aid agencies can be classified into three types: large,
medium and small. Multilateral and bilateral development institutions normally operate
within the large-to-medium scale funding of between USD 50 million to more than USD 200
million for a one-year period. International non-governmental organizations and/or grantmaking organizations and private philanthropic institutions on the other hand can be
categorized as medium scale entities with funding size ranging from USD 50 million
annually. Small-scale funding amounts to less than USD 10 million per year.
Multilateral
Development
Aid Agencies
International
Bilateral
Development Aid
Agencies
International
Non-governmental
Organizations and/or
Grant-making Agencies
International
Private
Philanthropic
Agencies
Small Scale
( < US$ 10 Million )
Medium Scale
( < US$ 50 Million )
National
Grant-making
Agencies
Illustration 2. Funding Scale
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| A Decade of Development Aid and the Role of Non-State Actors in Indonesia
Large Scale
( > US$ 50 Million )
Concerning implementation, programs conducted by development aid agencies can be
grouped into several models: (a) the provision of funding to support jointly agreed projects
under the management of state bodies as project or program implementing partner; (b) in
the form of policy advice based on study outcomes in accordance to the problem or issue at
hand; (c) through technical support, such as the placement of experts and consultants
through different recruitment procedures; and (d) in the form of grant funds offered to
governmental and non-governmental bodies within a specified period for the
implementation of a given activity or series of activities agreed in advance.
In terms of the technicalities of aid distribution, bilateral development agencies mainly
adopt the following methods. First, aid is channeled to multilateral agencies such as UNDP,
the World Bank and ADB, either through a trust fund or sector-wide program (SWP).
Agencies such as DSF (Decentralization Support Facility) and MTF (Multilateral Trust Fund
for relief assistance in response to the tsunami disaster in Aceh) are examples of a
development trust fund consortium supported by various bilateral development agencies,
including DFID and the Dutch Embassy. An SWP example is support for the education sector
through the Ministry of National Education to meet educational targets, such as support for
the BOS (School Operational Aid) project.
Strategies
Second, funding support is channeled to the state budget through project implementing
units under a particular state ministry or local state office. This approach is often known as
Direct Budget Support (DBS) lately seen as an effective way to enhance a sense of ownership
and ensure harmonization consistent with the principles of aid effectiveness (Action Aid,
2008).
Third, funding is funneled through private development contractors such as Research
Triangle Institute(RTI), Chemonics, Cowater International (Canada) and similar
institutions. Fourth, through other methods, such as direct grant giving to nongovernmental organizations, community organizations, universities and research institutes
as practiced by private philanthropic institutions, such as the Ford Foundation.
Open
Call for Proposal
Semi Open
Pro-Active
Tender
Tender and
Call for Proposal
Multilateral
development aid
agencies
International
bilateral development
agencies
International
non-governmental
organizations and/or
grant-making agencies
International
private philanthropic
agencies
National
grant-making
agencies
Illustration 3. Method of Aid Distribution
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At present, the Australian Agency for International Development can be considered as the
largest bilateral development agency in Indonesia with a funding volume of up to AUD 1
billion. From this amount, a certain portion of funding support is channeled through
Australian private development contractors. Australia however is currently planning to
converge the management of funding support through Indonesia Strategic Partnership with
extremely broad discretion. This form of strategic partnership is a “temporary solution” for
expanding support and organizing Australian development agencies in the future.
It appears that Australia's line of approach shall shortly be emulated by the United States
Agency for International Development. The agency is in the process of drawing up a new
strategic blueprint that seems to follow the trail of the U.S.-Indonesia Strategic Partnership
mechanism. Apart from internal sources of funding, U.S. bilateral aid agencies also pool
funds from other U.S. departments to be drawn together and channeled through the United
States Agency for International Development (USAID). The awarding of financial aid is
normally ensured through open tenders and implementation oriented, for example, by
facilitating the establishment of one-stop service centers for permits and licenses in 10
districts/cities who have expressed interest in project support. Another project assists KPK
(Corruption Eradication Commission) in implementing a baseline perception survey on
public satisfaction with services rendered by local governments.
Strategies
European bilateral aid agencies on the other hand mainly operate on a funding range of EUR
400-500 million through the Strategy Paper that extends over four to five years. The lion's
share of funds (up to 80%) is earmarked for government bodies, such as Bappenas (National
Development Planning Agency), and UNDP (United Nations Development Programme).
