Lessons on Fundam ental Principles o f Good Governance

O n e o f t h e m o s t i m p o r t a n t p r o d u c t s o f d e c e n t r a l i z a t i o n is t h e e n h a n c e m e n t o f t h e q u a l i t y o f d e m o c r a c y a n d g o v e r n a n c e in a s t a t e . A s t r o n g p o l i t i c a l commitment of the involved actors and well-designed institutions are all important aspects contributing to the improvement of a democratic society. Moreover, good

governance understood in terms of democratic procedures requires at least four

f u r t h e r f a c t o r s , e a c h o f w h i c h d e s e r v e s t o b e t r e a t e d in i t s o w n s e c t i o n : participation, accountability, coordination and power sharing.

The body of literature that the others have consulted confirms that the

c o n s t i t u e n t s ) f u n c t i o n e f f e c t i v e l y . E a c h o f t h e s e in t u r n r e q u i r e s a p p r o p r i a t e institutional manifestation. Accountability requires bureaucratic accountability to

e l e c t e d o f f i c i a l s , a n d t h e a c c o u n t a b i l i t y o f t h e e l e c t e d o f f i c i a l s t o t h e p u b l i c , in t u r n . Participation requires regular elections, an active and capable civil society; institutions for civil society engagement between elections (public meetings, policy

consultation forums, oversight and vigilance committees etc.), and a well functioning and critical media. However, for these principles to be effective certain preconditions should exist as follows:

Participation

D e m o c r a t i c d e c e n t r a l i z a t i o n is n o t o n l y a m a t t e r o f d e s i g n i n g t h e r i g h t

i n s t i t u t i o n s , b u t a l s o d e p e n d s o n t h e c i v i l a n d s o c i a l c o n t e x t in w h i c h t h e s e institutions operate.

F O R U M D E S A ( 2 0 0 6 ) in t h e i r r e p o r t s e x p l a i n e d t h a t in r e f e r r i n g to G o v e r n m e n t Regulation 8/2003, the Minister of Administrative Reform explains that the expansion o f th e o r g a n i z a t i o n a l s t r u c t u r e o f lo c a l g o v e r n m e n t s b e e n d r i v e n b y v a r i o u s in te r e s ts o f

a c t o r s a n d s t a k e h o l d e r s . T h e M o F in d i c a t e d th a t i f t h e e x p a n s i o n o f lo c a l g o v e r n m e n t s ’ o r g a n i z a t i o n s c o n t i n u e d , it w o u l d s o o n r u n o u t o f m o n e y t o f u n d lo c a l g o v e r n m e n t s t h r o u g h t h e D a n a A l o k a s i U m u m ( D A U ) . T h e C e n t r a l G o v e r n m e n t , t h e r e f o r e , is u n d e r p r e s s u r e t o i m p o s e a s t r o n g e r r e g u l a t o r y c o n t r o l o v e r th e r e g i o n s . O n t h e o t h e r h a n d , th e r e g i o n s a r g u e t h a t t h e C e n t r a l G o v e r n m e n t g e n e r a l i z e s t h e is s u e o f e x c e s s i v e o r g a n i z a t i o n a l s t r u c t u r e b a s e d o n a li m i t e d n u m b e r o f i s o l a te d c a s e s . T h e p r e c i s e p e r c e n t a g e o f r e g i o n s t h a t e s t a b l i s h e d e x c e s s i v e l y la rg e o r g a n i z a t i o n s h a s n o t b e e n r e v e a l e d b v th e C e n t r a l G o v e r n m e n t .

A s e n s e o f o w n e r s h i p m u s t b e c r e a t e d b e f o r e t h e l o c a l p o p u l a t i o n w i l l fe e l m o t i v a t e d t o p a r t i c i p a t e in d e c e n t r a l i z e d l o c a l g o v e r n m e n t a n d to s u p p o r t its d e v e l o p m e n t p r o j e c t s .

Vol. 16, No. 2 December 2007 © Centre for Indonesian Accounting and Management Research

Postgraduate Program, Braw ijaya University

The In te rn a tio n a l J o u r n a l o f A c c o u n tin g a n d B u sin e ss S o c ie ty 77

