AMSD – Legal and Regulatory Assessment
Box 6.5
6. Empower the Service Deliverer
Typical Flexibilities in Use of Support Services
FPA Part V.4: In Relation to use of other common/mandatory internal “Support Services” by the Regional Government 1. Flexible regulation regarding trips and reimbursement; 2. Freedom from regulations that force organizations to use buildings and other assets owned by the Government; managing facilities by contractor; using ”lease” for facilities that are not state assets; 3. Freedom to purchase general services from the best sources (e.g. travel services, photocopy, printing, selection of buildings and assets to be used) and financial control to pay for such services (not paid by ”central”); 4. Authority to enter into ”service agreements” to provide necessary internal support service by Regional Government.
Source: See Appendix C.1, “Model of a Flexible Performance Agreement”
The BLUD alternative appears designed to deploy AMSD Strategy 5 of organizational empowerment with the approach being through the financial management aspects. The BLUD form is a key instrument for promoting AMSD but the concern is whether: •
the desired flexibilities in management will eventuate through translation of the broad directions in PP 23/2005 into clear and accepted rules on the ground; and
•
the “governance” aspects (how rules are made that determine the allocation of resources and benefits) are keeping-up with those for financial management?
It is suggested the AMSD project can help with preparation of these core administrative rules, and begin to help with strengthening the accountability side through introducing stronger governance mechanisms. 6.3.5
Using Governance to Strengthen the Autonomy – Accountability Deal
Article 34 of PP 23/2005 that regulates BLUDs, authorizes the creation of a “supervisory board”, if desired by the PEMDA. The Consultant suggests this provides one key mechanism for strengthening the accountability side of the deal. The challenge is creating effective boards, because the experience with this approach has not been good in Indonesia (see the next section briefly assessing regional government-owned enterprises). The main problems are: •
Mixed objectives of the board: is it to guard the interests of the community, PEMDA or the organization?
•
The board being constituted with “constituencies” in mind (government, professionals, community for example) and thus tending to work against one another rather than as a team
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