Roughly 10-15% from total funding is funneled to international development agencies
largely from European Union member states (e.g. Oxfam GB). Residual funds are distributed
as grants to civil society groups in Indonesia. Normally ranging between EUR 100 to EUR 500
thousand, these remaining funds are directed at predetermined thematic projects that in
general require six to eight months to finalize the administrative process. This lengthy
administrative procedure often hamper civil society groups in Indonesia from securing
funding support, in addition to a grant mechanism that requires co-sharing of funding at 515% of total project value. As the entire grant decision-making process is centralized at the
EU headquarters in Brussels, country representatives mainly function as compliance offices.
Slightly distinct from bilateral development agencies, international organizations
commonly operate as the administrator of international grants with small- to medium-scale
funding. An international non-governmental organizations in Europe, for instance, works
with a funding range of EUR 3-4 million annually. Despite such limited scale, the agency
claims to have an advantage with its outstanding and tenacious human resource. Another
strong suit is the agency's highly efficient and well-organized database archiving system.
The manner in which international institutions work and manage funds is similar to that of
non-governmental organizations, even though they operate within a regional and global
scope. These institutions may not have a specific or periodic call for proposals mechanism in
place, but they are fairly open to initiatives from civil society groups. They place priority on
civil society groups as well as small- to medium-sized organizations for funding support that
varies from IDR 100 to 300 million each year. International development agencies also
adopt a proactive partnership grant-making mechanism despite a selection process that
prioritizes community-based civil society partnerships.
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| A Decade of Development Aid and the Role of Non-State Actors in Indonesia
These international non-governmental institutions also ensure that their programs focus on
reform measures from the demand-side rather than the supply-side, although certain
funding support is often directed at quasi-governmental bodies such as the National
Commission on Violence against Women. The identification of focus areas for funding
support is normally not based on a given intervention strategy, but driven more by the
tradition of institutional networks of the same country origin. Several focus areas shall
continue to be the priority of institutions, such as support for the capacity building of nonstate actors. They also generally believe that capacity building is the fastest way for the
transfer of knowledge.
The emergence of national grant-making institutions is indeed a noteworthy development
in itself. These agencies operate independently as national entities to support the
achievement of development goals. Examples are national grantors concerned with
environmental issues, governance reform and strengthening of civic democracy. They
typically operate on a modest funding scale of between IDR 40 and 50 billion each year for
supporting civil society elements in Indonesia. These entities have the advantage of being
adept in mobilizing funding sources.
Strategies
One of these organizations for example is entrusted with the authority to manage
endowment funds derived from bilateral development agencies. These endowment funds
subsequently evolve into mutual funds on offer to the business world and the public at large
in order to expand the funding scale until a decade onwards. Apart from the development of
endowment funds, the mobilization of funding sources is also initiated through support for
investment-based programs, such as early childhood education. An intervention like this
builds a broad constituency expected to be part of the development of future funding
sources. On one hand, this experience shows the potency of consistently creating alternative
funding opportunities from various institutional interventions. The main asset is creativity.
On the other hand, grant distribution is instead carried out on a relatively small scale that
simultaneously shows the priority placed on raising funds instead of distributing them.
Nonetheless, not all initiatives from national grant-making agencies consistently end in
success stories. A recent case involving a national grantor has given an invaluable lesson on
how declining support for non-state actors has pushed the agency to function as a recipient
rather than a grant-giving entity. This institution was originally designed to become a grantmaking agency for civil society in which the main funding source comes from a bilateral
development institution. Diminishing support on one hand is seen as flagging commitment
from the bilateral development agency that has been a partner for more than a decade. On
the other hand, this declining support is also because the national grant-making institution
is assessed to have not developed as expected. This case illustrates the absence of any
agreement on measurement or benchmark that gauges on how a national development aid
agency should ideally grow and develop. For example, the extent to which cooperative
support has strengthened the capacity of organizational staff or increased the likelihood of
continuity in the coming years.
From the foregoing discussion, several emerging trends in the past five to ten years should be
noted. First, the dominant role of various private contractors increasingly taking over the
function of international non-governmental institutions. These private development
contractors are now commonly appointed as program implementing partners for
international development agencies, such as those from the United States, Australia and
Canada. Agencies such as Research Triangle Institute(RTI), Chemonics, Management
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Systems International (MSI) Inc., and similar organizations are indeed not a new
phenomenon, but with respect to large-scale project execution, they have lately become one
of the key actors. Funds drawn from bilateral development agencies are channeled through
a tender mechanism where they normally emerge as winners. Projects won are not only
restricted to governance-related projects, but also encompass projects associated with law
enforcement, such as the institutional strengthening of the Supreme Court and Attorney
General's Office and those related to the democratic process, including parliamentary
institutional capacity building.
