0

SubmittedFor

DoctorofPhilosophy(IF49)

June2012

StateAssetManagementReforminIndonesia:AWickedProblem

DiaswatiMardiasmo(N4815904)

JusticeandLawResearchCentre

FacultyofLaw

QueenslandUniversityofTechnology

Brisbane,Australia

SupervisoryTeam:

Prof.CharlesSampford

Director,TheInstituteofEthics,Governance,andLaw(UNUniversity)

ProfessorofLawandResearchProfessorofEthics(GriffithUniverity)

(PrincipalSupervisor)

Dr.PaulBarnes

SeniorLecturer,SchoolofPublicHealth

Coordinator:Risk&CrisisManagementResearchDomain,InformationSecurityInstitute(QUT)

(AssociateSupervisor)

1

ABSTRACT

Efficientstateassetmanagement iscrucialforgovernmentdepartmentsthatrelyontheoperationsoftheirstateassetsinordertofulfiltheirpublicfunctions,whichincludepublicserviceprovisionandothers.Theseassetsmaybeexpensive,extensiveandor,complex,andcanhaveamajor impacton theabilityofgovernments toperform its functionoverextended periods. Various governments around theworld have increasingly recognisedthe importance of an efficient state asset management laws, policies, and practices;exemplifiedbythesurgeinstateassetmanagementreform.

Thisphenomenon isevident in Indonesia, inparticular through theestablishmentof theDirectorateGeneralofStateAssetsin2006,whowasappointedastheultimatestateassetmanager(ofRepublicofIndonesia)andtheproprietorofstateassetmanagementreform.TheDirectorateGeneralofStateAssetstoohaspledgeditsadherencetogoodgovernanceprinciples within its state asset management laws and policies reform. However thedegree that good governance principles are conceptualised is unknown, resulting inquestions of how and to what extent is good governance principles evident withinIndonesiasreformedstateassetmanagementlawsandpolicies.

This study seeks to understand the level of which good governance principles areconceptualised and understood within reformed state asset management policies inIndonesia (as a case study), and identify the variables that play a role in theimplementation of said reform. Although good governance improvements has been acentraltenet inIndonesiangovernmentagenda,andstateassetmanagementreformhaspropelled in priority due to found neglect and unfavourable audit results; there isambiguity in regards to the extent that good governance is conceptualisedwithin thereform, how andwhether this relationship is understood by state assetmanagers (i.egovernment officials), and what (and how) other variables play a supporting and/orimpedingroleinthereform.

Usingempiricaldata involvingasampleof four Indonesianregionalgovernmentsand70interviews;discrepancyinwhichgoodgovernanceprinciplesareconceptualised,thelevelit is conceptualised, at which stage of state asset management practice it isconceptualised, and the level it isunderstoodby state assetmanagers (i.e governmentofficials)wasfound.Humanresourcecapacityandcapability,thenotionofneedingmoretime,lowlegality,infancyofreform,anddysfunctionalsenseofstewardshipareidentifiedasspecific impedingvariablestostateassetmanagementreform;whilstdecentralisationand regional autonomy regime, political history, and culture play a consistentundercurrentkeyroleingoodgovernancerelatedreformswithinIndonesia.

This study offers insights to Indonesian policy makers interested in ensuring theconceptualisationand full implementationofgoodgovernance inallareasofgoverning,particularly within state asset management practices. Most importantly, this studyidentifiesanasymmetryingoodgovernanceunderstanding,perspective,andassumptionsbetweenpolicymaker(i.ehighlevelgovernmentofficials)andpolicyimplementers(i.elowlevelgovernmentofficials);tobetakenintoaccountforfuturepolicyevolvementsand/orwriting.Assuch,thisstudysuggeststheneedforamodifiedperspectiveandapproachtogood governance conceptualisation and implementation strategies, one thatacknowledgesandincorporatesanationsuniquecharacteristicsandnolongerdeniesthedoubleedgedswordofsimplifiedassumptionsofgovernance.

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StatementofOriginalAuthorship

Iherebydeclaretheworkcontainedinthisthesishasnotbeenpreviouslysubmittedto

meetrequirementsforanawardatthisoranyotherhighereducationinstitution.Tothe

bestofmyknowledgeandbelief,thethesiscontainsnomaterialpreviouslypublishedor

writtenbyanotherpersonexceptwhereduereferenceismade.

DiaswatiMardiasmo

15/06/2012

3

Acknowledgement

PujisyukurAllahSwt,whohasblessedmyPhDjourneybothduringthegoodandbadtimes.

Myparentsandsisters,whogavemeendlesssupportandprayersthroughoutmyjourney

withoutyouIwouldnotfindthestrengthtocontinueonwritingandfinallyfinishingthis

PhD.

MysupervisorsProfessorCharlesSampfordandDrPaulBarnes,whoallowedmetobe

me throughoutmyPhD journeyandwhobelieved inmenomatterwhat.Thankyou for

your guidance, for your confidence, and for tellingme that this PhD is the start of a

conversation,ofmycareer,andnottheendoftheworld. IwisheachPhDstudentwere

giventhisadvice,asitallowedmetothinkofmyPhDasajourneyandmadeitpartofmy

life.

MyfianceLukeusPovis,whostoodbymeandcomfortedmewhenIalmostlosthopeand

couldnotwritewithoutyouandyourendlesscupsoffreakyteasandtellingmethat I

candoit,thisthesiswouldnotbewritten.Thankyouforcomingwithmeonthisjourney,

formakingmyPhDapartofourlives,andforeverything.

AlloftheQUTresearchsupportstaffbothatQUTBusinessSchoolandFacultyofLaw,

thankyou formaking this journeyeasier.CIEAM, JaneMalady,BillDuncan,andMaxine

BrownIamluckytohaveyouasmysupportteam.

To my thesis cheerleading team fellow PhD students Alicia, Marissa, Tim, Cookie

monster, Cameron, Damien, Charles, and Michael; I thank you for your support, for

pushingmetodobetter,and forkeepingmecompanyvia facebookwhile Iwriteto the

middle of the night. My girlfriends Katie Cooling, Katie Joy, Roheema, Lucy, Marissa,

Gillian, Danielle,Marie, Nancy, andmore (there are toomany of you!) thank you for

wavingyourpompomsandgettingmethroughthefinish line.EveryoneatdancingLe

Step,LatinEnergy,TammiatMadDancehouse;thankyouforallowingmedancethrough

my PhD. Grant Luck and Eric Pearson thank you for beingmy rock throughout this

journey,couldnthavedoneitwithoutyou.TotherestofmybigfamilytanteFenti,my

godmotherBubuandfamily,Povisfamily(Linda,Basil,Jamie,Beck,MattandAmy),andall

Indonesianfriends;thankyou.Hereitiseveryonethefruitsofourhardwork.Enjoy

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ToMyMother,mymother,mymother,andmyFather,

WithoutwhomthisPhDthesiswouldnotexist.

5

TableofContentsABSTRACT................................................................................................................................1

Acknowledgement..................................................................................................................3

TableofFigures.....................................................................................................................12

TableofTables......................................................................................................................13

TableofBoxes.......................................................................................................................14

ListofAcronymsandAbbreviations.....................................................................................18

1.Introduction......................................................................................................................20

1.1 ResearchObjectives..................................................................................................23

1.2 MainContributionofStudy......................................................................................23

1.3 ThesisStructure........................................................................................................25

1.4LimitationsoftheStudy..................................................................................................27

2.LiteratureReview..............................................................................................................29

2.0Introduction....................................................................................................................29

2.1.StateAssetManagementandGovernancePrinciples...................................................31

2.1.1DefinitionandAssumptionsofStateAssetManagement.......................................31

2.1.2DefinitionandAssumptionsofGoodGovernance..................................................35

2.1.3GoodGovernanceandAssetManagement.............................................................45

2.2CommonChallengesandComplexitiesinStateAssetManagementPractices..............57

2.2.1StateAssetManagement:VariousPractices...........................................................57

2.2.2CommonChallengesandComplexitiesinStateAssetManagement......................63

2.2.3TheRoleofUniqueCountryConditionsinStateAssetManagementPractice.......66

2.2.4BestPracticeinStateAssetManagement...............................................................68

2.3History(19692006)ofStateAssetManagementPracticesinIndonesia......................71

2.3.1FiveYearDevelopmentPlan(REPELITA)..................................................................71

2.3.2IndonesiasStateAssetManagementPractice:DefinitionsandAssumptions.......72

2.3.3CommonChallengesand/orComplexitiesinPreReformStateAssetManagementPractices............................................................................................................................74

2.3.4IndonesianPoliticalHistoryandCulture:PotentialImpactonStateAssetManagementPractice.......................................................................................................75

2.4Reform(2006Current)ofStateAssetManagementPracticesinIndonesia..................77

2.4.1TheReformProcess:Law6/2006andLaw38/2008...............................................77

2.4.2TheDirectorateGeneralofStateAssets:RoleandRoadmaptoStrategicAssetManagement.....................................................................................................................78

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2.4.3ReformedStateAssetManagementPractices........................................................83

2.4.4Challengesand/orComplexitiesinReformedStateAssetManagement................85

2.5GoodGovernancePrincipleswithinReformedStateAssetManagementPoliciesandPractice.................................................................................................................................87

2.5.1GoodGovernanceinIndonesia................................................................................87

2.5.2GoodGovernancePrincipleswithinReformedStateAssetManagementPoliciesandPractice......................................................................................................................88

2.6ComplexitiesofDecentralisationandRegionalAutonomyinReformedStateAssetManagement.........................................................................................................................90

