NEW PUBLIC MANAGEMENT APPROACHES TO THE REFORM OF LOCAL GOVERNMENT (Indonesia Case

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By: Dwi R. Mulyaningrum, M.Eng, M.Sc. (Government Planner in Lampung Province, Indonesia)

NEW PUBLIC MANAGEMENT BACKGROUND Definition of New Public Management (NPM) that writes on Wikipedia is a management philosophy used by governments since the 1980s to modernize the public sector. This theory emphasizes the ability of the individual person rather than the public's ability altogether. It is an actual system of administrative public management that realized in almost all industrialized countries. Until now, NPM is a system of public administration management that most actual in the world and is realized in almost all industrial countries. According to Hood (1991), NPM was introduced in the 1990s, a new paradigm that is often called New Public Management. Actually, this system was developed in the United States in Anglo’s region since half of the 80s and has reached a very high status, especially in New Zealand. Though it also called by other names such as Post-Bureaucratic Paradigm (Barzeley, 1992), and Reinventing Government (Osborne and Gaebler, 1992), but it was still referred to NPM. This paradigm emphasizes the change in government behavior to become more effective and efficient. It used the principles of “The Invisible Hand” of Adam Smith idea. Diminishing the government role, open a private roles, and the government is more focused and broad on the public interest. Public enterprises privatized, the general labor market and deregulated private sector, and made a clear separation between strategic arrangement done by the state authority with political institutions and the implementation done by the administrative authority (government) and the responsibility done by an independent institution or private sector. The key hypothesis in this reform wave is that it will lead to greater costefficiency in government’s side with market orientation in the public sector, with minimizing negative side effects on other objectives and considerations. Of course, this new paradigm is not free from criticism. Among capitalism in the public sector and fears of eroded the idealism of public service. The purpose of NPM actually is to change the view of public administration. As a service provider to citizens, it must be aware of its responsibility to provide services efficiently and effectively. But, on the other hand it should not profit oriented.

the overlapping of authority will be reduced. Some stake holders such as governments. which in turn produce a division of authority more clearly between the two parties. the NPM is an issue regarding the determination of "what" and "how". analyze results Enrich feedback Some steps to implement NPM can be completed on the circumstance that there are sufficient numbers of critical support group that require reform. p. . politicians and society must work together to create the new patterns of this government. flexibility Potential for unintended consequences Outcomes vs. Column three suggests the factors that should relate empirically to a governance approach to implementation. communication demands Incentives. customers. With the separation of strategic decisions (planners) and the decision of the executive. b. equity Governance/NPM Results citizens value Quality and value Implementation Relevance Normative frame replaced by pragmatism Citizen expectations must be met. Tabel 1. From this term. sanctions. funding uncertain linked to performance Level of competition impacts control. Market competition Culture change. target population treatment not necessarily uniform Oversight functions. solve problems Continuously improve process Separate service from control Expand customer choice Provide incentives Measure. Limitation of liability As mentioned above.Some organizing theories that order application of governance and NPM (which provides more specific implementation strategies) to the area of implementation study. outcomes Deliver value Build accountability Identify. procedures Operate administrative systems Production Winning adherence to norms Identify mission. The unification of the responsibility to take care of work and funds. authority. which is adapted from Barzelay (1992. official governments establish what should be produced by the administration (local government or city government). services. In Table 1. 119). compares the traditional “bureaucratic” approach to a “post-bureaucratic” model. options Self-regulating partnerships Hierarchy/decentralization levels Level of competition. Comparison between Bureaucratic Implementation and Governance/ NMP Bureaucratic Implementation Public Interest Efficiency. process Network complexity Administration Control Specify functions. structures Justify costs Enforce responsibility Follow rules. The preconditions that must be prepared to apply NPM: a. one must specify the NPM objectives.

namely providing services to people who are eligible.Most of the tasks division in public administration was noticeable by the separation between the authority in charge of arrangement and the authority of funds. support device) in accordance with its intended purpose. 6. This agreement includes the start of the goals to be achieved through monitoring of the process of achieving these goals. administration can be controlled efficiently. Platform management contract is a contract or agreement between the parties (between government/politics and services provider/the executor) made an agreement. in order to reach the goals set by politics. 3. THE NEW PUBLIC MANAGEMENT INSTRUMENTS 1. Therefore. Management Contracts The definition of it is the administration through agreements on the objectives to be achieved. Customers Orientation The essence of NPM reveals that the administration is not the final goal. the department should consider with its responsibility to regulate the use of resources (funds. but as a customer because of the tax paid has a right to a certain amount of quality services. the department has obtained adjusting budget with the product ordered. The department needs adequate space to done well. Controlling function must provide the required information at the right time. Personnel . Controlling It can be defined as an integrated concept to control the administration efficiently and economically. and based on target groups and customer demand (citizens). the base relationship between input and output. Delivery Of Responsibilities In The Field Of Resource The contracts among the parties is aim to make the main concern and interest on the part of the administrative offices on the results of their work. is a summary of each administrative activity that made into a working product catalog based on the number. Output Orientation With this orientation. quality and cost. 5. The work product. Procurement of information modified to the needs between political party or government as an arrangement parties. positions. 2. It is only one task. and administration as executor. personnel. 4. It assigned to support clearly definition about the work to be produced by a section or department (product). This means that community no longer seen as a servant. while the funds needed to carry out these tasks under the responsibility of other parts. In order to perform this work. offices or administrative units. The task dispensed to the departments.