Second, another growing trend sees specific efforts to strengthen coordination among
donor agencies and harmonization among development institutions into one to two priority
issues, such as through support facilities that are essentially a consortium of bilateral
development entities that seek to improve certain development agendas, including
decentralization, community empowerment and poverty reduction. Bilateral development
agencies would customarily deposit their funds and subsequently appoint an agency to act
as their custodian. An example is DSF (Decentralization Support Facility) under the
coordination of the World Bank for managing funds obtained from different sources.
Nevertheless, a recent study on DSF reveals that a coordination and harmonization
approach is not always effective due to barriers within the bureaucratic process of the
development agencies themselves and obstacles arising from government bureaucracy
(Winters, 2012).
Strategies
This similarly applies to PSF (PNPM Support Facility), again coordinated by the World Bank,
for supporting the expansion of PNPM (Program Nasional Pemberdayaan Masyarakat or
National Community Empowerment Program) Mandiri. In practice, the World Bank is in the
middle of managing trust funds originating from bilateral development agencies. An
approach and strategy like this has impinged on funding sources for international and
national development entities. Grants shall instead be funneled mainly to institutions such
as the World Bank even though such funds are sourced from governments where
international development agencies originate from.
Third, from their geographic approach or regional coverage, nearly all development aid
agencies operate across the entire regions of Indonesia and even at the national level.
Certain agencies however, distinctly award attention to a particular geographical and
operating area. The Canadian International Development Agency (CIDA) for instance
centralizes almost all of its development support in Sulawesi. The Australian Agency for
International Development (Ausaid) meanwhile specifically places priority on the eastern
part of Indonesia, such as NTT (East Nusa Tenggara), NTB (West Nusa Tenggara), Sulawesi,
Maluku and Papua.
Fourth, from the perspective of democracy, human rights and civil society, another
important point to note is the decreasing amount of support for civil society elements
committed to the upholding of democracy and human rights. An Edward Aspinal study in
2010 shows that the amount of funds channeled for the democracy and human rights sector
and support of non-state actors in Indonesia has gradually spiraled downwards. As an
illustration, nearly 80% of aid funds from European multilateral development agencies are
earmarked for state bodies with Bappenas as the principal recipient. Only five percent from
the remaining funds is allocated for civil society groups, either through grants managed by
international non-governmental institutions or directly fed to non-state actors in Indonesia.
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| A Decade of Development Aid and the Role of Non-State Actors in Indonesia
Table 2. Strategy Matrix
PARTNER
APPROACH
Multilateral
Development
Aid Agencies
G
International
Bilateral
Development
Aid Agencies
G
C
R
R
International
Non-governmental
Institutions and/or
grant-making agencies
G
C
R
R
International
Private
Philanthropic
Agencies
G
C
R
R
National
Grant-making
Agencies
G
C
G
C
TIME
SCALE
DISTRIBUTION
R
Government, legal
and political institutions
Civil Society Org.
R
R
Reform from Above
Long-Term / more than 3 yrs
Large-scale
R
Reform from Below
Medium-Term / 3 Tahun
Medium-scale
Short-Term / less than 3 yrs
Small-sclae
more than USD 50 Million
less than USD 50 Million
Tender
Direct & Competitive
less than USD 10 Million
How do we perceive the strategies and implementation approach of development agencies?
Are the strategies suitable for the needs of civil society in Indonesia?
Strategies
At the implementation level, by drawing on Rothstein's checklist (1998), the following three
elements need to be examined and an assessment conducted: (a) program design; (b)
organization for implementation; and (c) program legitimacy. Program design consists of
two sets of plan that need to be distinguished and are indeed dissimilar, i.e., regulatory plan
and intervention plan. These plans should be able to deal with both static and dynamic
conditions. In terms of the implementing organization, two types of approach can be
identified – organization as an incentive system and a norm system. In relation to this, the
term 'responsibility drift' may apply to an organization or a unit within the organization.
This is related to cases known as the democracy black hole where policy decisions are made
in the absence of accountability, either politically or administratively.