2.6.1DecentralisationandRegionalAutonomyinIndonesia...........................................90

2.6.2ImpactofDecentralisationandRegionalAutonomy...............................................92

2.6.3PotentialComplexitiestotheImplementationofReformedStateAssetManagementPolicies........................................................................................................94

2.7Conclusion:ContributionofStudy..................................................................................96

2.7.1.IntegratedGovernanceandAssetManagementKnowledge.................................96

2.7.2SpecificIndonesiaStateAssetManagementReformKnowledge.........................101

3.ResearchQuestionsandConceptualFramework...........................................................103

3.1.ResearchQuestions.....................................................................................................103

3.2.ConceptualFramework................................................................................................106

4.Methodology...................................................................................................................108

4.1EpistemologyandMethodologicalApproach...............................................................108

4.1.1Epistemology..........................................................................................................109

4.1.2MethodologicalApproach.....................................................................................110

4.1.3PastResearchMethodologiesinRelevantStudies................................................110

4.2MethodologyDesign.....................................................................................................113

4.2.1RationalebehindaCrossCaseMethodologyDesign............................................113

4.2.2ATwoPhaseCrossCaseMethodologyDesign......................................................114

4.2.3NumberofCaseStudiesandIssuesofGeneralisability.........................................116

4.3DataCollection..............................................................................................................118

4.3.1SamplingMethod...................................................................................................118

4.3.2DocumentAnalysis.................................................................................................120

4.3.3SemiStructuredInterviews...................................................................................123

4.3.4OnSiteObservation...............................................................................................127

4.4DataAnalysis.................................................................................................................128

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4.4.1RecordingandManagementofData.....................................................................129

4.4.2AnalyticalApproach...............................................................................................130

4.4.3CrosscaseAnalysis................................................................................................131

5.CaseStudy1:StateAssetManagementinSpecialCapitalRegionDKIJakarta..............133

5.1Background:PastandPresentConditionofSpecialCapitalRegionDKIJakarta..........133

5.2DataCollection..............................................................................................................137

5.2.1DocumentAnalysis.................................................................................................138

5.2.2SemiStructuredInterviews...................................................................................138

5.2.3OnsiteObservation...............................................................................................141

5.3StateAssetManagementinSpecialCapitalRegionDKIJakarta:Laws,Policies,andExperiences.........................................................................................................................141

5.3.1ContentsofDKIJakartasRegionalDecreeno17/2004onRegionalStateAssetManagement...................................................................................................................145

5.3.2DKIJakartainStateAssetManagement:ExperienceandImplementation..........155

5.4GoodGovernancewithintheConceptualisationandImplementationofStateAssetManagementReform..........................................................................................................158

5.4.1AccountabilityandTransparency..........................................................................158

5.4.2StakeholderParticipation......................................................................................160

5.4.3RegulatoryCompliance..........................................................................................163

5.4.4Efficiency................................................................................................................166

5.5ChallengesinStateAssetManagementreforminDKIJakarta.....................................168

5.5.1AbsenceofStandardisedInformationSysteminSAMReporting.........................168

5.5.2DisconnectinUnderstandingofSAMPracticesbetweenSAMActorsandSAMLaw........................................................................................................................................169

6.CaseStudy2:StateAssetManagementinGorontaloRegionalGovernment................172

6.1Background:PastandPresentConditionofGorontaloRegionalGovernment............172

6.2DataCollectionProcess.................................................................................................175

6.2.1DocumentAnalysis.................................................................................................176

6.2.2SemiStructuredInterviews...................................................................................177

6.2.3OnsiteObservation...............................................................................................179

6.3StateAssetManagementinGorontaloProvince:Laws,Policies,andExperiences.....180

6.3.1NorthGorontaloRegency......................................................................................181

6.3.2GorontaloRegency................................................................................................184

6.3.3GorontaloProvincialGovernment.........................................................................186

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6.3.4SimilaritiesandContrastingExperiencesinStateAssetManagementbetweenGoverningBodiesinGorontaloProvince........................................................................193

6.4GoodGovernancewithintheConceptualisationandImplementationofStateAssetManagementReform..........................................................................................................197

6.5ChallengesinStateAssetManagementreforminGorontaloProvince.......................200

6.5.1ReportingandOwnershipCertificates...................................................................200

6.5.2Financialarrangements/fundingofstateassets....................................................202

6.5.3HumanResourceChallenges.................................................................................204

7.CaseStudy3:SpecialRegionYogyakartaGovernment,CentralJava.............................211

7.1Background:PastandPresentConditionofSpecialRegionYogyakartaGovernment.211

7.2DataCollectionProcess.................................................................................................213

7.2.1DocumentAnalysis.................................................................................................214

7.2.2SemiStructuredInterviews...................................................................................215

7.2.3OnsiteObservation...............................................................................................217

7.3StateAssetManagementinSpecialRegionYogyakartaGovernment:Laws,Rules,andRegulations.........................................................................................................................218

7.3.1YogyakartaProvincialGovernment.......................................................................220

7.3.2SlemanRegency.....................................................................................................230

7.3.3SimilaritiesandContrastingExperiencesinStateAssetManagementbetweenGoverningBodiesinDIYYogyakarta...............................................................................233

7.4GoodGovernancewithintheImplementationofStateAssetManagementinSpecialRegionYogyakartaGovernment.........................................................................................235

7.5ChallengesinStateAssetManagementreforminSpecialRegionDIYYogyakartaGovernment........................................................................................................................237

7.5.1RoleofPoliticalHistory..........................................................................................237

7.5.2IncompleteStateAssetReportingSystem.............................................................238

7.5.3RoleofTraditionalSocietalCultureWayofdoingthings....................................240

8.TheGoodGovernanceConceptualisationEvaluativeTool.............................................242

8.1TheGoodGovernanceConceptualisationEvaluativeTool...........................................242

8.1.1StateAssetManagementLaw,Policies,andTechnicalGuidelinesEvaluated......243

8.1.2CodingRulesoftheGoodGovernanceEvaluatorTool..........................................244

8.1.3JustificationfortheGoodGovernanceEvaluatorMatrix......................................246

8.2.GoodgovernanceEvaluationMatrixforCaseStudies................................................248

8.3ObservationsBasedontheGoodGovernanceEvaluatorTool/Matrix........................274

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8.3.1FirstObservation:DifferenceinStateAssetManagementLawsandPoliciesStructure.........................................................................................................................274

8.3.2SecondObservation:TheChoicetoEstablishSpecific/TailoredStateAssetManagementLawsandPolicies......................................................................................276

8.3.3ThirdObservation:VaryingDepthsofExplanationinDetailingStateAssetManagementrelatedActors...........................................................................................279

8.3.4FourthObservation:VaryinglevelsinGoodGovernanceconceptualisationwithinSAMlawsandpolicies,anditsunderstanding................................................................282

8.4AnalysisandConcludingComments.............................................................................288

8.4.1AnalysisofObservations........................................................................................289

8.4.2ConcludingComments...........................................................................................291

9.Findings...........................................................................................................................294

9.1ResearchQuestionOne................................................................................................294

9.1.1ExplicitandImplicitConceptualisationofGoodGovernanceinSAMLawsandpolicies............................................................................................................................299

9.1.2ContradictingViewsinIntervieweesPerceptionofRegionalStateAssetManagement...................................................................................................................300

9.1.3Concludingcomments...........................................................................................303

9.2ResearchQuestionTwo................................................................................................303

9.1RoleofStateAssetManagers...............................................................................303

9.2StateAssetManagementActorsLevelofUnderstandinginanIntegratedGoodGovernanceandStateAssetManagementReform...........................................................309

9.2.1VaryinglevelsofUnderstanding............................................................................309

9.2.2VaryinglevelofStateAssetManagementCycleKnowledge.................................317

9.3ResearchQuestionThree..............................................................................................322

9.3.1FourInfluencesofDecentralisationandRegionalAutonomy...............................323

9.3.2DoubleEdgedSwordofDecentralisationandRegionalAutonomy......................330

9.3.3ConcludingComment.............................................................................................331

9.4ResearchQuestionFour................................................................................................332

9.4.1PoliticalHistoryandBureaucraticCulturePlayaStrongRoleinStateAssetManagementReform......................................................................................................332

9.4.2PoliticalHistoryandBureaucraticCultureDoesNotPlayaStrongRoleinStateAssetManagementReform............................................................................................333

9.4.3PoliticalHistoryandBureaucraticCultureMayPlayaStrongRoleinStateAssetManagementReform......................................................................................................335

9.4.4ConcludingComment.............................................................................................336

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10.AnalysisofInfluencing/contributingfactorsandtheNotionofExcuseRhetoric.......337

10.1ImpedingVariable1:PrematurityofStateAssetManagementReform....................339

10.2ThepeopleStateAssetManagementrelatedactors............................................342

10.3ThenotionofTimeandIneedmoretime.............................................................344

10.4InconsistencyandInformationUncertainty...............................................................348

10.5Incomplete(computerised/automatic)SysteminStateAssetManagementPractice............................................................................................................................................351

10.6IncentiveandSanctions..............................................................................................352

10.7ThirdPartiesandtheSociety......................................................................................354

10.8LegalitiesIncompleteLegalPaperwork...................................................................357

10.9LowStewardship/DysfunctionperceptionofCustodianship....................................359

10.10LowMonitoringandControl.....................................................................................360

10.11InconsistenciesandContradictionssurroundingImpedimentFactors....................362

10.11.1FirstInconsistency..............................................................................................362

10.11.2SecondInconsistency.........................................................................................363

10.11.3ThirdInconsistency............................................................................................365

11.Discussion......................................................................................................................368

