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Indonesia development policy review : enhancing government effectiveness in a democratic and decentralized Indonesia (Inglês)

A decade ago, in 1998, Indonesia experienced a severe economic crisis that resulted in the economic dislocation of millions of households, a sharp rise in poverty, a 13 percent decline in Gross Domestic Product (GDP), and near bankruptcy of the financial sector. The economic crisis precipitated a dismantling of the previous political order, leading to a period of wrenching political turmoil characterized by several changes in government and the heightening of separatist tensions. Ten years later, Indonesia has emerged economically strong and remarkably stable in political terms. This report takes stock of where things stand today, by reviewing Indonesia's development performance of the last decade, and looks ahead to the development agenda for the next decade. Though it is important to recognize that institutional reforms take time and it is often advisable to take a step-by-step experimental approach, maintaining a sense of urgency, making haste slowly, is critical throughout the process. That is because without a continued sense of urgency there is a risk that Indonesia's hard-earned reform momentum might stall. The government has shown commitment to reform, but significant obstacles to change remain. There is a risk that the reform effort will languish as even committed reformers are overwhelmed by the extent and complexity of the task of pushing forward institutional reforms and putting in place new ways of doing things in the face of entrenched organizational cultures and behaviors. The task is especially challenging when, as is often the case, the implementation of institutional reforms relies on the very unreformed systems and processes that are themselves the object of change. Those who benefit from the existing system, whether from corruption, capture or nepotism, the very institutional distortions that are often the target of the reform agenda, can use those distortions to politically derail efforts at serious institutional reform. Broader political dynamics can also intervene when the electoral imperatives of coalitional and money politics undermine incentives and efforts to strengthen the accountability of state institutions. A sustained focus on governance and transparency can help by restoring confidence in the legitimacy of public processes and institutions and building a consensus for continued reforms. If Indonesia can make haste slowly and maintain a sense of urgency in furthering its governance transition, it has the potential to become a dynamic, competitive, and inclusive middle-income economy.

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