Diagram on the Fuel Subsidies Debate

Here’s my quick note on the back-and-forth debate regarding the fuel subsidies:

My fellow wonk friend Taufik wrote an article questioning those who are against the policy, whether they are only looking at the short-term welfare effects by keeping the low fuel prices. Agreeing with Taufik, the economics are clear here, scrapping fuel subsidies is the way to go. However, the political aspects remains to be tricky.

A caveat, the diagram above is a simplification of the real world situation in Indonesia. It is easy for policymakers to sit on the pedestal and argue that in the long-run we are maximizing welfare by removing the unsustainable subsidies. The truth is, the visibility of how welfare and equity are achieved really depends on where that money is being spent elsewhere, and how fast it can reach to the disadvantaged groups of society.

Therefore, those of you who are in disagreement, I would say that it is better to scrutinize the government more on Indonesia’s social welfare programs that targets better for the poor and investment on the public transport system – as the welfare effects are greater for society.

Take note, however, the government will not be winning any trust points with the citizens if they don’t prioritize correctly – such as establishing the anti-pornography task force over dealing with corruption.


Homework after Indonesia’s Land Acquisition Law

The House of Representatives (DPR) passed a Law on Land Provision for the Development for Public Interest on Friday (16/12).

For those who have been involved in infrastructure provision in Indonesia, the new land law provided a breath of fresh air in the process of acquiring land that is much needed for infrastructure projects in the country. The Law is not a novel policy, but in the form of Law (Undang-undang) it provided better legal certainty compared to the previous Presidential Regulation stipulating the similar matter.

Based on the Law, it set a timeframe for acquiring land, whereby all of the land acquisition process should be finished within a maximum of 436 working days, which includes notification, public consultation, and dispute settlement mechanisms that provides legal protection for rightful landowners to get their fair share of compensation.

Compensation is also not limited to money, as rightful landowners can be compensated through land swaps, resettlement, stock ownership or any other forms agreed by both parties.

Agrarian reform activists fear that the Law can be used to forcefully take land for the benefit of corporations, such as in the recent case of Mesuji whereby farmers’ land are allegedly taken away by force for palm oil and rubber plantations. The Law, however, specifies exactly which categories of projects are eligible in the name of “public interests” and palm oil is not included. Moreover, the Law emphasizes that it is the responsibility of the state to acquire land from rightful land owners. Even if they are in a public-private partnership agreement for a project, any risks involved in acquiring land is shouldered by the government.

The term “rightful land owners” imply that landowners truly own their piece of land and are registered, not just simply owning a land certificate. Problems will then arise with those whose lands are not registered, and considering that most indigenous land or ulayat rights in Indonesia are not registered, the fears of landowners being evicted out of their land – their home – is not baseless.

There are due process mechanisms in the new Law to ensure that anyone who is affected with the land acquisition can voice out their concerns. However, embedded in the spirit of the Law is the assumption that at least two enabling conditions are in place: that Indonesia has an efficient land registration system and an effective land-use planning.

Unless we get these two enabling conditions right, no matter how good the land acquisition law and its bylaws are drafted, implementation will still be difficult.

On the Point of Policy Implementation in Indonesia

If you want to know how things in Indonesia generally work, look at mall security checks. It’s pointless, but it employs a lot of people.

I’ve once made a comment that if you want to know how things in Indonesia generally work, you look at mall security checks. It’s pointless, but it employs a lot of people.

Sadly there’s a truth to my remark above, it is because generally in Indonesia there is a gap in effectiveness when it comes to implementation.


When you visit a mall in Jakarta, every car that comes inside gets inspected, presumably to see whether you carry a bomb in your car. How does the security guards check them? They open the car’s door or trunk, usually it takes less than 5 seconds, and they’re done.

Do you expect to find a bomb in that short amount of time beside an annoyed passenger? The better security guards have one of those detectors, the stranger ones just glaze over you (and not your car) as if they have x-ray visions or paranormal abilities to identify dangerous explosives.

The same thing happens when you enter the mall itself, your bags go through some sort of security checks, with or without detectors, with fancier malls having scanners like the ones we encounter in the airport.

Are they effective?

How do you measure that what they are doing is actually preventing criminal activities or deterring terrorism acts in Jakarta’s malls, buildings and hotels?