11.0Introduction................................................................................................................368

11.1GovernmentOrganisationalStructure.......................................................................369

11.1.1AssumptionbehindGovernanceanditsImpactonSAMreform........................372

11.2UncertaintyAvoidanceandTraditionalCultureasVoiceofReason........................374

11.3MismatchbetweenWestandEastIdeologiesinSAMPractices............................381

11.3.1Argument1:IncompleteCapacityandCapability...............................................383

11.3.1Argument2:SuitabilityofWesternIdeologies..................................................386

11.3.2Argument3:MixedResultsinPastReformsAspiredbyWesternIdeologies...388

11.4Concludingcomment..................................................................................................390

11.2.1StagnantStateAssetManagementReform:ExcuseRhetoric?...........................394

11.2.2MainLearning......................................................................................................395

12.ConclusionandRecommendations..............................................................................399

12.1AnswerstoResearchQuestions.................................................................................400

12.1.1ResearchQuestion1:LawandPoliciesofStateAssetManagement..................400

12.1.2ResearchQuestion2:IntegrationbetweenGoodGovernancePrinciplesandStateAssetManagement.........................................................................................................402

12.1.3ResearchQuestion3:ImplementationofSAMPolicies......................................405

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12.1.4ResearchQuestion4:PoliticalHistoryandBureaucraticCulture........................407

12.2StateAssetManagementReforminIndonesia:AWickedProblem..........................410

12.3MainLearningofStudy...............................................................................................417

12.4FutureResearch..........................................................................................................418

12.5ImportanceandContributionofStudy.......................................................................420

12.5.1ResearchGap.......................................................................................................420

12.5.2Stateassetmanagementliterature.....................................................................421

12.5.3PublicPolicyReform............................................................................................421

12.5.4GoodGovernanceLiterature...............................................................................422

12.5.5LocalGovernmentResearch................................................................................422

13.Bibliography..................................................................................................................424

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TableofFigures

Figure3.1TheoreticalFrameworkofthisStudy.................................................................107Figure4.1MethodologyDesign..........................................................................................116Figure4.2TheJohariWindowasaSamplingMethod........................................................119Figure4.3InterviewDesign................................................................................................125Figure5.1DKIJakartaGovernmentStructure....................................................................134Figure5.2SpecialRegionJakarta(DKIJakarta)StateAssetManagementRoadmap.......157Figure6.1GorontaloProvinceGovernmentStructure.......................................................173Figure7.1GovernmentStructureofDIYYogyakarta..........................................................213Figure7.2ProcessesofLawand/orLegalProductEstablishmentin.................................226YogyakartaProvincialGovernment....................................................................................226Figure8.1OrganisationalChartoftheRegionalStateAssetBodyinYogyakartaCity.......280Figure9.1BPKPs(GovernmentFinanceandDevelopmentSupervisoryAgency)FrameworkforImplementationofStateAssetManagementLawsandPolicies..................................295Figure9.2RoleofGoodGovernanceinPublicPolicyandBestPracticeinensuringitimplementationindaytodaygoverning............................................................................296Figure9.3StateAssetManagementStructuralChartasIdentifiedbytheHomeAffairsMinistryDecree7/2007onRegionalStateAssetManagement........................................305Figure10.1LevelofSupportforImpedingVariableinPercentageValue;forIndonesianRegionalGovernment.........................................................................................................339Figure11.1DiagramRepresentationofVarianceinGovernmentStructureandStateAssetManagementLawsandPoliciesAdopted...........................................................................369Figure11.2JohariWindowofCaseStudiesandVoicesofReasonInfluence...................382Figure11.3FactorsatPlayinIndonesianStateAssetManagementReformImplementation............................................................................................................................................390Figure12.1BreakdownofGoodGovernancePrinciplesConceptualisedinIndonesiaStateAssetManagementLawsandPolicies................................................................................402Figure12.2LevelofGoodGovernanceandStateAssetManagementUnderstandingatIndonesiaCentralGovernment...........................................................................................403Figure12.3LevelofGoodGovernanceandStateAssetManagementUnderstandingatIndonesiaRegionalGovernment........................................................................................403Figure12.4SpreadofGoodGovernanceandStateAssetManagementUnderstandinginCentralGovernmentbasedonEchelonlevel.....................................................................404Figure12.5SupportforInfluencing/contributingfactorsasIdentifiedbyInterviewees...411Figure12.6TheIntricateRelationshipofInfluencing/contributingfactorsasaWickedProbleminIndonesiasStateAssetManagementReform.................................................413Figure12.7FactorsinanIntegratedGoodGovernanceandStateAssetManagementineachlevelofGovernment...................................................................................................415

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TableofTables

TABLE2.1COMPARATIVEANALYSISOFGOODGOVERNANCEPRINCIPLES,CORNISHANDMORTON(2001)ASSETGOVERNANCEMODEL,ANDTHEPAS55

5355

TABLE2.2DIRECTORATEGENERALOFSTATEASSETROADMAPTOSTRATEGICASSETMANAGEMENT

81

TABLE2.3METAANALYSISOFCURRENTLITERATUREGOVERNANCEANDSTATEASSETMANAGEMENT

98100

TABLE4.1PROPOSEDINTERVIEWQUESTIONS 124TABLE5.1CATEGORISATIONOFGOVERNMENTOFFICIALS 139TABLE5.2DKIJAKARTAGOVERNMENTINTERVIEWDISTRIBUTION 139TABLE6.1DOCUMENTSCOLLECTED(FORANALYSIS)FROMGORONTALOREGIONALGOVERNMENT

177

TABLE6.2GORONTALOREGIONALGOVERNMENTINTERVIEWDISTRIBUTION 178TABLE7.1YOGYAKARTASPECIALREGIONALGOVERNMENTINTERVIEWDISTRIBUTION 217TABLE8.1KEYFORGOODGOVERNANCEEVALUATIONMATRIX 248TABLE8.2GOODGOVERNANCEEVALUATIONMATRIXFORGORONTALOPROVINCIALGOVERNMENT

249251

TABLE8.3GOODGOVERNANCEEVALUATIONMATRIXFORGORONTALOREGENCY 252254

TABLE8.4GOODGOVERNANCEEVALUATIONMATRIXFORGORONTALOCITY 255257

TABLE8.5GOODGOVERNANCEEVALUATIONMATRIXFORDKIJAKARTA 258260

TABLE8.6GOODGOVERNANCEEVALUATIONMATRIXFORYOGYAKARTAPROVINCIALGOVERNMENT

261

TABLE8.7GOODGOVERNANCEEVALUATIONMATRIXFORYOGYAKARTAPROVINCIALGOVERNMENT

262266

TABLE8.8GOODGOVERNANCEEVALUATIONMATRIXFORSLEMANREGENCY 267272

TABLE8.9GOODGOVERNANCEEVALUATIONMATRIXFORYOGYAKARTACITY 273TABLE8.10GOODGOVERNANCE(GG)CONCEPTUALISATIONANDUNDERSTANDINGCATEGORY

282

TABLE9.1TASKANDFUNCTIONOFSTATEASSETMANAGEMENT(SAM)RELATEDACTORSATREGIONALGOVERNMENT,ASPERHOMEAFFAIRSMINISTRYDECREE17/2007ONREGIONALSTATEASSETMANAGEMENT

306307

TABLE10.1LEVELOFSUPPORTFOREACHIMPEDINGVARIABLE,INNUMERICALANDPERCENTAGEVALUE;ININDONESIANREGIONALGOVERNMENT

338

TABLE11.1.JOHARIWINDOWOFCASESTUDIESANDVOICESOFREASONINFLUENCE. 376

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TableofBoxesBox5.1PositiveViewsonDKIJakartaGovernmentStructure 135Box5.2NegativeViewsonDKIJakartaGovernmentStructure 136Box5.3ReluctancetoChangeDKIJakartaGovernmentStructure 137Box5.4CommoncommentsfoundinDKIJakartasmiddleandlowlevelgovernmentinterviews

140

Box5.5SpecificStateAssetManagementLawsaccordingtoDKIJakartaGovernmentOfficials

143144

Box5.6GoodGovernancePrinciplesinDraftingofDKIJakartaSAMLawsandPolicies

144

Box5.7SourceofSAMComplexityinDKIJakarta 155Box5.8UncertaintyinAccountabilityandTransparencyGoodGovernancePrincipleswithinDKIJakartaSAM

159

Box5.9CertaintyinAccountabilityandTransparencyGoodGovernancePrincipleswithinDKIJakartaSAM

159160

Box5.10StakeholderParticipationinDKIJakartaStateAssetManagementLawandPractice

162

Box5.11RegulatoryComplianceinDKIJakartaSAMLawandPracticeHighLevelOfficials

163164

Box5.12RegulatoryComplianceinDKIJakartaSAMLawandPracticeMiddle/LowLevelOfficials

164

Box5.13ExamplesoftheExpressionRegulatedbyRegionalHeadDecreeinDKIJakartaSAMLaw

165

Box5.14ConceptualisationofEfficiencyinDKIJakartaSAMLawandPractice 166Box5.15ExamplesofExplicitMentionofEfficiencyinDKIJakartaSAMLaw 167Box5.16AbsenceofStandardisedInformationSysteminSAMReporting 168Box5.17ResponsiblePartyPostAcquirementofStateAssetaccordingtoDKIJakartaOfficials