What about the legitimacy aspect? This can be examined from two angles: (i) outcomes of a
given policy; and (ii) financial ties that refer to funding sources being utilized. In other
words, the change strategy of development agencies appears to mainly gravitate around the
foregoing two core aspects, namely policy design and implementing organization, both in
terms of substance and process. To a certain degree, weaknesses or 'ailments' of the
program design and implementing organization have been identified and different remedies
prescribed. The level of success or impact even to this day remains to be a contentious issue
due to dissimilar measurements, attributes and criteria. Nevertheless, a key component
that has yet to gain serious attention concerns legitimacy.
In simplified terms, funds from development agencies are somewhat similar to funds from
the oil and gas sector; easily obtainable and no need for bottom-up accountability, compared
to for example the accumulation and management of tax funds from the public. Without the
appropriate mechanism, development aid can isolate the state from its citizens such as the
issue of oil rents where accountable and responsive institutions from top-down are difficult
to develop and consolidate.
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The legitimacy of programs under development agencies can be strengthened in the
presence of strategies that promote bottom-up accountability of bureaucratic, legal and
political bodies. The shift in development funding sources from oil and gas (natural resource
rents) to tax funds is a strategy to make governments more dependent and accountable to
their citizens (Brautigam, Fjeldstad and More, 1998). Furthermore, legitimacy can be
reinforced at the availability of a strategy that exerts bottom-up pressure by building
beneficiary constituents, among others through the distribution of oil and gas rents in the
form of cash transfer to citizens (Moss, 2011).
In line with this analogy, a shortcoming of the approach adopted by development agencies
toward civil society organizations in Indonesia is the absence of a specific strategy that
encourages the establishment of a funding mechanism from the government of Indonesia
itself, mainly for civil society elements, either through a tender mechanism or a direct
competitive grant mechanism.
Strategies
Not a single development agency has a specific plan or initiative to push for the
establishment of a funding mechanism for civil society groups in Indonesia, including
alternative funding sources from the national budget or private corporations. A trial project
that draws from the national budget as a funding option can initially be directed at efforts to
improve the environment, protect consumers and open up access to legal aid for vulnerable
groups. Given the substantial volume of national budgetary funds, the utilization of funds
ranging from IDR 100 to 500 billion each year for non-state actors distributed in a
competitive manner shall change and democratize relations between the state and civil
society from statist and political patronage to a rights-based relationship.
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Strategies
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Implications
for Non-State Actors
in Indonesia
V.
Implications for Non-State Actors
in INdonesia
The improved political and economic standing of Indonesia and changes to rules and
regulations and mechanisms related to development aid by and large have given Indonesia a
voice that is increasingly as resonant as aid-giving countries. In other words, development
agencies will now make more effort to conform to or align with the priority agendas and
targets set by the government of Indonesia. Harmonization and adjustment should not be
seen as damaging or erroneous. Not only is it correct but can nurture a sense of ownership
and promote sustainability, and engender better results and benefits.
Nevertheless, at the operational and implementation level, it can also end in bureaucratic
capture, particularly in a situation where state bureaucracy remains far from public ethics,
integrity and accountability. Criticisms or corrections to development agency strategies and
operations have been fairly voluminous. A study by William Easterly (2002) for example,
puts out a word of caution to multilateral and bilateral development agencies, especially the
World Bank against what is known as the 'cartel of good intentions'.
The term 'cartel' is used because competition among actors is non-existent and consumers
face difficulty or are denied the opportunity to demand for accountability. 'Good intentions'
on the other hand implies the intent to improve conditions that run the gamut of agendas,
from poverty reduction to law enforcement and human rights protection. Despite such good
intentions however, their strategies and operations are caught in a capture situation by aid
bureaucracy itself.
Implications
'Cartel of good intentions' in Indonesia is largely apparent with regard to the democracy,
human rights and governance sector. In the past ten years, development aid to state bodies
such as the Supreme Court and Attorney General's Office as well as different state ministries,
institutions and political parties has failed to produce the desired outcomes, except for
changes to the Constitutional Court and Corruption Eradication Commission, and to a
certain degree, bureaucratic reform at the Ministry of Finance.
Furthermore, development agencies shall be increasingly bound to the agendas and policies
of the government of Indonesia. Another implication is that development agencies shall be
more inclined towards partnering with and/or providing aid funds to the government rather
than for example civil society organizations or private and business groups. Multilateral and
bilateral development agencies deal with a considerable amount of funds and prefer to work
with the government rather than the people for a longer time period of between three and
five years. Development agency projects specifically operate through a tender mechanism
with private contractors or consultants as the executing agency. Most non-state actors are
relegated to the role of sub-implementer or typically as complementary actors for various
activities.
