What's wrong with development planners?

Budhi Santoso Jakarta

The Indonesian economic crisis of 1998 provoked a number of practitioners and critics to review national development planning systems that had been implemented for 30 years during the New Order era.

Simple questions were raised: What has the planning institute been doing to allow such a severe crisis to occur?

Some arguments have centered around theoretical debates between centralistic and decentralistic approaches in the implementation of national development programs.

It is argued that the centralistic method of development planning tends to locate planning in the hands of the state and technocrats, where growth is more important than equity.

As part of the economic development reform agenda, there are some changes in the system of planning and the budgeting of national development program that previously centered on sector departments in Jakarta transferred to regions. The legalization of this reform was been stipulated in Law No. 33/2004 on budgetary matters and Law No. 32/ 2004 on regional administrations.

Considering that the national and centralized development system is regarded as old fashioned and out of date, the system was replaced by the medium term expenditure term model (MTEF), which was adopted in Law No. 17/2004 on state finance.

However, taking into consideration that the country needs guidelines to adopt President Susilo Bambang Yudhoyono's vision and mission in a national medium term development planning program, the House of Representative enacted Law No. 25/2004 on the National Development Planning System.

The House probably thought that Law No. 17/2004 did not specify guidelines for the future of the country, but rather how much money would be spent over a period of time.

Owen Podger wrote in this newspaper that the passing of Law No. 25/2004 was a backward decision and against international trends in national planning. He cited Law No. 17/2004 as the correct way of planning. It is a pity that Podger did not mention how many countries have successfully adopted the method and how many countries were unsuccessful.

This opinion does not intend to respond to the criticism raised by Podger to the National Development Planning Board (Bappenas) who's existence is supported by Law No. 25/2004. However, some interesting issues are worth raising.

First, we should agree that planning without budgeting is only a dream. Budgeting without planning will result in wasteful spending or widening the possibility of corruption by government officers.

Good and correct planning will direct us where to go in the future. It should have a clear vision and mission both in the medium and long term. Planning of national development for the sake of short term need results in unpredictability.

One can imagine a passenger on a plane intending to go to Bali, but when the plane has landed he realizes that he is in Manado. Law No. 25/2004 is not designed to allow exclusive planning without adopting the elected president's vision and mission. All of this should be written in an integrated planning and budgeting document in conformity with the country's long term goal.

The second issue is about coordination. Departments should be given autonomy to coordinate their sectoral development plans. Bappenas will not act as a super agency who pretends to know and control everything.

Budgeting functions (budgeting power) is no longer Bappenas' responsibility. Bappenas no longer coordinates how departments formulate their own sector development program, but when there is a program which in its implementation is the responsibility of more than one ministry, a kind of planning coordination is absolutely necessary so that there will not be duplication or lack of synchronization.

The government has now adopted a development budget administration process using a performance basis in which Bappenas is only involved in planning, monitoring and the annual evaluation. The task and function of planning and budgeting of sector development is conducted by each department, the Ministry of Finance and House of Representatives.

The problem of how to achieve significant economic growth every year is merely a choice of either using the centralistic or decentralistic approach.

As part of the reform agenda, the government has decided to implement a decentralistic approach that is to involve as much as possible regional governments and civil society in formulating development plans and its budgeting so that economic recovery can be achieved without ignoring the end users.

As we know Indonesia prior to the crisis was one of the seven emerging Asia Pacific countries lead by Japan to have continuously high economic growth and reducing poverty at the same time for more than 25 years.

By making detailed observations of the root of the problem that caused the Indonesian economic crash we can hopefully better identify between causes in the public or financial sector.

We should also ask ourselves whether it is wise to blame development planners in Bappenas while we know that by early 1998 the key decisions were in the hands of economic cabinet ministers who were actually not economists?

It should also be understood that the country's economy does not only depend on the public sector but also the private sector which has a much bigger role in the national economy.

The judgment thus should not be based on how development planning was formulated and implemented, but also what the results were?

Finally, the importance of planning coordination is signified in the ability to the government to secure a strategy which can be adopted by all departments. Some departments, until today, still implement a centralistic approach, a methodology closer to the project approach (for multi sector projects) rather than a programs approach.

There are many reasons behind this, but basically by centralizing the program, this means budgeting power remains in the hands of the department.

When you have budgetary power you can spend the money as you like, and you can save some of it for your own pocket. This is another reason why planning coordination is important, among others, to give direction to departments to consistently implement a new paradigm of development.

The writer is head of the irrigation sub-directorate at Bappenas. The opinion's expressed here does not represent Bappenas' view.