170

Box6.1GorontaloProvinceGoverningObjectives 175Box6.2StateAssetDevelopmentinGorontaloProvince 180Box6.3NorthGorontaloRegencyGovernmentonSpecificSAMLawsandPolicies 183Box6.4GorontaloRegencyOpiniononSpecificSAMLawsandPolicies 184Box6.5PositiveImpactofGorontaloProvincialStateAssetManagementApproach 190Box6.6NegativeAspectsofGorontaloProvincialGovernmentsSAMApproach 192Box6.7GorontaloCityGovernmentApproachtoSAMLawsandPolicies 196Box6.8IncompleteGuidancetoGoodGovernanceConceptualisationinStateAssetManagementLawsandPolicies

199

Box6.9ReportingandOwnershipCertificatesasaChallengeinGorontaloProvincesSAM

201

Box6.10FundingofStateAssetManagementasaChallengeinGorontaloProvinceSAM

202

Box6.11HumanResourceChallengesinNorthGorontalo 205Box6.12HumanResourceChallengesinGorontaloProvincialGovernment 207Box6.13HumanResourcesatGorontaloCityandGorontaloRegency 209Box7.1StateAssetManagementReformasanOpportunityandCautionaryMeasure

221

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Box7.2SilentstruggleofStateassetownershipbetweenCivilgovernmentandSultanate

223

Box7.3PositiveOpinionsregardingSpecificYogyakartaProvincialGovernmentSAMLaws

225

Box7.4NegativeOpinionsregardingSpecificYogyakartaProvincialGovernmentSAMLaws

227

Box7.5YogyakartaProvincialGovernmentcommentsonTaskandFunctionStructureofSAMLaws

229

Box7.6.SlemanRegencygovernmentofficialopiniononSpecificSAMLaws 230Box7.7YogyakartaCityJustificationforTaskandFunctionSAMLawStructure 234Box8.1LimitedHumanResourcesforStateAssetManagementPositionsinYogyakartaCity

281

Box9.1BPKPsRoleinAssistingRegionalGovernmentImplementStateAssetManagementReform

297

Box9.2SupportingArgumentsforIncompleterulesofthegameinRegionalStateAssetManagement

301

Box9.3 IntervieweesOpinionon LevelofGoodGovernanceConceptualisation inStateAssetManagementLaws

302

Box9.4ImbalanceRelationshipbetweenCentralGovernmentAssetGovernorandRegionalGovernmentAssetGovernor

308309

Box9.5InformalStateAssetManagementRelatedEducation 313Box9.6MismatchinExpectationofHighLevelOfficialsandAbilityofMiddleLowerLevelOfficials

316

Box9.7IncompetencyofGovernmentOfficialsinConceptualisingGoodGovernancewithinPublicPolicy

317

Box9.8GoodGovernanceConceptualisationwithinStateAssetManagementLifeCycle

319

Box9.9ImpactofaDisconnectbetweenCentralandRegionalGovernmentinStateAssetManagementReform

320321

Box9.10AssistanceAdvisoryRelationshipbetweenBPKPandRegionalGovernment 321Box9.11ImpactofDecentralisationandRegionalAutonomyintheQualityofStateAssetManagementLawsandPoliciesestablishedbyRegionalGovernment

323

Box9.12ImpactofDecentralisationandRegionalAutonomyonRegionalStateAssetGovernmentHierarchyStructure

324

Box9.13ImpactofDecentralisationandRegionalAutonomyonStateAssetOwnership

325

Box9.14ImpactofDKIJakartaRegionalGovernmentStructureonStateAssetManagement

326

Box9.15ImpactofRegionalGovernmentAgeinStateAssetManagement 327Box9.16ImpactofDualityinGovernmentonStateAssetManagement 329Box9.17SimplifiedStateAssetManagementChallengesinNewRegionalGovernment

330

Box9.18ChallengesinStateAssetManagementforNewRegionalGovernment 331Box9.19StrongAgreementforImpactofIndonesianPoliticalHistoryandBureaucraticCultureinStateAssetManagementReform

333

Box9.20ImbalanceofHardandSoftControlasanImpedimenttoStateAssetManagementReform

334

Box9.21IndividualCharacteristicsasImpedimentVariabletoStateAssetManagementReform

335336

16

Box10.1SupportforPrematurityofStateAssetManagementReformasanImpedingVariable

341

Box10.2SupportforThePeopleasanImpedingVariable 343344

Box10.3ComplicationofStateAssetsProcuredPriortoStateAssetManagementReform

345

Box10.4RegionalGovernmentAgeandStateAssetManagementComplication 346Box10.5OpposingstatementtoIneedmoretimeasanImpedingVariable 347Box10.6SupportforInconsistencyinStateAssetManagementPracticesandInformationUncertaintyasanImpedingVariable

349

Box10.7OpposingArgumentsforInconsistencyandInformationUncertaintyasImpedingVariable

350

Box10.8SupportforanIncompleteAutomatedSystemasanImpedimentVariable 351Box10.9SupportofLackofIncentive/SanctionasanImpedimentVariable 353Box10.10SupportforThirdPartiesasanImpedimentVariable 354Box10.11TheCrucialRoleofSocietyinStateAssetManagementReform 355Box10.12SocietyasanimpedimentvariabletoStateAssetManagementReform 356Box10.13SupportforIncompleteLegalPaperworkasImpedimentVariable 358Box10.14SupportforLowStewardship/DysfunctionCustodianshipasImpedingVariable

359360

Box10.15SupportforLowStewardship/DysfunctionCustodianshipasImpedingVariable

361

17

18

ListofAcronymsandAbbreviations

ADB:AsianDevelopmentBank

APEC:AsiaPacificEconomicCooperation

ASEAN:AssociationofSouthEastAsianNations

BAPPENAS: Badan Perencanaan dan Pembangunan Nasional (National Development

PlanningAgency)

BCBC:BritishColumbiaBuildingCorporation

BPKP: Badan Pengawasan Keuangan dan Pembangunan (Finance and Development

SupervisoryAgency)

BSI:BritishStandardsInstitute

DKIJakarta:DaerahKhususIbukotaJakarta(SpecialCapitalRegionDKIJakarta)

DIYYogyakarta:DaerahIstimewaYogyakarta(SpecialRegionYogyakarta)

DJKN:DirektoratJenderalKekayaanNegara(DirectorateGeneralofStateAssets)

GAAP:GenerallyAcceptedAccountingPractice

IAM:InstituteofAssetManagement

ILGR:InitiativesforLocalGovernanceReform

IPC:InferentialPatternCoding

KNKG:KomiteNasionalKebijakanGovernance(NationalCommitteeonGovernance)

MPRRI:Majelis PermusyawaratanRakyatRepublik Indonesia (The People'sConsultative

AssemblyoftheRepublicofIndonesia)

PAS55:PubliclyAvailableSpecification55

OECD:TheOrganisationforEconomicCooperationandDevelopment

ORC:OntarioRealtyCorporation

19

PPP:PrivatePublicPartnership

REPELITA:RencanaPembangunanLimaTahun(FiveYearDevelopmentPlan)

UNDP:UnitedNationsDevelopmentProgramme

UNESCAP:UnitedNationsEconomicandSocialCommissionforAsiaandthePacific

UU:UndangUndang(IndonesianConstitution,usuallyaccompaniedbyan identification

numberandyearintroducedi.eUU32/2004)

WERF:WaterEnvironmentResearchFoundation

20

1.Introduction

The practice of state assetmanagement is gaining amomentum in importance across

governmentsworldwide (Conway,2006;Dow,Gillies,Nichols,&Polen,2006;Kaganova,

McKellar, & Peterson, 2006; McKellar, 2006b), where governments are realising their

reliance on the maximum performance of state assets in order to perform its main

function of public service provision, and are enthusiastic to reform its state asset

management policies. There is also an increasing realisation thatwithout efficient and

effective state asset management policies and practices the governments initial

investmentwould turn into a liability (or a loss). Jabiri, Jaafari, Platfoot,&Gunaratram

(2005)and Lin,Gao,Koronios,&Chanana (2007)agreewith thisnotionas theybelieve

that the operations and management of infrastructure assets are considered to be

expensive, extensive and or complex, and have amajor impact on performance over

extendedperiods.

Thepracticeofstateassetmanagementdiffersbetweencountries, inareassuchas; the

definitionofstateassetmanagementandwhat isconsideredtobestateassets,the level

of private (or corporate sector) involvement (i.e public private partnerships), the

accounting system used, the information system in place, and the level of state asset

managementpolicysegregationbetweencentral levelandregional levelofgovernment.

Interestingly,despitethevarianceinstateassetmanagementpolicies,commonchallenges

such as incomplete information system, accountability, and governance

adherence/conceptualisation are identified (Kaganova,McKellar and Peterson 2006).

Such common challenges has resulted in a surge of reform in state assetmanagement

practices, aiming for a best practicewhereby good governance principles are a central

consideration in the conceptualising (or drafting) of reformed state assetmanagement

policies and practices (Cornish & Morton, 2001; Kaganova & NayyarStone, 2000;

McSweeney,1999;Woodhouse,2004)

Althoughtheconceptualisationofgoodgovernanceprincipleswithinreformedstateasset

management policies is suggested, there is still ambiguity on the meaning of good

governanceconceptualisationwithinstateassetmanagementparticularly inregardsto

what is meant by good governance principles, which good governance principles are

conceptualised,andhowthesegoodgovernanceprinciplesareconceptualised.Therefore

21

there isaneedforastudythatfocusesonunderstandingtherelationshipbetweengood

governanceandstateassetmanagementlawsandpolicies.

Countries suchasCanada,Australia,andNewZealandare considered tobepioneers in

stateassetmanagementreform,whereuponpractices introducedby thesecountriesare

consideredtobewelldevelopedandadvanced(Kaganova,McKellar,andPeterson2006).