What are the implications of the development aid or funding trend specifically for civil
society in Indonesia? As mentioned earlier, when a middle-class country becomes
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increasingly prosperous, development issues are no longer about the lack of funds or
resources but more on barriers to the distribution of resources. Failure to respond swiftly to
this matter shall create a socio-economic chasm that can incite social friction and instability.
Hence, non-state actors must assume a more decisive role in (a) promoting the
accountability of the state towards the poor and marginal groups; and (b) ensuring the
upholding and respect of human rights. Failure to support civil society elements can strip
development agencies of their legitimacy (Glennie, 2011).
In Indonesia, this scenario is highly relevant. Instead of bridging chasms, progress achieved
by Indonesia's formal political system as reflected in the performance of political parties and
the parliament in reality has yet to narrow down socio-economic disparities in society. One
of the reasons for this is that political parties in Indonesia are not oriented to programs and
problem solving. In other words, Indonesia's political parties tend to be internally oriented
or self-serving with a transactional attitude that serves personal interests or that of their
leaders and group rather than for programs and policies that can strengthen fundamental
freedoms and elevate the well-being of each and every citizen, men and women, rich and
poor.
Similar to the larger purpose of development agencies, civil society also envisions a more
democratic and tolerant Indonesia based on the rule of law and human rights in which
growth is bolstered by a robust and capable society. As such, economic growth should be a
means to an end and not an end in itself. Economic growth shall be meaningless if the social
status of the Indonesian people do not change for the better as reflected in the Human
Development Index (HDI). Economic growth shall be rendered pointless if discrimination
against certain groups is not effectively dealt with by the state.
Implications
A fundamental and ongoing struggle of non-state actors Indonesia is working towards
concrete progress in the realization of human rights and democracy, including efforts to
bring an end to impunity for human rights abusers, promote the participation of women and
vulnerable and marginal groups, safeguard diversity and revolutionize government capacity
and accountability that covers initiatives to curb corruption and strengthen ecological
sustainability through the appropriate policies and curtailing of natural resource
exploitation. The slogan should no longer be 'liberty, equality and fraternity' but 'liberty,
equality and ecology'.
Buoyed by the spirit of an open society, civil society in Indonesia envisages a state and society
where the values of freedom and equality can be collectively brought to fruition. At the
institutional level, the government's optimal role is a requisite, with just the right dose of
intervention in economic matters and private affairs such as those related to religion and the
conception of a good life. At the same time however, the state must be adept in enforcing the
law, maintaining security and public order to ensure the creation of a cohesive and
harmonious society. Every individual deserves due respect and protection, and is entitled to
equal opportunity.
In relation to this, the priority issues of development agencies denote two fundamental
attempts: (a) to encourage bureaucratic, legal and political institutions to work effectively
and efficiently; and (b) to change or improve these institutions to be more accountable,
transparent and responsive. Both agendas reflect the characteristics of a good government.
In reality, only a few development agencies have pushed for the priority issue of (c)
reforming these institutions to work effectively, accountably and impartially. Impartiality
30
| A Decade of Development Aid and the Role of Non-State Actors in Indonesia
means that bureaucratic and law enforcement agencies must equally serve the people,
ensure non-discriminatory treatment of citizens and fulfill their rights. The poor and rich
must be treated on equal terms. Women are awarded the same level of respect as shown to
men, children and the elderly. The priority issue should therefore no longer be good
government, but the quality of government.
Without the impartiality of policies and operations of bureaucratic, legal and political
institutions, the government's legitimacy shall be further undermined. Impartiality is
essential and reflects the problem of discrimination and exclusion faced daily by marginal
groups, the poor, women, minorities, senior citizens, the disabled and children. Impartiality
may well be a missing element in the behavior, mindset and motive of bureaucratic, legal and
political institutions. A good government bears the obligation to demonstrate adequate
capacity and accountability. Despite this however, a good government can still be overruled
by a discriminatory and exclusive attitude on the grounds of ethnicity, political patronage
and other reasons. Bearing this in mind, impartiality must therefore be an inherent element
and become the collective mindset of state bodies.
Schematically, based on ongoing operations of development agencies, two scenarios or
approaches can be outlined. First, a governance model in which the distinct feature sees the
government and state agencies as the key ally, and both the target and engine of change.