We don’t know for sure, but since we assume it’s working and it’s creating jobs, why not do it anyway?

So to summarize: sometimes we don’t know whether a proposed policy is effective, but nevertheless, we invest on our resources to do it because it “sounds” or “looks” good. What is missing: finding the gaps in your implementation. More often than not, if you want to look for the gaps in implementation, you look at the front-line workers dealing with the client or problem directly.


You see, the idea of having security checks are not bad, considering that Jakarta suffered from the JW Marriot bombings several years ago. But when it comes to implementation, the security guards are the ones that have autonomy and discretion to exercise whether to have tight or loose security checks. This will in turn affect the implementation outcomes.

Let’s say you have two probabilities of making an error in this situation, a type I error (one rejects the null hypothesis when it is true) means that the security guards perform a very tight security check to a 70-year-old lady with an arthritis; or a type II error (one accepts the null hypothesis when it is false) whereby the security checks are loose like business-as-usual but it turns out that person that you just let inside was indeed a suicide bomber.

The implementation decision lies with the security guards, and considering that the probability for error are more dire if they don’t do their job well (regardless of the old lady), they simply just don’t do it. No incentives? Perhaps. Or perhaps it is just that the policy or how things are run that needs to change.


Another example of policy implementation: driving licenses. I had to renew my driving license this year and I dreaded the fact that I have to go to the police station and having to deal with those policemen. Indonesian policemen are seen to be not the most sympathetic people around, which is ironic because they are supposed to be the ones who protect the citizens.

One day, I came into a police station in South Jakarta and asked the first policemen I saw at the door, “Excuse me, where do I go to renew my driving license?” and he replied, “Inside. There’s a clear signage. Do you want me to help you with the process?” I politely said no, knowing that it was an implicit offer to “speed-up the process”.

I went inside, and indeed, there was a clear signage. There was even someone dressed as an information guide that kindly directed me where to go.

If I can remember correctly, the order of sequence for my driving license renewal was as follows:

  1. Provide the photocopy of your ID;
  2. Pay at the counter – get a registration form and an official receipt;
  3. Fill out your registration/renewal form;
  4. Wait for a health check (which is a simple eye test) – pay for the health check and get the receipt;
  5. Go to the insurance counter – pay and get a receipt;
  6. Submit at the counter your: photocopy of ID, registration form, your old license, your health check form, insurance receipt and payment receipt – get a queue number;
  7. Your number is called, the officer takes your photo and signature;
  8. Wait for a while and your name is called – you get your shiny new license; and
  9. Go to insurance counter, get your insurance.

All of this were done in under 30 minutes. I was impressed. I expected that it was going to take at least an hour of my time, plus additional “unofficial” charges. But everything was done very smoothly and the expenses that I made are all legal (complete with receipts).

However, remember the front door policemen? A friend of mine said yes to his proposal and got his license done in 15 minutes – with “additional” charges. Sadly, even if you have a good operational system, if the implementing workers still have the discretion to deviate from the system, the outcomes will be different too.

All in all, I’m saying that when it comes to policy implementation, think about those doing the actual job. It’s a comfortable position up there at the top when you’re the ones making the decisions, but it all boils down to who’s really implementing it at the bottom.

So, to the newly appointed ministers and deputy ministers in Indonesia, have a moment or two to think about your street-level bureaucrats too.

Indonesian policy bits: illegality of English speeches

This week’s commentary on Indonesian policy bits: Constitutional Court chief Mahfud MD said that SBY’s English speeches are illegal, according to Law No. 24/2009 and his own Presidential Decree.

This week’s commentary on Indonesian policy bits: Constitutional Court chief Mahfud MD said that SBY’s English speeches are illegal, according to Law No. 24/2009 and his own Presidential Decree.


I’m not joking. If you care to read Law No. 24/2009 on State Flag, Language, Symbol and National Anthem,  it says on Article 28 that:

Bahasa Indonesia is compulsory to be used in official speeches of the President, Vice President, and other state officials that are delivered domestically or abroad.

In the explanation, it states that these “official speeches” can use foreign languages (so not specifically English) as long as it is in an international forum that’s conducted abroad that stipulates the use of specific languages.

SBY even signed a Presidential Regulation No. 16/2010 on the Usage of Bahasa Indonesia in Official Speeches of the President and/or Vice President as well as Other State Officials to strengthen this law.