Other countries such as Indonesia, China, Kuwait, Kyrgyztan, etc are identified to be

embarking on the journey of state assetmanagement reform, considered to be at the

earlystagesandareeagertolearnfrom(otherconsidered)advancedcountries(Kaganova,

Speakman, & AlSultan, 2003; O. Kaganova, Tian, & Undeland, 2001). Indonesia

exemplified its enthusiasm in reforming state assetmanagement policies and practices

through the establishment of the Directorate General of State Assets in 2006. The

DirectorateGeneralofStateAssetshavestressedthenewdirectionthat it istakingstate

assetmanagement laws and policies through the introduction of Republic of Indonesia

Law Number 38 Year 2008, which is an amended regulation overruling Republic of

Indonesia Law Number 6 Year 2006 on Central/Regional Government State Asset

Management (Hadiyanto, 2009c). Law number 38/2008 aims to further exemplify good

governanceprinciplesandputsforwardathehighestandbestuseofassetsprinciple in

stateassetmanagement(Hadiyanto,2009a).

This study will focus on analysing state asset management policies in Indonesia, in

particular reformed state asset management policies that were introduced with the

establishmentoftheDirectorateGeneralofStateAssets.Indonesiaischosenasacountry

casestudyforseveralreasons.

FirstlythereintroductionofgoodgovernanceprinciplesaftertheAsianFinancialCrisesin

1997 isanongoingprocesswithin thecountry,where improving theunderstandingand

implementationofgoodgovernanceprinciplesremainsaconstantthemeofallpresidency

regimes after Soeharto and is amain objective of the current presidency regime. Thus

there isapushforconceptualisinggoodgovernanceprinciples inallareasofgovernment

responsibilities, including state asset management. The Indonesian government and

society however acknowledges their tendency to remember the entrenched ways of

Soehartos regime,whichwas, toa certainextent, contradictory fromgoodgovernance

principles.Itisidentifiedthatthechangeinmindsetfromthefamiliaroldregimetonew

good governance principle abiding regime is incomplete. Therefore the intricacy of

22

conflictingsetsofminds,entrenchedwaysofdoing things,and theoptimistobjectiveof

conceptualising and implementing good governance principles within public policies

providean interestingplatformforunderstandingthecomplexities in implementingstate

assetmanagementreform.

Secondly a review of state assetmanagement practices (of various countries) and the

literature on an integrated governance and asset management approach show that

althoughIndonesiaisacknowledgedtohaveinterestingcomplexitieswithinitsapplication

of reformed state asset management practices (Kaganova, 2006; MacAndrews, 1998;

MacAndrews&Saunders,1997),thereisanabsenceofstudiesonIndonesiasstateasset

management practices both prior to and after the introduction of state asset

managementreformin2006.Thisshowsthatthereismuchtodiscover,andwillhavethe

potentialtoaddtostateassetmanagementliteratureintermsoflearningcurvesforother

countries.

Thirdly Indonesia isunique inthesensethat it ismadeupof33provinceswithdifferent

regional cultures, level of resources (human, capital, physical), and government policy

objectives. Keeping this in mind, Indonesia introduced decentralisation and regional

autonomy regime in 2001, which transfers the authority of governing many sectors

(forestry, internationaltrade,etc)fromcentralgovernmenttoregionalgovernment.This

suggests there are potential complexities in the equal implementation of state asset

management policies across 33 provinces. A study that focuses on analysing these

potential complexitieswillnotonlyhave theoretical contributions that iswithin state

assetmanagement literaturebutalsopracticalcontributionsfor Indonesianstateasset

managementpolicymakers.

Theshortdiscussionabovehighlightstheheightened importanceofreformedstateasset

management practices that incorporate good governance principles and the current

untappedstateassetmanagementexperienceofIndonesia.Thisleadstotheformulation

ofastudythatfocusesonincreasingtheunderstandingofhowgoodgovernanceprinciples

interact and influence state assetmanagement laws and policies and create/establish

constructs of intricate relationships between various factors that play a role in the

conceptualisation,understanding,andimplementationofsaidlawsandpolicies.

23

1.1 ResearchObjectives

The purpose of this study is to further understand the relationship between good

governanceprinciplesandpublicpolicy,within the contextof stateassetsmanagement

lawsandpolicieswithinIndonesia.Thismainobjectiveisbrokendownaslistedbelow:

1.Understandtheextentthatgoodgovernanceisconceptualisedandimplementedwithin

stateassetmanagementlawsandpolicies.

2. Identify and consider the risks of not understanding the relationship between good

governance principles and state asset management laws and policies, leading to the

identificationoffactorscontributingtocurrentstagnantstateassetmanagementreform.

3. Identify the level of state asset management actor understanding, in regards to

conceptualisingandimplementinganintegratedgovernanceandstateassetmanagement

approach.

4.Understandhow (and towhatextent)decentralisationandregionalautonomyregime

potentiallyaddscomplexitytotheimplementationofanintegratedgovernanceandstate

assetmanagementapproach.

5. Understand how political history and bureaucratic culture play a role in the

conceptualisationandimplementationofstateassetmanagementpoliciesandpracticesin

Indonesia.

1.2 MainContributionofStudy

Oneofthemainmotivationsofthisstudy istheabsenceofresearchonIndonesiasstate

asset management practices, in particular after the introduction of its reform and

establishmentoftheDirectorateGeneralofStateAssetin2006.

The importanceof this study is signifiedby its theoretical andpractical contribution. In

practicalterms,thediscussionandfindingsofthisstudycontributestotheknowledgeof

Indonesianstateassetmanagementactor.Asthere isnoexistingresearch inthisfield in

Indonesia,andthefactthatstateassetmanagementreformisIndonesiasfirstexperience

within the fieldofstateassetmanagementbestpractice, it is important to informstate

24

asset management laws and policies makers and implementers of the intricate

relationshipsexistinginconceptualisingandimplementinganintegratedgoodgovernance

andstateassetmanagementapproach.

Inparticularthisstudywillthrowlightatrecurringquestionsfromstateassetmanagement

policymakers,regardingthestagnantimplementationofstateassetmanagementreform.

This informationcanbeconsideredasa learningcurveby Indonesianstatemanagement

actors in their path to state assetmanagement best practice, and has the potential of

beingincorporatedinfuturestateassetmanagementlawsandpolicies.

Intermsoftheory,thisstudycontributesinfourstreamsofliterature/areaofstudy.

Firstly, state asset management literature. This study contributes to state asset

management literature (andassetmanagementat large)byconsideringpoliticalhistory,

bureaucratic culture,and traditional societal cultureas independent factors thatplaysa

roleintheassetmanagerorassetuser(i.epolicyimplementers)perspectiveandapproach

toimplementationofassetmanagementrelatedlaws,policies,andtechnicalguidelines.

Secondly, public policy reform literature. This study identifies wicked problems and

themes for consideration by the Indonesian government in their drafting, establishing,

introducing,andenforcingofpublicpolicyreform.Onawiderscaleofpublicpolicyreform

literature, this study further emphasise the impact of country uniqueness in the

conceptualisationandimplementationofpublicpolicyreform.

Thirdly, good governance literature.A focusof this study is an indepth explorationof

howgoodgovernancecanbeconceptualisedwithinapublicpolicy(takingasanexample

state assetmanagement laws and policies), and how well such a conceptualisation is

understood and implemented by public policy makers and implementers. This study

highlights the potential mismatch in good governance perception and understanding

between public policymakers and implementers. This study also highlights the crucial

factors that contribute to the divergence of good governance understanding and

conceptualisation,andquestionwhetherconvergencetoonegoodgovernancestandardis

an ideal expectation of public policy makers, in consideration of unique country

characteristics.

25

Fourthly,localgovernmentresearch.Thisstudycontributestolocalgovernmentresearch

byquestioning themeritsofadecentralisationand regionalautonomy in implementing

nationalpublicpolicyreformandprovisionofpublicservice.

Basedontheidentificationoftheoreticalandpracticalcontributionsofthisstudyabove,it

isconcludedthatthisstudyisofhighsignificanceandjustified.

1.3 ThesisStructure

Thisstudywillbestructuredasfollows.

Chapter 2 provide a literature review of available integrated governance and asset

managementliteratureandstateassetmanagementliterature,highlightingtheneedfora

study that focuses on the conceptualisation of good governance principleswithin state

asset management practices and the need for a study that focuses on Indonesias

reformedstateassetmanagement.Chapter2isdividedinto7sectionsinordertoprovide

acomprehensiveillustrationofthegapsinacademicresearchandpotentialcontributions

ofthestudy.

Chapter3 identifiestheoverarchingresearchquestionsandresearchquestionswithin it,

inparticularproviding the rationalebehindeachquestion.Chapter threealsoprovidea

conceptualframeworkthatillustratesthepurposeofthisstudy.

Chapter 4 is themethodology chapter outlining the epistemology that underpins this

research, the qualitative nature of the research, the research design, data collection

methods, and analyticalmethods.Chapter 4 alsoprovides an accountof thepilot case

study, inparticularconcentratingon lessons learnt inregardstotheconceptualisationof

governance principles within an asset management practice and in regards to data

collectionmethods.

Chapter 5 to Chapter 7 arewhat Yin (1994) describe to bewriteup of case studies, a

qualitativestudytechniquerecommendedbyMilesandHubermann(1994)asafirststep

incrosscaseanalyticalapproach.Thuschapter5to7arerichwriteupofcasestudiesof

the Directorate General of State Assets, DKI Jakarta, Gorontalo, and DIY Yogyakarta

consecutively.

