List of Abbreviations
Chapter 2: Context of the Study
2.2 An overview of the Indonesian context
Following is a brief description of Indonesia’s geography, population, economy and governmental system.
2.2.1 Geographical context
The Republic of Indonesia, commonly known as Indonesia, is a country in Southeast Asia that lies on the equator; it is situated between the Asian and Australian continents and between the Pacific and Indian Oceans. Figure 2.1 below is a map of Indonesia; it clearly shows Indonesia’s position between two continents and two oceans as well as Indonesia’s neighbouring countries.
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Consisting of 17,508 islands, with an area of 1,904,569 square kilometres, Indonesia is the largest archipelagic country in the world. Of its 17,508 islands, five are large islands: Sumatra, Java, Kalimantan, Sulawesi and Papua. Indonesia had 34 provinces with 505 districts as of December 2013 (Ministry of Home Affairs, 2013); its capital city is Jakarta (located on Java Island).
Figure 2.1 Map of Indonesia
Source:
http://www.worldatlas.com/webimage/countrys/asia/lgcolor/idcolor.htm
2.2.2 Population
Indonesia is the most populous country in Southeast Asia and the fourth most populous in the world. According to the results of the Statistics Indonesia (2010) conducted by the Indonesia Statistics Board, the total population in 2010 was 237,641,326. The United Nations projects that by 2050, two thirds of Indonesia’s population will live in urban areas. Over the last forty years, the country has experienced a process of rapid urbanization, resulting in the current situation in which over half of Indonesia’s total population resides in urban areas, especially on Java Island. From an economic perspective, this constitutes a positive
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development as urbanization and industrialization are necessary in order for Indonesia to join the ranks of the world’s middle-income countries.
Indonesia’s ethnic composition is characterized by wide variety as the country contains hundreds of different ethnic groups and cultures. However, more than half of the population can be classified as belonging to the two main ethnic groups:
Javanese (41 percent of the total population) and Sundanese (15 percent of the total population). Both of these groups originate from the island of Java, Indonesia’s most populous island, which encompasses roughly 57.48% of the country’s total population (Census Report 2010). When the island of Sumatra is included, this figure rises to approximately 78.79% of Indonesia’s total population, indicating a significant population concentration in the western part of the country (Statistics Indonesia 2010). Overall, the most populous province is West Java (with more than 43 million people); the least populous province is West Papua, in the far eastern region of Indonesia, with approximately 760,000 people (Statistics Indonesia 2010).
2.2.3 Economic context
Indonesia is well recognized for its natural resources, including crude oil, natural gas, tin, copper and gold. In addition, Indonesia is known for its agriculture products, which include rice, coffee, rubber, tea and palm. According to a World Bank (2014), Indonesia is the tenth largest economy in terms of purchasing power parity, Indonesia is also a member of the prestigious Group of Twenty major economies (G-20), which consists of the 19 countries with the most important economies and the European Union. Regarding global competitiveness, Indonesia is in 38th position, having progressed 19 places since the issuing of the previous report (Global Competitiveness Index 2013-2014).
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Indonesia is the third largest democratic country in the world after the USA and India. As in other democratic countries, the Indonesian political system recognizes the separation of the legislative, executive and judicial powers. The legislative power is vested in the People's Consultative Assembly, which consists of two houses: the House of Representatives composed of representatives of political parties, and the Regional Representatives Council, composed of representatives from each province in Indonesia. Each province is represented by four delegates who are elected by the people in their respective regions. The People's Consultative Assembly was previously the highest state institution. However, in the Fourth Amendment of the 1945 Constitution, the Consultative Assembly was relieved of that position. The membership of the Consultative Assembly was then modified after the 1999-2004 period to include not only the members of the House of Representatives but also the members of the Regional Representatives Council. The members of the House of Representative members and the Regional Representatives Council are elected every five years. Since 2004, the Consultative Assembly has become a dual parliament with the Regional Representatives Council as its second chamber. Previously, members of the Consultative Assembly were all members of the House of Representatives in addition to representatives of groups. The Consultative Assembly is composed of 550 members of the House of Representatives and 128 members of the Regional Representatives Council.
The executive office is centralized to the president, vice president, and the cabinet of ministers. (Globalsecurity.org 2018).
With regard to the number of ministries in the cabinet, there have been some changes over time, and these are dependent upon the president in office. The current cabinet ministries total 34 departments (Presidential Regulation 121/2014). Similar to other emerging countries, Indonesia also faces great challenges to improve public-sector performance. The Government of Indonesia
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has taken strategic steps to improve the public-sector quality in a series of public- sector reform programs. In order to unite and coordinate all public-sector programs, the Government of Indonesia introduced the Grand Design of Bureaucratic Reform for 2010–2025. This gives the Ministry of Administrative and Bureaucratic Reform (Kemenpan-RB) a mandate to lead the public-sector reform process in Indonesia (Presidential Regulation 81/2010). However, the MoF has been carrying out the reform over a longer period since 2002. This reform has focused on three major strategies. The first is the enactment of three packages of three laws regarding State Finance (17/2003), the State Treasury (1/2004) and the Audit of State Financial Management and Accountability (15/2004). The second is the separation of functions of budget preparation and budget execution. The third strategy is the establishment of the Large Tax Office as part of the modernization of tax administration. After the first period of the reform process (2002–2006), the MoF launched a massive bureaucratic reform program with the so-called Tiga pilar reformasi birokrasi (three pillars of bureaucratic reform), which cover organisation, business process and human resource from 2007 to the present.
Along with these three bureaucratic pillars, the MoF also introduced a PMS based on the implementation of the BSC, replacing the ‘traditional’ performance measurement system in order to assure the successful enactment of the programs based on the three pillars of bureaucratic reform. As the MoF is the pioneer in Indonesian bureaucratic reform, its reform programs have been widely adopted by other public-sector organisations. The implementation of the BSC as a PMS is one of the themes that has provided a benchmark for other ministries, institutions, local governments, and state-owned enterprises.
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