Sustainable infrastructure development

Giovanni Comparini, Jakarta

I have followed very closely the 100-day program of the Indonesian government to find solutions to infrastructure development, the importance of which has become even more topical after the floods, which paralyzed Jakarta just a day after the Infrastructure Summit's end. From the renowned guests' speeches and significant articles/excerpts in The Jakarta Post, it clearly emerges that this important and laudable initiative of Indonesian central government is aimed at filling the huge gap between the funds made available by the state budget and lenders, and those necessary to finance the five-year development plan of basic infrastructure.

To achieve this important objective, Indonesia central government has promised to speed up regulatory reforms, and to propose investment opportunities to the private sector, particularly foreign investors. While this move seems to be realistic and appropriate, there are certain aspects of the private sector participation that merit careful analysis.

The effectiveness of the huge financial resources allotted to any development plan will depend on many interrelated factors -- particularly the way the various projects are managed and coordinated at central and local level by the involved governmental institutions. Their management capability, organization arrangement, human resources' know-how and behavioral characteristics will play a fundamental role in the initiative's final success.

This means, in other words, that the expected economic growth of 6 percent cannot be considered a certainty. This target might be reached and even exceeded, or it might be missed, based on this institutional performance. A key-factor that will determine the initiative's success or failure might be what is called the "institutional culture" of the participating governmental organizations, and the complex of internal rules, expressed or not, which determine the actual way an institution functions and performs. As a matter of fact, many project assessments have shown that a gap between the "institutional culture", and the culture implicit in the objectives/targets pursued, results in a project failure.

At present, the "institutional culture" of Indonesian public administration is often questioned, and the most questioned aspects concern issues such as policy and legal uncertainty, corruption and nepotism, and a general lack of good governance, transparency and accountability. However, the present system, like all established and consolidated systems, is reluctant to change, and needs new incentives and pressures, which cannot be found inside the system itself.

There is a clear need for new forces, able to induce the system to move from the current paradigmatic positions, to those of a system more transparent, flexible, and closely connected with civil society. Local communities and the private sector could act as the new stakeholders, able to activate this cultural change.

With this purpose, the new partners could become active and an integrating part of a renewed system for public infrastructure management, which might replace the present monopolistic system, and allow a more effective and fair service delivery. The private sector, in particular, should act as a responsible and far- sighted partner, going beyond what is the current stereotype of the role of the business world.

This need of a more participative approach in public infrastructure management has been concisely but very clearly expressed during the Summit, in the presentation by the World Bank Vice-President for East Asia and the Pacific, concerning a reform in the process for supplying public services. The proposed process introduces a Consultative Council, consisting of local community and local institution representatives, which are expected to act as mediators between civil society's requirements and aspirations, and governmental policies and positions. As a result, we can conclude that a new flexible and progressive system needs to be institutionalized quickly, with the active participation of the three stakeholders in the overall service delivery process.

Therefore, an urgent question to be answered is how this important institutional change can be supported and accelerated. It is clear that a similar paradigmatic change cannot come only from one side, but needs the collaboration and commitment of the three involved parties: Government administration, local communities, and the private sector.

A realistic path foresees a long collaboration between these three partners, which would result in a progressive integration of Indonesian civil society with the government administration. Public and private sectors in particular, should start a long process of collaboration, which would cover not only technical and financial aspects, but also management capability, knowledge sharing/dissemination, and other "soft"/behavioral matters.

If adopted, this collaboration should result in participation schemes able to foster a process of progressive sharing, integration and development.

A Build, Operate and Transfer (BOT) scheme could be appropriate, if combined during the two preliminary steps (build and operate) with institutional development. This long process, if consistently implemented, would result in a progressive change and development of the institutional frame and culture of Indonesia's government administration, which manages service infrastructure. Finally, through the effect of induction, these paradigmatic changes would spread throughout all levels of Indonesia's government -- central, provincial and local government.

The writer is a member of the Italian Business Association in Indonesia. He has a wealth of experience in Indonesia in the field of institutional development and urban infrastructure management. He can be reached at compa@bogor.wasantara.net.id.