26

The structure of each chapter highlights the government structure of the regional

government, political history and accepted traditional culture/norms, experience with

state assetmanagement prior to the reform, detailed explanation of the case studys

interpretation and/or approach to state assetmanagement reform, and any identified

challenges in the conceptualisation and implementation process of state asset

managementreform.

A crucial objective of each case studywrite up (chapter) is not only to highlight their

experiencewith the stateassetmanagement reform,butalso tohighlighteach regional

governments unique characteristics such as traditional culture, political history,

governments objectives and current socioeconomic and political conditions, etc and

howitplaysaroleintheirversionofstateassetmanagementreformandanychallenges

identified.

Asthestrengthofthisstudyisinitsqualitativenature,anyconclusionmadeoremergent

issues/themesidentifiedwillbesupportedbystatementsfromintervieweesnotonlyto

asa justificationtoolbutalsotoprovidethereaderwithaclearerpictureofthetrainof

thoughtthatleadtosaidconclusionand/oremergentissue.

Chapter8providesa tabled illustrationofgoodgovernanceprinciplesconceptualisation

withinstateassetmanagementlawsandpolicies,aswellasthelevelthatitisunderstood

andimplemented.Thisisdonethroughthegoodgovernanceevaluatortable,whichallows

aconclusionregardingthelevelthatagoodgovernanceprincipleisconceptualisedwithin

a stateassetmanagement lawand/orpolicy. Italsoprovides information regarding the

structureofvariousstateassetmanagementlawsandpoliciesaseachlawisevaluatedon

aclausebyclausebasis.

Chapter9,titledpreliminaryanswerstotheresearchquestion,isbasedonanalysisofthe

good governance evaluator tool and coding of interviewees opinions (based on the

researchquestionsandotheremerging issues).Thenatureofresearchquestionanswers

providedinthischapterispreliminary,utilisedasaplatformtoidentifyemergingthemes

orcrucialissues(andperhapsinterestingissues)inneedoffurtherdiscussion.

Chapter10discussesallinfluencing/contributingfactorstoanintegratedgoodgovernance

approach as identifiedby interviewees throughout thedata collectionprocess.Hintsof

influencing/contributingfactorsdiscussedinthischapterareevidentinchapter5onwards,

27

howeveranalysisofthevalidityandrelevanceof influencing/contributingfactorsarenot

yet performed. The discussion of influencing/contributing factors in Chapter 10 is

focussed on positive and negative comments regarding each impeding variable, in an

attempttoprovevalidityandrelevancetostagnantintegratedgoodgovernanceandasset

managementapproach in Indonesia.Thischapteralsotouchedonthesubjectof excuse

rhetoric,aconceptsupportedbyBessant(2010) inherstudyof influencing/contributing

factorsinimplementingpublicpolicyreformindevelopingcountries.

Theanalysisanddiscussions inChapters8,9,and10have resulted in theemergenceof

crucialthemes,interestingwickedproblems,challenges,andotherissues.Howeverthese

aremerelyidentifiedinthepreviouschapters,butnotyetdiscussedindepth.Chapter11

fills this gap by providing an indepth discussion of each crucial theme or interesting

wickedproblems,discussingtheirviability,potentialrelationshipbetweeneachother,and

its role in the conceptualisation of good governance principles within state asset

managementlawsandpolicies,andtheimplementationofsaidlawsandpolicies.

Chapter12concludesthethesis.

1.4LimitationsoftheStudy

Limitationsofthisstudyexist,howevermoreoftenthannotitismitigatedbythenatureof

thestudyand/orformulatingsaidlimitationintoanareaforfutureresearch.

Thefirstlimitationofthisstudyisthespecificitynatureofthestudy,wherebyfindingsof

the study are tailoredwithin the contextof Indonesia. That said, a literature reviewof

available state asset management research that is focused on the experience of a

particular country (see Chapter 2) reveals that Indonesia is a neglected country in the

research field,be itpreorpost stateassetmanagement reform.Aswithmany country

specific studies, it is themethodology and analytical frameworkof this study thathold

transferabilitypotential.Indonesiasexperiencecanbedrawnuponbyothers,inparticular

thoseofsimilargovernmentstructure,politicalhistory,andbureaucraticculture.Although

specific in nature, the depth of this study and observationsmade contributes to the

dialogue of how governance principles are conceptualised in state assetmanagement

public policywithin the intricacy of political history and culture, thus asmentioned in

section1.3contributestoawidearrayofacademicliterature.

28

Thesecondlimitationofthisstudyisthesamplenumber(n),ifcontrastedwiththesizeof

Indonesiascentralandregionalgovernmentcohort.Thenumberofcasestudiesinvolved

in this study is the central government itself and three provinces, encompassing

approximatelytenregionalgovernments.Thismaybeconsideredsmall,considering that

there are 33 provinces in Indonesia and approximately 154 regional governments.

However the purpose and scope of this research is not that of quantified generalised

findings; rather the purpose of this study is to enable indepth understanding and the

ability to construct relationships of relevant factors that depicts the complexity of

integratedgoodgovernanceand stateassetmanagement reform,and itsunderstanding

and implementation, in Indonesia. Tomitigate this limitation, intervieweesof thisstudy

aresourcedfromdifferentlevelsofregionalgovernmentwithinaprovince(i.eprovincial,

regency,andcity levelgovernment),aswellasensuring that the threeechelon levelsof

Indonesias government structure (high,middle, low) are represented in each regional

government.Not only does this allows a triangulation in the interviewing and analysis

process, it also allows direct links to be made to illustrate the relationship (and any

challengeswithinit)betweenthepublicpolicymakerandimplementer.

The third limitation of this study is the snapshot nature of the study. The studywas

performedbetween20092011,withdatacollectionperformedbetweenJanuaryandJuly

2010.Itisrecognisedthatmanyofthefactorsdiscussedinthisstudyiscorrectatthetime

ofthestudy,however it isalsoacknowledgedthatthesefactorsareofevolvingnature

forexample theestablishmentand/orabolishmentof lawsandpolicies, levelofhuman

capacityandcapability,etc.Aconcreteexample isthe levelofauditopinionprovidedby

the external audit body, which by the Indonesian government is acknowledged as a

quantifiablemeasure of the quality of state assetmanagement practices. The external

auditbodyperformsitsauditonaquarterlybasis,whichsuggestsapotentialforevolving

level of opinion rewarded to regional governments. The external audit bodys opinions

drawnupon from thisstudy is thatofQuarter1of2010,andQuarter2of2010 (during

datacollectionperiod),hencecorrectat the timeofwritingonly.Thatsaid, thisstudy is

the firstwithin the context of Indonesias integrated good governance and state asset

management approach, and a longitudinal study isnot themainpurposeof this study.

Rather this study isofanexploratorynature,attempting tounderstand the intricacyof

conceptualising and implementing an integrated good governance and state asset

managementapproachinIndonesia.

29

2.LiteratureReview2.0IntroductionThemainpurposeof thisstudy is to identify theextent thatgoodgovernanceprinciples

are conceptualisedwithin reformed state assetmanagement policies in Indonesia, and

understandthecomplexitiesthatimpactimplementationofsaidstateassetmanagement

policies.

A review of assetmanagement literature show a common theme ofmeasuring asset

performance,howeverthis isnotwithinthecontextofthestudy.Areviewofnewpublic

management (NPM) literature, and to a certain degree public asset management

literature,hashighlighted the importanceofaccounting reformsandperspectivewithin

thegovernmentinsupportofreformedstateassetmanagementpolicies.Althoughthisis

acknowledgedtobeacrucialstep in increasingefficiencywithingovernmentprocedures

and isofhigh importancetopublicassetmanagement, it isalsonotamainfocusofthis

study.Thereforealthoughaccountingresearchmaybe identified/discussedbrieflywithin

thestudyfromtimetotime,duetothepurposeofthisthesiswhereaccountingresearchis

identifiedthethesiswillnotbetakingthisperspective. Thisstudyfocuseson identifying

andunderstandingtheconceptualisationofgoodgovernanceprincipleswithinstateasset

management,thelevelthatsuchaconceptualisationisunderstood,andthevariablesthat

impacttheimplementationofreformedstateassetmanagement.Hencethisstudyfocuses

on the background or the underpinnings of the phenomena. To do so this literature

reviewwillbedividedintosevensectionsasdetailedbelow.

Section1aims tounderstandandanalyse thedefinitionsandassumptionsofbothstate

assetmanagementpracticesandgoodgovernanceprinciples.Thissectionwilldetail the

variousdefinitionsof state assetmanagement and identify common characteristics and

assumptions. Itwill then explore the definition of good governance and its principles,

paying particular attention to assumptions that are found within governance theory.

Furthermore this section will explain the known role of governance within asset

management practices, exemplifying it through the introduction of the term asset

governance;which is found in other contexts of assetmanagement (i.e physical asset

management). This will allow further understanding of the relationship between

30

governance and asset management, as well as highlight any issues and complexities

evidentwithinassetgovernance.

Section 2highlights current state assetmanagementpractices indifferent countries, in

particular drawing out the common challenges and/or complexities. According to

Kaganova and McKellar (2006) unique conditions of each country needs to be taken

account despite drawing common conclusions, therefore this sectionwill highlight the

extent that unique country conditions impact state assetmanagement practices. This

sectionalsoaddressesthenotionofgoodbestpracticeinstateassetmanagement.