So apparently, all this time, his speech writers didn’t get the memo?

It’s a good thing that the law does not stipulate any criminal sanctions for using languages other than Bahasa Indonesia in official speeches. If you try to burn down our red and white flag or try to be creative with remixing Indonesia Raya (the national anthem), you can however, go to jail.

I think the whole idea is ridiculous. Why do you need to regulate the use of language in official speeches? My bet is that this law will soon be amended. Whatever. Why was this regulated in the first place – be it the philosophical rationale, the costs and benefits – that’s what I seriously want to know.

This is another example of an Indonesian law that’s not been carefully thought of and consistently implemented.

Indonesian Policy Bits: Drunk Driving and Privacy for Sale

I’m starting a weekly segment on my blog on “Indonesian Policy Bits”, which are minor commentaries on articles that I’ve read on Indonesian policies and its political and economic situation, apart from my regular analysis or commentaries. This week, I’ll touch up on the issue of drunk driving vis-a-vis alcohol control and the government’s proposal to sell citizen database in the electronic identification cards system for business interests.

I’m starting a weekly segment on my blog on “Indonesian Policy Bits”, which are minor commentaries on articles that I’ve read on Indonesian policies and its political and economic situation, apart from my regular analysis or commentaries. This week, I’ll touch up on the issue of drunk driving vis-a-vis alcohol control and the government’s proposal to sell citizen database in the electronic identification cards system for business interests.


The famous fountain in front of Hotel Indonesia has become a favorite spot for drunk drivers. A car with its 23-year-old drunk driver crashed the fountain, broke two fountain lamps (each costing Rp 27 million) and a water pump. A police officer who worked at the police bureau near the fountain said that similar accidents were frequent, at least five this year.

So what is the solution? A Jakarta Park Agency officer said:

“We have requested the Transportation Agency to immediately build rows of light speed bumps so that drunk drivers would be alerted as their cars approach the fountain”

Did it occur to them that they should stop drivers from getting drunk at the first place?

At least two problems occur to me: 1) there is a lack of public education on the consequences of drunk driving; 2)  I question whether there is alcohol control, especially for minors.

I would expect the government to have public education services on the dangers of alcohol, i.e. that you need to be responsible when you drink. Of course, conservative groups would immediately make a fuss that such acts would only encourage more drinking because you’re not supposed to drink in the first place. It’s the same problem with sex education and public information on the use of condoms – try telling the girls who must bear their unwanted pregnancies that it’s their fault because they’re not supposed to have sex in the first place.

Public awareness is needed because you can’t stop people from getting drunk or having sex, but you can teach them on how to be responsible about it. Ignoring the problem doesn’t mean that it doesn’t exist.

One phenomena that I observed in Jakarta, is the mushrooming of 7/11, Circle K and other convenience store that freely sells alcohol. In several occasions, I have seen under-age teenagers buying alcoholic drinks without any adult supervision. There were no control from the sellers themselves, although there is clearly a sign that says “selling alcohol and tobacco to people under the age of 18 is prohibited” behind the sales counter.

Tobacco? Don’t get me started. Any kid can easily buy cigarettes from the nearby warung for such a cheap price.


Here’s another news: the government plans to sell our electronic data for business interests.

I’m a supporter for a single identification number system, because there are several benefits to it, among them are:

  • Prevention of identity frauds, which can lead to the prevention of money laundering and even track possible terrorists;
  • Easier to track low-income groups so it is relatively easier to target poverty alleviation measures, i.e. educational and health assistance; and
  • Prevent voters data manipulation in elections

What I don’t agree is that if the government tries to sell our data for marketing purposes:

Reydonnyzar Moenek, Home Ministry spokesman, told The Jakarta Post on Monday that the data could be used for business interests but only to see the distribution of certain characteristics of the Indonesian population.

“For example, if a milk brand needs data about infant distribution in Indonesia for marketing purposes, they can use the data. But we won’t disclose private information,” he said, adding that the government would charge those who were interested in using the data.

“We will discuss the mechanism further, but if it happens, the income from selling the database will be categorized as non-tax income,” he added.

Instead of protecting our privacy, they are looking for additional state income? If this happens, I will mourn the loss of integrity from my government that they are more willing to sell our data for money.