When President Suharto's regime fell in 1998, reform leaders in Indonesia responded to public calls for democracy by implementing reforms in the structure of government, decentralizing authority to the country's districts.  This transformation altered the relationship between the Indonesian people and the state, granting greater autonomy to local leaders.  In theory, decentralizing to the district level would reduce demands for separatism in the provinces while strengthening the accountability of local governments to their constituents.  However, the new structures also risked empowering local politicians who might be inexperienced, corrupt or interested in secession, triggering the very disintegration of the country that the reformers sought to prevent.  This policy note outlines the ways in which Indonesia implemented sweeping reforms-consolidating regional and central government services and empowering local governments-while avoiding this governance trap.  It also traces the process by which the government incrementally revised the initial laws and policies as it encountered challenges. 

Richard Bennet drafted this case study with the help of Itumeleng Makgetla and Rohan Mukherjee on the basis of interviews conducted in Jakarta and Surakarta, Indonesia, during April and June 2010. 

Associated Interview(s):  Siti Nurbaya, Hadi Soesastro

President Suharto of Indonesia (1967-1998) presided over one of the most corrupt regimes of the 20th century.  For over three decades, the political and financial interests of Suharto's family, cronies and allies in the military dictated the policies of the Indonesian state.  Nevertheless, a handful of public officials attempted to rationalize, improve and clean up the way government worked.  Emil Salim and Sarwono Kusumaatmadja, both cabinet ministers under Suharto, were two such men.  The pair struggled to manage the influence of the military, motivate a moribund bureaucracy and confront Suharto's many cronies.  Lacking formal mechanisms through which to channel their efforts, Salim and Kusumaatmadja seized on passing targets of opportunity, structuring and adapting their initiatives on an ad hoc basis and relying on unconventional tactics.  Although their successes proved unsustainable, their story offers specific lessons in the often elusive tactics of how individual public officials can achieve modest change against institutional inertia and determined opposition from vested interests.

Matthew Devlin drafted this case study on the basis of interviews conducted inJakarta, Indonesia, in July 2009. 

Associated Interview(s): Sarwono Kusumaatmadja, Emil Salim

Studi kasus ini juga, Menerapkan Aturan Dan Akuntabilitas: Standar Operasional Prosedur Di Kementerian Keuangan Republik Indonesia, 2006-2007, tersedia dalam Bahasa Indonesia.

In 2006, Indonesian economist Sri Mulyani Indrawati took on a huge and knotty problem: bringing order and efficiency to the Indonesian Ministry of Finance, an organization of 64,000 employees. At the time, many Indonesian citizens viewed the ministry as corrupt and unaccountable, exemplifying the failures of the entire government. President Susilo Bambang Yudhoyono had appointed Mulyani because of her reputation as a tough-minded reformer and a savvy manager. Mulyani ascribed the ministry’s weak and inconsistent handling of taxes, customs and other services to a shortage of clear and consistent procedures for the many tasks employees handled. A key element of her strategy was to simplify and standardize ministry processes in order to improve employee performance and accountability. During the next two years, Mulyani and her team initially focused their efforts on 35 priority services that citizens used heavily, and then they expanded the reforms to include other activities. By 2007, the ministry had developed and implemented nearly 7,000 standard operating procedures. The changes significantly improved public services and earned popular acclaim for both the ministry and the Yudhoyono government. This case shows how a strong leader and her reform team introduced new ways of working to achieve significant gains in service efficiency, quality and fairness.

Rushda Majeed drafted this case study on the basis of interviews conducted in Jakarta, Indonesia, in November and December 2011, and on a 2009 interview of Sri Mulyani Indrawati by Matthew Devlin and Andrew Schalkwyk. Case published April 2012.

Associated Interview(s):  Sri Mulyani Indrawati, Robert Pakpahan

Rushda Majeed drafted this case study based on interviews conducted in Surakarta and Jakarta, Indonesia, in November and December 2011. Case published July 2012.

Michael Scharff drafted this case study based on interviews conducted in Jakarta, Indonesia, in December 2012. Case published April 2013.