Section 3 outlines the history (prereform 1969 2006) of state assetmanagement in

Indonesia,reflectingontheroleofpoliticalandculturalhistory.Thissectiondiscussesthe

FiveYearDevelopmentPlans(REPELITA)ofIndonesiasince1969to2009,whichhasbeena

fundamentalguidefornationaldevelopmentrelatedpolicies inIndonesia.Thediscussion

of theseplanswillallow identificationofcommonchallengesand/orcomplexities found

overanumberof years (since the introductionofREPELITA)up to the reform (of state

assetmanagementpractices)in2006.Thissectionwillalsohighlightanyuniqueconditions

within Indonesia thatmay impede the implementation of a fully efficient and effective

stateowned asset management policies, and needs to be taken into account when

comparing common challenges and/or complexities (in state assetmanagement) with

othercountries.

Section 4 focuses on understanding the reform in state assetmanagement policies in

Indonesia from theyear2006onwards (topresent).Thissectionwilloutline theaimsof

thereformand itsprocess, inparticularexplainingtheroleoftheDirectorateGeneralof

State Asset Management. As a reform is expected to address problems or identified

challengesand/orcomplexitiesofpreviouspractices,thissectionevaluatestheextentthat

currentreformaddressespaststateassetmanagementchallengesand/orcomplexities(as

identifiedinsection3).

Section 5 The purpose of this study if to understand the extent that good governance

principles are conceptualised and understood within Indonesias reformed state asset

management policies. Section 5 analyses reformed state assetmanagement from the

perspectiveofgoodgovernance, inparticular the conceptualisationof itsprinciplesand

theextentthatgovernanceassumptions(asperidentifiedinsection1)areaddressed.

31

Section 6 draws upon the findings of Kaganova and McKellar (2006), discussing the

possibilityforacountrytosabotageimplementationofstateassetmanagementthrough

the introduction of other types of reforms (in other sectors of the economy), a new

regime, or new constitutions and rules and regulations. One of the main changes in

Indonesias governing system is the implementation of decentralisation and regional

autonomy policies in 2001. This section focuses on explaining the definitions and

assumptionswithindecentralisationandregionalautonomy,andtheeffect ithashadon

regional governments within Indonesia. This section continues on to exploring the

potentialcomplexitiesthatdecentralisationandregionalautonomymayimposeinregards

toimplementationofreformedstateassetmanagementpractices.

Section7concludes the literature reviewbyhighlighting thecontribution to theoryand

practiceandthemainargumentsofthisstudy.

2.1.StateAssetManagementandGovernancePrinciples

Thissectionwilldiscussthevaryingdefinitionsofbothstateassetmanagementandgood

governance,inparticularidentifyingthedefinitionsthatwillbeusedinthisstudy.Known

assumptionswithineachconceptinparticularwithincyclesoftheassetmanagementlife

cycle and within each governance principle will also be discussed. This section also

explorestheknownrelationshipbetweenassetmanagementandgovernanceknownas

assetgovernance found inadifferentasset typesand context;highlighting the roleof

governanceprinciples,implementationexperiences,andcomplexitiesfound.

2.1.1DefinitionandAssumptionsofStateAssetManagement

2.1.1.1DefinitionofAssetManagement

Priortothediscussionofwhatisconsideredtobestateassetmanagement,itisimportant

tounderstand itsunderpinning:assetmanagement.Understandingofassetmanagement

willcreateknowledgeonwhatisconsideredtobeassetmanagement,processesinvolved

withintheconceptandpractice,consideration(s)forimplementation,assumptionswithin

assetmanagement,andothertheoriesinvolvedwithinassetmanagement.

32

Assetmanagement isdefinedasa strategic, integrated setof comprehensiveprocesses

(financial,management,engineering,operatingandmaintenance)togaingreatestlifetime

effectiveness,utilisation,andreturnfromassets(Mitchell,2002;Mitchell&Carlson,2001).

Wittwer,Bittner,&Switzer (2002)believes thatassetmanagement isadecisionmaking

toolthatcreatesaframeworkforbothlongandshorttermplanning,whichencompasses

a systematic process ofmaintaining, upgrading, and operating assets.Wenzler (2005)

providesariskbaseddefinitiontoassetmanagement,inparticularutilisingtheknowledge

of identifying, designing, constructing, operating, and maintaining assets in order to

optimisetradeoffsamongfinancialandoperationalperformancerisks.Woodhouse(2006)

seconded taking the riskbased approach to asset management whilst ensuring the

achievementoforganisationgoalsbydefiningassetmanagementas the systematicand

coordinatedactivitiesandpracticesthroughwhichanorganisationoptimallymanages its

assetsand theirassociatedperformance,risksandexpendituresover their lifecycles for

thepurposeofachievingitsorganisationalstrategicplan.

Fromthesnippetofvariousassetmanagementdefinitionsaboveitcanbeconcludedthat

common characteristics of assetmanagement are keywords such as the importance of

strategy, systematic processes, optimising efficiency, and consideration of various risk.

Asset management involves activities where there is integration between strategic

planningandoperations,maintenance,andcapitalinvestmentdecisionmaking.Themain

aimofassetmanagementistoincreasetheefficiencyofassetswhichcomprisesenhancing

the productivity, maximising the asset lifecycle and minimising the total cost of

ownership. Cornish andMorton (2001) suggested that such a goal can be achieved by

understanding business costs and performance drivers, determining investments to

optimiseperformanceandoperationcosts,managingthedeliveryofnetworkperformance

and investment programs, monitoring asset conditions, and devising appropriate

maintenancepolicies.

2.1.1.2DefinitionofStateAssetManagement

The concept of state assetmanagement itself is not particularly new, however it is a

concept that has continually changed in phrase aswell as in its overall definition. Jim

(2007) provides a simple definition to state assetmanagement: A continuous process

improvement strategy for improving the availability, safety, reliability, and longevity of

assets i.e systems, facilities, equipment, and processes. Cagle (2003) argues that a

33

practicalworkingdefinitionofstateassetmanagement isembodied intheknowledgeof

threecrucialaspects:a)whatassetsareavailable,b)theconditionofassetsavailable,and

c)thefinancialburden itwillcosttomaintaintheavailableassetatatargetedcondition.

Cagle (2003) further stated that stateassetmanagement refers toa setofprocessesor

activities addressing the proactivemanagement of capital assets and/or infrastructure.

Thisincludes:

1.Maintaining a systematic record of individual assets as an inventory,with regard to

acquisitioncosts,originalandremainingusefullife,physicalcondition,andcosthistoryfor

repairandmaintenance.

2. A defined program for sustaining the aggregate body of assets through planned

maintenance,repair,and/orreplacement.

3. Implementing and managing information system in support of asset management

practices.

Itisimportanttonotethatdifferentcountrieshaveadifferenttermforstateassetssuch

as property assets, public assets, public infrastructure assets, and state infrastructure

assets. Although there is a slight difference as towhat is considered to bewithin the

differentscopeofeachterm,thereisacommonthemeinthesensethattheseareassets

that areownedby the government, its function is to allow the government toprovide

public services, and in most cases are utilised or occupied by either a government

institutionorisavailableforpublic/societyuse(Kaganovaetal2006).Hencethisliterature

reviewwillalsolookatdefinitionsofstateassetmanagementwheredifferentassetterms

(i.epropertyassets,publicassets,stateinfrastructureassets,etc)areused.

Kaganova&McKellar (2006) describe public property assets as state asset that do not

directly address the ownership ormanagement of public housing, basic infrastructure

facilities,orparkland.Notbecausetheyarenotimportantassuch,butbecausetheyraise

particular issues that deserve targeted attention of their own (Kaganova andMcKellar

2006).Whatisexaminedismainlyurbannonresidentialrealestate,includingvacantland,

ownedbygovernmentsand theirvariousauthoritiesorentities.However it is identified

thatpublichousingandbasic infrastructurefacilities(intheformofbuildings)areassets

thatallowthegovernmenttoprovidebasicpublicservice(Schulte&Ecke,2006).

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Hencetypicalrealestateorstateownedportfoliosincludeschools,kindergartens,public

offices, recreation facilities, hospitals,museums, parklands, and vacant lands;whereas

properties such as prisons, military facilities, universities, and federal offices are not

typicallyconsidered in themanystudies thatanalysesstateassetmanagementpractices

withinaparticularcountrycontext(SchulteandEcke2006).

Aunifiedacademicdefinitionofstateassetmanagement isatpresentabsent whereby

existing definitions are industry based or within a country context (i.e various

governments).AccordingtoKaganovaandMcKellar(2006)themainreasonforthisisthat

despite the importance of topic, the topic has not attracted sufficient attention from

researchers. Gruis, Nieboer, & Thomas (2004) offer a generic asset management

definition that seems to be popular in state assetmanagement practices (for example

withintheworksof(Kaganova,2006;Peterson,2006).Gruis,Nieboes,andThomas(2004)

definestateassetmanagementasthemanagementprocessthat involvesanalysisofthe

performanceofanorganisationsassetsinsupportofdecisionsaboutholding,selling,and

repositioning.Theflexibilityofthisdefinitionisthatanalysiscanbeconductedatthelevel

of individualproperties,aparticularclassofproperties,ortheorganisationsentireasset

portfolio;contributingtothepopularityofthedefinition.

Agovernmenttypicallyownsavastarrayofassetsthatsupportsthedailydeliveryofbasic

servicesthatisdeemedtobeagovernmentspurpose.Itisnotedthatthemostcommon

management government (or state) assets are is highly fragmented with different

categoriesofassettypesfallingwithindifferentjurisdictionorbureaucracy,orevenwithin

differentpoliciesandprocedures.Kaganova,McKellar,andPeterson(2006)observedthat

in almost all countries different classes of property, or different types of stateowned

assets,aremanagedaccordingtotheirownrules;oftenadheringtotraditionalpractices

rather than anyassessmentas towhat typeofassetmanagement ismostappropriate.