S M E R U ( 2 0 0 6 ) r e v e a l e d th a t in th e r e g io n a l a u to n o m y e r a , th e im p le m e n ta tio n o f

b a s ic e d u c a tio n b e c a m e th e r e s p o n s ib ility o f lo c a l g o v e r n m e n ts . N e v e r th e l e s s , it n e e d e d th e c o o p e r a t i o n o f c e n tr a l, p r o v in c ia l a n d d is tr ic t g o v e r n m e n t, a s in (a ) im p r o v in g a c c e s s a n d b r o a d e n in g l e a r n in g o p p o r tu n itie s in r e m o te a n d is o la te d r e g io n s ; ( b ) in c r e a s in g th e p a r tic ip a tio n r a te o f w o m e n a n d c h ild r e n ; ( c ) i m p r o v in g th e q u a lity a n d r e le v a n c e o f b a s ic e d u c a tio n ; ( d ) m a n a g in g e f f ic ie n tly th e u s e o f e d u c a tio n r e s o u r c e s ; a n d ( e ) s u p p o r tin g th e p a r tic ip a tio n o f th e c o m m u n ity . M e a n w h ile , th e p r o g r a m s f o r i m p r o v in g th e e f f ic ie n c y o f e d u c a tio n a l m a n a g e m e n t in c lu d e s th e

f a c i l i t a t i n g t h e p a r t i c i p a t i o n o f p o o r a n d m a r g i n a l i z e d g r o u p s in t h e political system.

P a r t i a l r e f o r m s h a v e b e e n in i ti a t e d in t h e r e g i o n s t h r o u g h l o c a l i n n o v a t i o n s w i t h i n t h e l o c a l g o v e r n m e n t s ’ j u r i s d i c t i o n . S u c h r e f o r m s m a y b e f u r t h e r e n c o u r a g e d i f lo c a l government can secure sufficient financial independence to meet local demands. The process of initiation and innovative methods can be done collaboratively with donors

a n d lo c a l i n s t i t u t i o n s lik e u n i v e r s i t i e s a n d N G O ’s w h e r e t h e y h a v e p l a y e d a n i m p o r t a n t r o l e in a s s i s t i n g l o c a l g o v e r n m e n t to i m p l e m e n t a n d s u s t a i n lo c a l i n n o v a t i o n s . It is a l s o

c l e a r f r o m t h e c a s e s a n d fie ld w o r k t h a t a ll s t a k e h o l d e r s h a v e g a i n e d e x p e r i e n c e o v e r t i m e in t e r m s o f e f f e c t i v e n e s s , f e a s i b i l i t y a n d s u s t a i n a b i l i t y o f s u c h i n n o v a t i o n s . B e s t p r a c t i c e s in o n e r e g i o n m a y n o t b e r e a d i l y t r a n s f e r a b l e to o th e r s . ( F O R U M D E S A , 2 0 0 6 )

A c c o u n ta b ility •______ Regular and free elections at all government levels are the best device to

________ensure accountability. ________________________________________________ In c a s e o f A c e h p r o v i n c e w h e r e A c e h w a s g r a n t e d S p e c i a l A u t o n o m y s t a t u s u n d e r L a w

1 8 /2 0 0 1 d u e to i n e q u a l i t y a n d t h e p o o r e c o n o m i c s it u a t i o n , th e c e n t r a l g o v e r n m e n t o f f e r e d A c e h g r e a t e r a u t o n o m y in m a n a g i n g its r e s o u r c e s a n d g o v e r n a n c e f u n c t i o n s . T h e t h r e e k e y f e a t u r e s o f A c e h ’s s p e c i a l a u t o n o m y a re : 1) L a r g e s h a r e o f r e t a i n e d r e v e n u e f r o m oil a n d g a s ; 2 ) D i r e c t e l e c t i o n o f g o v e r n o r a n d h e a d o f lo c a l g o v e r n m e n t ( b u p a t i / w a l i k o t a ) ; 3 ) I m p l e m e n t a t i o n o f S y a r f a h / ( S h a r i a ) I s l a m i c la w . T h e s e all o f f e r i n g s a r e i n t e n d e d to p r o v i d e g r e a t o p p o r t u n i t y f o r A c e h n e s e to i m p r o v e th e ir

c o m m u n i t i e s ’ e c o n o m i c p e r f o r m a n c e , a tta in b e t t e r liv i n g s t a n d a r d s , a n d m o v e t o w a r d a

g o o d g o v e r n a n c e s y s t e m . T h e d i r e c t e l e c t i o n in A c e h w a s e n v i s i o n e d to b e th e first

d i r e c t e l e c t i o n a t t h e lo cal lev el in I n d o n e s i a b e f o r e L a w 3 2 / 2 0 0 4 c o n c e r n i n g lo cal

g o v e r n a n c e w a s p a s s e d . T h e la w s p e c i f i e s th a t th e d i r e c t e l e c t i o n o f h e a d o f local

g o v e r n m e n t is to b e i m p l e m e n t e d n a t i o n a l l y ( W o r l d B a n k , 2 0 0 6 ) .