Second, a democratic model that in contrast relies more on the energy and innovation of civil
society organizations, non-governmental organizations, universities, the mass media and
the business community.
Implications
The first scenario translates into narrower room for civil society to move, and only through
hard work can civil society continue to operate and contribute, albeit in the sidelines. The
second scenario on the contrary can allow greater space for the creative initiatives of civil
society in carrying out advocacy work and promoting change far and wide in terms of
geographic scope as well as policy and institutional dimensions. In other words, the first
scenario is a feasible option as it has been practiced for years and with its own proponents
among development agencies and the government. This scenario however may not be
desirable to non-state actors in Indonesia. On the other hand, the second scenario may be
highly desirable, although not entirely feasible because statist initiatives and traditions
among bureaucrats, and political patronage among politicians and policy-makers may be
resistant towards this second model.
The governance model that places complete trust on reformers from within bureaucratic,
legal and political institutions must be counterbalanced and supplemented with a
democratic approach to the intervention model where trust is bestowed upon reformers and
initiatives from outside of the bureaucracy, such as non-state actors, the business
community and the mass media. If not, this scenario shall be highly prone to bureaucratic
capture and even undermined by other state bodies, including legal and political institutions,
except when other methods are also undertaken where resources are not entirely placed in
their hands but dispersed to other actors outside of the bureaucracy and other state
agencies.
In addition, intervention from development agencies should also best be accompanied by
changes to the mindset of bureaucratic bodies (legitimacy, impartiality and integrity), and
not simply focus on operational changes (e.g. computerization) and institutional reform (e.g.
civil servants payroll system, freedom of information, etc.). Operational and institutional
TIFA Foundation, July 2012
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31
changes are indeed a necessity, but have yet to suffice and be sustainable. Several
development agencies have put such initiatives in motion with the key word 'knowledge
building'.
The democratic model on the other hand calls for change and diversification of funding
sources for non-state actors in Indonesia, for example from the state budget. It is certainly
not easy to reallocate the national and local budget for immediate distribution as
competitive grants to non-state actors in Indonesia. This requires the role and intervention
of reformers within government itself, without which the democratic model would not be
realized any time in the near future.
In terms of funding, Indonesia is not an impoverished country. Indonesia has adequate room
for funding. With an annual budget that exceeds IDR 1,000 trillion, Indonesia is
unquestionably capable of financing programs and activities executed directly by various
non-state actors for the purpose of creating public goods, such as improvements to the
quality of the environment, consumer protection, poverty alleviation and social protection
for all. Some of them can be carried out by increasing the reliability and contribution of the
national and local budget. It can take different forms and start from a competitive grant
mechanism as long practiced by OECD member countries. The reliability of such funds is not
only essential in terms of amount, but also as a form of legitimacy that seeks to find the most
viable principle and method to change a statist relation and political patronage approach
into a rights-based relationship between the state and its citizens.
Implications
Tablel 3. Two Strategy Options
32
DIMENSION
GOVERNANCE MODEL
DEMOCRATIC MODEL
Main Obstacle
Actor / Agency
Actor and initiative
Assumption of Change
Adequacy of reformers within
state institutions
Adequacy of initiatives and reformers
within society
Drivers of change
State (state building)
Public and the state
Legitimacy
Formal procedural
Substantial and social
Partner
Government institutions:
bureaucratic, legal and political
Non-governmentalentities: nongovernmental organizations,
universities, the mass media and citizens
Intervention
Institutional innovation and
modernization
Innovative initiatives and institutions
Funding scale
Large
Medium
Fund distribution
Tender or offer
Direct and competitive
Funding source
International
International and national
Sustainability
Co-finance from the national or
local budget
Competitive grant mechanism from the
national or local budget and CSR
(Corporate Social Responsibility) funds
Accountability
Technical
Technical and Social
| A Decade of Development Aid and the Role of Non-State Actors in Indonesia
Implications
TIFA Foundation, July 2012
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33
Recommendations
and Path Ahead
VI. Recommendations and Path Ahead
Non-state actors in Indonesia constitute as a home-grown social force set in motion by the
educated urban middle class. Nonetheless, the country's non-state actors are not without
their share of shortcomings. They still need to address many internal weaknesses in terms of
their capacity and institutional models. Hans Antlov, et al. (2008) for example puts forward
several deficits in civil society actors in Indonesia: (i) rely heavily on confrontation; (ii) weak
institutional capacity due to over reliance on a leader-follower model that hampers
institutionalization and regeneration, and (ii) lack of cooperation among non-state actors
that result in the failure to achieve wider impact.