However Kaganova,McKellar, and Peterson (2006) also noted that there has been an

increasing interest in thearea,whereuponanewdiscipline thatcriticallyconsidersstate

assets as a component of public wealth and seeks to apply standards of economic

efficiencyandeffectiveorganisationalmanagementisemerging.

Fromabroadperspective,thetaskofapublicpropertyassetmanagercanbe likenedto

thatofacorporationholdingamixedportfolioofrealproperties,ortoamixedusereal

estateinvestmenttrust(Kaganovaetal2006;CornishandMorton2001).Atonelevelitis

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decidedhowtomanageindividualpropertyholdingsthismeanshowtooperate,market,

andmaintain them. At a higher level there needs to be common rules to guide and

motivateitspropertymanagerssothatthesameguidelinesregardingeconomicefficiency

andothervaluesareappliedthroughouttheorganisation.

2.1.1.3KeyDimensionsofStateAssetManagementandAssumptions

Shenhav(2003)providesaviewofsystemisersthosewhoapplymechanicalengineering

methods to the administrative restructuring of firms within the context of asset

management.Theconceptofasystemassumescoherenceandautonomy,wherecarefor

the smallest and most important details of a particular work aspect is treated

systematicallyandgivenhighpriority.Thereforethereisarelianceonemployeesfollowing

asetofstandardprocedures,inordertoensurepeakconditionoftheirassetsinorderto

maximiseperformance.Thissuggeststhatoneofthekeydimensionsofassetmanagement

is regulatory compliance,where it is crucial for employees to adhere to standardised

proceduresandspecificationsinordertoensureoptimumassetperformance.Thisleadsto

the need of accountability as a monitoring function where decision makers are held

accountableforanyassetrelateddecisions.

2.1.2DefinitionandAssumptionsofGoodGovernance

2.1.2.1DefinitionofGoodGovernance

Governance is defined as a process that supports regulations, policies, and procedures

whichensureorganisationsrunintheinterestofstakeholdersandresourcesareallocated,

managed, and redeployed in amanner thatmaximises productivity and value (Alles,

Datar,& Friedland,2005;Bhner,2000;Considine& Lewis,2003;Narracott&Bristow,

2001;Schmidt&Brauer,2006)Thedefinitionofgoodgovernanceandidentificationofits

principlesisattimesconfusedordeemedtobeinterchangeablewiththedefinitionsand

principlesofcorporategovernance.Admittedly,whenonelooksatthedifferencebetween

definitions andprinciplesof good governance and corporate governance,onemay find

onlyveryslightdifferences.Accordingto(Ouchi,1979,1980)thisismostlyduetothefact

that the fundamental governance theory of both concepts is similar,whereupon both

conceptsadheretofiduciaryduty,agencytheory(seeworksof(Jensen&Meckling,1976),

and to a certain extent transaction economics theory (see works of (Coase, 1936;

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Williamson,1984;Williamson,1979,1988,1999).Itistheapplicationofeachconcepti.e

goodgovernancewithin thecontextofgovernment institutionsandpublicservants,and

corporate governance within the context of the corporate sector that provide the

contextofitsdifferingassumptionsandcomplexities.

Todefinegoodgovernance requires theacknowledgementof corporategovernance,as

corporategovernance (or lackof) isconsidered tobe the trigger to the resurfacingof

governance theory, and also the questioning of how governments govern their nations

(Mardiasmo,2007).Corporategovernance isrecognisedasanessential instrumentwhich

evolves rapidly,where there is a constantevolvementof its keydimensions (Mathur&

Melvin, 2004; Narracott & Bristow, 2001). This suggests a potential implication for

organisationaloutcomes rapid evolvementof keydimensions require theneedof re

alignment on a periodical basis which may prevent full implementation of corporate

governancewithin theorganisationandpreventoptimumperformanceofemployees in

delivering organisational outcomes.Despite this corporate governance remains to be a

popular framework,particularlyafter themanycorporatecollapses (suchasEnron,HIH,

OneTel,etc)wherelackofcorporategovernanceispinpointedasthecausebehindthese

collapses. As a result corporate governance requirements grew in significance (Abdel

Khalik, 2002; Benston & Hartgraves, 2002; Ronen, 2002), where various corporate

governance standards, codes, and policy reforms emerged. This suggests there are

different definitions of corporate governance, varying depending onwho introduced a

particularcorporategovernancestandard.

Goodgovernancehasbeenamain literarydiscussion inmany countries,with literature

heavily concentrated on African countries (Bardill, 2000; Carroll, 2001; Harris, 2001;

Hintjens,2000;Hope,2002;Matanga,2005;McMahon,2005;Mensah,2005;Philander&

Rogerson,2001;Pillay,2004) EuropeanUnion (Crawford,2002;Kranenborg,2003), and

Asia Pacific countries (Bryant, 2001;Guess, 2005; Li, 2003;Ray, 1999; Sparke, Sidaway,

Bunnell,&GrundyWarr,2004;Velayutham,2003).Goodgovernanceisfocusedonaclean

governmentthatprovidesqualityservicetowardsitssociety/community,transparentand

participative in itsdecisionmakingprocess,and isaccountablefor itsactionsatalltimes;

bothunder legaland society scrutiny (Alter,2002;Bardill,2000;Beeson,2001;Berman,

2006; Caddy, 2001; Doig, 1995; Doornbos, 2003; Gilbert, 2006; Gorontalo, 2004;

Kranenborg, 2003; Lindsey, 2004;Morrison, 2004;Northover, 2005; Ray, 1999; Rogers,

2003;Simpson,2006;Subramaniam,2001;Tisdell,1997;Weiss,2000).

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Itisacknowledgedthatgoodgovernanceisthebasicconditionforstabilityandprosperity

inallcountries,wherenationswhoareabletosustainhighstandardsofgovernancewill

succeedwhileotherswillstruggle(Elsner,2004;Roy&Tisdell,1998).TheADB(2004)has

identified thatgoodgovernancecomprises the followingelements:participation, ruleof

law,accountability,transparency,equity,effectivenessandefficiency,professionalismand

effectivemanagement serviceorientation,andmonitoringofperformance.According to

theUnitedNationsEconomicandSocialCommission forAsiaand thePacific (UNESCAP),

the true testof goodgovernance is thedegree towhich itdeliverson thepromiseof

humanrights:civil,cultural,economic,politicalandsocialrights(UNESCAP,2007).

The main emphasis and key dimensions incorporated within the different codes of

governancecanberelatedto(Eisenhardt,1989)opinionofwhatgovernanceisitisan

informationsystemthatisdesignedasameansofmonitoringmanagerialperformanceto

detectdysfunctionaldecisionmaking,where itsmechanismscanbeemployedtomonitor,

controlandobservetheactionsofmanagersinordertoidentifythosewhofailtomaximise

firmvalue.

Fivecommonkeydimensions ingoodgovernancecanbeextracted from thevarianceof

governance literature discussed above: accountability, stakeholder participation,

regulatory compliance, transparency,andefficiency. Lampel (2004) suggests thathard

governance, one that is based on rules, formal mechanisms, and stringent legal

enforcementiscrucialatatimeofcrisisortorecoverfromcrisis.HoweverGrandori(2001)

andLampel (2004)alsopointedouttheneedtobalancethiswithsoftgovernanceone

that isbasedon loyalty, trust,and informalobligation inorder toachieveabalanced

workforcethatdeliversorganisationaloutcome.

2.1.2.2GoodGovernancePrinciples

A.Accountability

Accountability has a prominent place in the discussion of politics, regulation, and

governanceprinciples (O'Brien&Dubnick,2009),whereby itsdefinitiongoesbeyondthe

prescribed text of financial reports. Accountability is recognised in many fields as a

keywordand thushasa varianceofmeaningdependentupon its context;however the

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process of reinterpretation of different interestsmay in fact result in a secure narrow

conceptionofwhataccountabilityis.

Borrowingthetableofaccountabilitysdiscursiverolesandmeaningsthat isOBrienand

Dubnicks(2009),accountabilitycanbecategorisedbasedontwofactors:focuswhether

it isacauseoracure,andperspectivewhetheraccountability servesasamechanism

controlorasasetting (normative infrastructure).Asacausal factor, it is theabsenceor

failureofeffectiveaccountabilitythatprovidedthefocusofdiscourse.Asasolution/cure

however,accountabilityhaslandeditselfcentralstagetomanydiscussionsonhowtodeal

with specific failures, such as:manifestations ofmalfeasance andmisfeasance such as

deceptiveormisleadingconduct,unethicalconductlinkedtodefectiveinternalcorporate

codes of conduct or governance arrangement, and/or the operation of the external

regulatoryarchitecture.Asamechanisticfeaturebeingaccountablesuggestsbeingsubject

tothosemechanismsthataredesignedtoimposesomeformorcontrolorguidance.Asa

manifestation of the normative condition however, being accountable is thought of

something an agent is or ought to be. Friedrich (1940) regarded accountability as a

conditioninstilledinpublicofficialsastheybecomemoreprofessional.Thusinthecontext

of government officials accountability is associated with concepts such as integrity,

trustworthiness,blameworthiness,etc.

Accountabilityalsoreferstothelevelthatgovernmentofficialsarebeingheldaccountable

fortheiractions,decisions,andispreparedfortheconsequences.Howevertheambiguity

of theword allows for rhetorical commitment to particular courses of action,which at

time lacksempiricalevidence inapplication. Ithasbeenobserved thatdespite repeated

assurances of commitment to greater transparency and accountability,many industry

pra