Vol. 16. No. 2 December 2007 © Centre for Indonesian Accounting and Management Research Postgraduate Program, Brawijaya University

78 A C r is is o r C r itic a l D e v e lo p m e n t

Quality and Transparency

• T h e q u a l i t y a n d e f f i c i e n c y o f s e r v i c e d e l i v e r y in l o c a l o r r e g i o n a l a r e a s c a n

be improved significantly through a statistics service gathering data and producing demographic status analysis.

S o m e d e v e lo p m e n t is s u e s a n d p r o b le m s in In d o n e s ia c a n n o t b e s o lv e d s y s te m a tic a lly

d u e to a v a ila b ility a n d q u a lity o f d a ta , e .g ., e d u c a tio n , p o v e r ty , h e a lth , e tc . M o r e o v e r ,

a r g u m e n t in d e s ig n in g a n e w p o lic y . N P M ( N e w P u b lic M a n a g e m e n t) im p le m e n ta tio n n e e d s a h ig h q u a lity d a ta f o r s u p p o r tin g a p o lic y d e s ig n , e .g ., I T I m p le m e n ta tio n .

I t is i m p o r t a n t t o i n s t i t u t i o n a l i z e m e c h a n i s m s f o r c i t i z e n f e e d b a c k w i t h regard to local government performance and service delivery.

A c c o r d in g to W o r l d B a n k r e p o r t ( 2 0 0 6 ) o n A c e h R e c o n s tr u c tio n P r o g r a m , p r o v in c ia l

a n d lo c a l g o v e r n m e n ts w ill a ls o b e in c h a r g e o f a ll r e c o n s tr u c tio n in f r a s tr u c tu r e s . It is

c r itic a l to e n g a g e lo c a l g o v e r n m e n ts n o w in a n y n e w la r g e - s c a le in f r a s tr u c tu r e p r o je c ts . T h e 2 0 0 7 b u d g e t p r o c e s s w ill p r o v id e a n im p o r ta n t s ig n a l o f th e p r o v i n c e ’s a n d lo c a l

(MandE) systems.

I m p l e m e n t a t i o n o f N P M is r e a l l y d e m a n d e d in G e r m a n y ( W o l l m a n n , 2 0 0 2 ) . Its

c o n c e p t s a n d m e a s u r e s i n t r o d u c e th e lo g ic o f “ p e r f o r m a n c e m a n a g e m e n t ” o f p u b li c o r g a n i z a t i o n in t h e ( i n t r a - ) a d m i n i s t r a t i v e o p e r a t i o n s w i th th e h e l p o f ( s i m p l i f i e d a n d p r a c t i c a b l e ) p e r f o r m a n c e i n d i c a to r s a n d “ c o n t r o l l i n g ” ( “ f e e d b a c k ” ) m e c h a n i s m s ,

inter-district/municipal “benchmarking” (see also Kuhlmann 2002).

including attempts at

• In o r d e r t o e n s u r e t h e q u a l i t y o f s e r v i c e s d e l i v e r e d a t t h e l o c a l l e v e l , l o c a l s e r v i c e p r o v i d e r s m u s t h a v e a c c e s s t o a c o m p r e h e n s i v e s u p p o r t s y s t e m in order to implement national strategies.

Postgraduate Program. Brawijaya Uni\ersit\

The International Journal o f A c co u n tin g a n d B usiness S o ciety

In G e rm a n y a s W o llm a n n (2002) s ta te d th e “ lo cal w e lfa re s ta te ” p a tte rn th a t th e

d e liv e ry o f th e p e r s o n a l sociri services (s u c h a s k in d e rg a rte n s , h o m e s fo r th e e ld e rly )

h a s b e e n g u id e d b y th e “subsidiarity p rin c ip le ” w h e re th e lo c a l g o v e rn m e n t s h o u ld re s tric t i t s e l f la rg e ly to (to « e recent te rm in o lo g y ) an “ e n a b lin g ” fu n c tio n , w h ile th e s e rv ic e p r o v is io n i t s e l f shoeld b e left to th e (n o n -p u b lic a n d n o n -p ro fit) w e lfa re o r g a n iz a tio n s . In fa c t, some 70 to 8 0 p e rc e n t o f th e s o c ia l s e rv ic e s (p la c e s in k in d e r g a r te n s , h o m e s fo r seM on etc.) h a v e b e e n o ffe re d b y th e lo c a l b ra n c h e s o f fo u r la rg e n o n - p r o f it w e lf a r e organizations h is to ric a lly a s s o c ia te d w ith th e c h u rc h e s an d w o rk e rs m o v e m e n t.

Lessons on Fundam ental Principles o f Good Governance