On the other hand, democracy and development in Indonesia and anywhere else is not a
linear process between input, process and output, but also involves a political process with
diverse actors and initiatives. For example, policy change in general requires three elements:
political occurrence (elections or economic crisis), recognition of issue, and policy
recommendation (Stone, 2007). Development aid should at least contribute to two key
aspects: push for policy recommendations from citizens and civil society actors, and
encourage political elites and the government to set an agenda for deliberations of proposed
policies. With regard to this, the functioning of the democratic process that should at least
occur every five years provides such narrow room for change.
At this particular point, the role of non-state actors in Indonesia becomes crucial in ensuring
that the political elites seize on the political momentum to improve the situation. Based on
the empirical experience of citizens, civil society actors can contribute in spurring political
will from the circle of elites through a broad range of actions, either by means of policy
advocacy or making available the necessary knowledge and effective innovative models.
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Recommendations
In other words, many convergent points and spaces can be found between non-state actors,
development agencies and the government. This is also true for the quality of government
and democracy, and the optimal role of the state. The convergence of purpose can be
enhanced from an abstract theoretical proposition into tangible stance and joint actions.
Nevertheless, this convergence must continue to be tolerant towards differences in
approach and method for problem solving. There should be no domination or hegemony
between one and the other. A top-down reform approach is equally important as reform
from below, and vice versa. The principle of partnership and complementarity should
therefore be effectively applied. In relation to this, the following are several measures for
consideration by all parties, including the government, development agencies and non-state
actors in order to promote a broader and heightened role for Indonesia's non-state actors in
the next five to ten years.
35
For the Goverment :
1. A democratically elected government in every five years must make all efforts to build
trust with its citizens. Conversely, citizens are increasingly expected to fulfill their tax
obligations as an absolute obligation. There is also mounting pressure for the
government to build a rights-based relation, among others through the provision of
public goods financed from the people's taxes. With respect to this, the government
needs to explore and experiment such avenues in order to broaden the role of non-state
actors in the development process.
2. The government requires policies that govern on the relationship between the
government and non-state actors with regard to development and democracy. An initial
approach would be to develop a public goods scheme financed by the state budget. For
example, a legal aid initiative funded by the national budget and implemented by civil
society actors has been introduced, although it has yet to be properly organized and
institutionalized.
3. The government needs to conduct a systematic investigation and experiment to expand
the practice of public goods provision by non-state actors outside of the legal aid sector.
As a middle-class country with an annual national budget that exceeds IDR 1,000 trillion,
it is indeed time for public goods to also be financed by the state. Several local
governments, for example in Sinjai and Makassar (South Sulawesi) as well as Musi
Banyuasin and Ogan Komering Ulu (South Sumatera) have allocated funds from the local
budget for free legal aid for poor communities.
4. The government should take into account regulatory changes or revisions on the
procurement of government goods and services, particularly pertaining to public goods
such as poverty alleviation, consumer protection, education, human rights
environmental conservation, women's empowerment, disaster risk reduction and the
safeguarding of diversity in Indonesia. Amendments are necessary to allow civil society
actors with the appropriate expertise and unquestionable track record easy access to
state budgets as an alternative resource through competitive procedures and
mechanisms.
Recommendations
For Development Agencies ::
1. The need to revive the mechanism for demand-pull initiatives for competitive grants in
order to open up and broaden access and opportunities for non-state actors in Indonesia,
primarily those outside of Jakarta and Java. Development aid from multilateral and
bilateral development agencies should also ensure that aid outcomes are socially
acceptable to the people of Indonesia, in addition to being technically effective. Hence,
the role of civil society actors becomes crucial to ensure social acceptance.
2. The need to heighten the involvement of non-state actors in the country's development
strategy formulation process, including the formulation of programs or projects,
program monitoring and evaluation, and program accountability.
3. The need to experiment on mechanisms for strengthening the involvement of non-state
actors in the implementation of programs funded by grants from multiple donors, such as
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| A Decade of Development Aid and the Role of Non-State Actors in Indonesia
the PNPM Peduli model. This mechanism is a significant breakthrough in terms of the
extended role of non-state actors in program and project implementation. In coming
years, such involvement is expected to increase and include participation in the policy
formulation of development aid strategies.
