The State Retreats and Never Returns:

Consequences of Neoliberal Reforms on Administrative Law Protection in Indonesia

Mohamad Mova Al’AfghaniCenter for Water GovernanceUniversitas Ibn Khaldun Bogor

Putting Public in Public Services: Research, Action and Equity in the Global South International Conference – Cape Town, South Africa

April 13-16, 2014

Administrative Law Protection in General

• Access to Justice, review of administrative decision by an administrative court for general principles of good administration “arbitrariness” or “abuse of authority”.• Protection under Public Service Law: sanctions for public officials

includes removal from office, demotion, suspension of salary raise, termination, revocation of license (unlikely for small matters)• Guarantee of transparency through Freedom of Information Law• Participation in Decision-Making Process• Redress mechanism, guarantee of service quality and quantity These are available under the traditional provider/positive state and some advanced regulatory states.

What it supposed to be

The Positive/Developmental/Provider State The “Regulatory” State

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Transport, etc

Armed Forces

Judiciaries

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Armed Forces

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Judiciaries

Civil Registration

Regulation of water, energy, transport, etc

Redress Mechanism, Transparency, Access to Justice, Participation in Decision Making, Allocation, etc

Reconfiguration

The state reconfigure itself into a “regulatory” state which, a move which have overarching impact on constitutional and administrative law

What happens in Indonesia

The Positive/Developmental/Provider State The Regulatory State Does Not Materialize

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Water,Energy,

Transport, etcWater,Energy,

Transport, etc

Armed Forces

Judiciaries

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Armed Forces

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Non State Actors

Service Delivery

The Public

Privatization,Contracting,Outsourcing

Batam Case Study I

• 25 year concession contract awarded by the Batam Authority;• Obligation to supply, finance, build water facilities and pay lease fee;• Concession not accompanied by any regional by law or public law

regulation;• In 2008, around 4500 houses which have already been occupied,

failed to be connected to the network. Private sector claims for financial difficulties;• Case lodged to Competition Commission (KPPU)

Batam Case Study II

Competition Commission Decision: • discriminating business entities, Problematic: are citizen in need of water “business entities”?• abusing its dominant position and Problematic: (condition for “abuse”: determining the conditions of trading with the intention of preventing consumers from obtaining competitive goods and or services, b. limiting markets and technology development; or c. bar other potential business actors from entering the relevant market.). None of these are relevant for water consumer. • controlling the production and marketing of goods which results in monopolistic

practices.Problematic: Water services are, by characteristics, a natural monopoly. This count was upheld by Supreme Court. This is a misinterpration of the law.

Batam Case Study III

Important Lessons:1. The contract was between Batam Authority and the Private Sector, citizens

are not directly a party. Thus, they do not have legal standing; 2. Thus, they need to be described as “business entities” in order to claim their

right to water in order to make a claim in the competition commission;3. Although the claim is successful, water, here, is regarded as a pure

commodity by the Court and needs to be argued in accordance with competition principles;

4. If the services remains to be delivered by Batam Authorities, they will be liable under general administrative law and citizen will have a direct claim.

Limits of the Public Service Law 1

• The Public Service Law enacted in 2009 is an achievement in the reform era• Article 13 of the Law: “An undertaker [of public service function] may

conclude cooperation in the form of delegation of parts of its public service provision in with another entity …” Does not say anything about “privatization”, but it is in fact a disguised privatization as anything can be subjected to a delegation.

Limits of Public Service Law II: SanctionsBefore Delegation After Delegation

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Water,Energy,

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Armed Forces

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Non State Actors. Sanctions to employees are outside of government reach.

Service Delivery

The Public

Privatization,Contracting,Outsourcing

Sanctions for public officials: removal from office, demotion, suspension from sallary raise

or termination

Limits of the Freedom of Information Law

Bodies FoI Applicable? ReasonJakarta Provincial Government YESPAM Jaya, State Owned Water Utility (Contracting Party)

YES

Palyja (Concessionare, Subsidiary of SUEZ Env and Astra)

No FoI Law covers only branches of the executive, legislative and judiciary; or those carrying out state functions or those whose budget is derived from the state budget.

Aetra (Concessionarire, subsidiary of a shell company)

No FoI Law covers only branches of the executive, legislative and judiciary; or those carrying out state functions or those whose budget is derived from the state budget.

Regulatory Body No Set-up under a contract (a regulation-by-contract), the regulatory body is not a public body. They regard themselves as either a private entity or NGO

Application of the FoI Law in Jakarta Water Concession

Two ExplanationsWhy is it that in the case of Indonesia’s delegation of essential services, the state retreats and does not reconfigure itself?

FirstRejection of the “regulatory state” by judiciaries amidst “disguised privatisation” by the executive. According to the Court, the state has five functions: policy making (beleid), administrative (bestuursdaad), managerial/share ownership (beheersdaad), supervisory (toezichthoudensdaad) and regulation (regelendaad). Share ownership has the first and foremost importance in realizing “State Control” in vital public services as required by Constitution. Thus, not only regulation, but also state ownership through State Owned Enterprise. (But, what about corporatization?)

Two ExplanationsSecond

Good Governance advocated by civil societies have some success in making state apparatus accountable. But Good Governance reforms, through for example the Public Service Law or FoI Law does not address delegation of public service to private sector

Armed Forces

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Judiciaries

Civil Registration?FoI Law

Public Service Law, Administrative Review

FoI Law and Public Service Law are either inapplicable or ineffective.Administrative review no longer applicable because it is now a private law matter