4. The need to foster cooperation with national grant-making agencies in program
formulation and execution. Several partnerships with national grantors have been
piloted, for example on issues related to environmental conservation and governance
strengthening. This approach however has not been widely applied nor has it been
broadened to other sectors.
For non-state actors :
1. It is crucial to pro-actively create ample space for consultation in order to shape
development aid policies and programs, mainly in multilateral and bilateral agencies, for
the purpose of ensuring accountability and social impacts from each international
development aid, including therein the creation of measurable and institutionalized
dialogue forums.
2. The need to take the initiative in the formulation and oversight of international
development aid strategies. Non-state actors in Indonesia may have gained the necessary
experience, but still need to put in more extensive and comprehensive efforts to ensure
aid effectiveness.
3. It is necessary to heighten cooperation and coordination, among others through a
consortium of non-state actors in Indonesia for the purpose of increasing the quality,
significance and impact of public policy advocacy. It is now time to reduce competition
among relevant actors or to manage it in a healthier manner. Leaders of non-state actors
need to think on a macro level about major obstacles and barriers in Indonesia and
combine approaches and expertise among non-state actors. Examples of key issues are
corruption, environmental destruction and intensified intolerance in Indonesia.
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Recommendations
4. The need to improve governance and leadership among non-state actors in order to
ensure the institutionalization of accountability and regeneration mechanisms. Civil
society in Indonesia is increasingly in desperate need of visionary and highly competent
young recruits. Civil society leaders need to meticulously organize their institutions and
bring an end to gerontology (where power lies with the seniors) internally in order to
retain highly dedicated young people with outstanding technical skills.
37
Recommendations
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About The Authors And Editors
HERRYADI ADUN, since 2006 manages the Democracy program of Tifa
Foundation. He is in charge of developing initiatives and partnerships with civil
society organizations in Indonesia with the intention of building substantive
democracy, specifically with regard to accountable leadership among elements of
civil society and the political circle.Previously assigned to assist in a
humanitarian mission in Aceh together with the Canadian Red Cross and has
gained extensive experience from his lengthy stint in the tropical forests of East
Kalimantan in his capacity as the consultant of the sustainable forest
management project under Deutsche Gesellschaft für
TechnischeZusammenarbeit (GTZ/ SFMP).
JIM TOAR MATULI, has accumulated immense experience in the management of
development aid programs, compliance audit, finances and accounting,
administration and human resource management. He has spent more than 12
years as a specialist for various international agencies, such as Oxfam Great
Britain, Catholic Relief Services and Australian Red Cross in handling
humanitarian programs, emergency responses and development projects in
South Asia and Southeast Asia. In the past year, he joined the CIDA-funded
Support to Indonesia's Islands of Integrity Programfor Sulawesi (SIPS) in
collaboration with Cowater International Inc. Canada.
MICKAEL BOBBY HOELMAN, has previously carved out a career with ICW
(IndonesiaCorruption Watch) in the early stage of its inception, and acquired
invaluable working experience at the Department for InternationalDevelopment
of the United Kingdom (comparable to Bappenas, the Indonesian National
Development Planning Agency). He was formerly the advisor on advocacy and
governance for Oxfam GreatBritain's representative office in Indonesia and now
entrusted with the position to manage the Democracy and Governance program
of Tifa Foundation. An economics graduate with an advanced degree in political
science, Hoelman is keen in conducting studies and a frequent facilitator and
resource person in numerous discussions, primarily related to social
accountability.
SUGENG BAHAGIJO, actively conducts extensive studies on social policies in
which his work is documented in several of his publications, among others:
“Mimpi Negara Kesejahteraan: Telaah Dinamika PeranNegara dalam Produksi dan
Alokasi Kesejahteraan” (Jakarta: co–author, LP3ES, 2006) and “Globalisasi
Menghempas Indonesia” (Jakarta: editor, LP3ES, 2006). He has formerly assumed
the office of Deputy Director of INFID (International NGO Forum on Indonesian
Development) from 2002 to 2004, Associate Director of Perkumpulan Prakarsa
(2005–2009) and Executive Director of Komunitas Indonesia untuk
Demokrasi/KID (2010–2011). He hasacted as the technical advisor to the
Bappenas Deputy Minister for Regional Autonomy and Cooperation (2004–2005)
and policy advisor to the Coordinating Minister for People's Welfare
(2006–2007). In addition to being an avid writer, he also actively serves as
resource person and facilitator while regularly assisting studies for a broad range
of research institutes and think-tanks, including Tifa Foundation.
TIFA Foundation, July 2012
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