to enhance knowledge in business economics. Quality Management Products must be in a harmony with the demands and the objectives. Application of economic instruments in the public administration is sufficient to ensure efficiency and higher effectiveness. management and communication. though private industry is not always more productive than public administration. It can be tool to motivate employees increasing the productivity with their innovation capabilities. NPM is also adopted by many local .As a key factor in modernization process. In addition to information about the quality of the work itself. b. The best idea is to think like private company in term of improved performance and act as public administration. It is important to concern on improving human resources (human capital). The measuring instrument is the cost and performance of companies or other divisions with similar activities. Information Technology Any controlling steps require perfect system information. it needs merging among information and quick communication. 8. many government officials assume that private industry performance is superior. a. Performance measurements in term of organization performance and motivation aspects in personal employee side will important progress. these are other considerations in the increasing performance of organization/government especially in term of NPM application. Competition with private Competition among private company encourages improved performance of the company itself. Some steps to establish a successful personnel management including offensive effort in improving the qualifications of employees through education and training . As the new paradigm. To satisfy the customer. However. NPM was supporting in the creation of new structures. it needs a very high quality of services/product. NPM APPLICATION IN INDONESIA Historically. the performance comparisons also provide an opportunity to learn. NPM in Indonesia actually has applied since 1999 with the issuance of Presidential Instruction No. data compression and the possibility to control accessing data collection. In order to fulfill satisfying of the customer. Benchmarking The underlying idea of benchmarking is to have a standard for the quality of the work itself. 7 of 1999 on Government Accountability and Performance. Below. This quality will be customer's consideration in deciding to buy/use the product/services or not. 7.

It occurs in term of the mechanism of contracts and competitive bidding. Creating competition in the public sector. It is also encourage the government to open competition with foreign private sector is another positive impact. Currently there are five institutions in the national level that made a pilot reform the bureaucracy. Until now. Salary increase aims to reform the institution in question immediately reached. the Directorate General of Treasury. some aspect that indicate characteristic of NPM by Christopher Hood that has been applied in the Ministry of Finance and Audit Board are: 1. In the lower level. 5. Bontang. There are at least 17 government agencies proposed by the Secretariat of State (State Secretariy) and the Cabinet Secretariy to increase employee salaries till 80 percent. 6. this organization apply such as: professionally managed organization. . Although still partially performed. They are the Ministry of Finance. Sragen. Emphasis on output and outcome control. Another one is turn in local governments in which improving the quality of public services. Especially in first levels of managers in the Ministry of Finance has applied this idea. 3. especially after implementation of regional autonomy in Indonesia. the Supreme Court. Adopting a management style of the business sector into the public sector. More details. approximately 180 formed regional system of integrated public service as a way of reforming the bureaucracy. Discipline and saving resources. functions and clear job descriptions. and the Directorate General of Customs. Semarang. Implementing performance accountability of government institutions is a form of accountability for government agencies in achieving the organization's mission and objectives in the implementation of government duties. and the Ministry of Administrative Reform. such as: the Directorate General of Taxation. 4. Separating work units in the public sector. the bureaucratic reforms in Indonesia that tend to apply NPM began appear in several ministries and agencies. Attorney General. Some local governments in Indonesia that had already initiated reforms within the local bureaucracy are Jembrana. and Gorontalo. providing limits basic tasks. Some positive impacts of it are government efficiency and increasing productivity. Riau. providing clear authority and responsibility. the providing of public service was significant changes. Supreme Audit Board. Some regions also have set up bureaucratic management system.governments. it was the provision of remuneration according to job grade employees. particularly by applying the remuneration system based on performance in their public administration. Gradually. Sidoardjo. 2. In the early 2009. Bureaucratic reformation was occurred through central and local governments. Professional management in the public sector. Was done with the use of performance budgeting is designed by the Directorate General of Treasury.

the system of remuneration could be a consequence. Public Administration Quarterly Anindita. This system is not based on a fair performance. It still need big effort from especially government and support from politician to apply it that appropriate with local character of Indonesian people. Result and Timebond) ideas. NJ. The current performance standard is more focus on the target and measuring the achievement. J. rather than the whole process in the organization and employees side. E. Maybe. and van den Heuvel. so it can lead jealousy both individuals and organizations. The Ethics of New Public Management: Is Integrity at Stake? . political changes. Achievable.Remuneration system reform is to be another interesting one on applying NPM in my country. The main problem of applying performance-based budgeting as one of the reform measures in Indonesia is not the presence of government outputs and outcomes with SMART (Specific. conditions that make employees motivated. Measurable. The performance measurement to be the main requirement of equitable remuneration. it can be applied precisely. Indeed.G. (2010) (Homepage of Penerapan New Public Management di Indonesia Suara Pembaca) (online) Available at: . Huberts. References: Ewalt. the application of NPM in Indonesia still unsatisfied.. Prepared for presentation at the Annual conference of the American Society for Public Administration Newark.D. but also many complex aspects that involved in Indonesian government such as: attitude of the stake holder. 2007. community acceptance and others. 2001. It caused not only the government will. Theories of Governance and New Public Management: Links to Understanding Welfare Policy Implementation.A. but the important essence of NPM can be captured by Indonesian government. Outputs and outcomes listed is still much to be "abstract" and "not quantitatively measurable". workload measurement and compilation of the annual government office’s performance report (LAKIP) can be one pointer that we begin to realize the importance of performance standards and performance measurement. It is occurred in a performance-based system. it must be biggest consideration for local government that applying NPM. According to me. H. However. Department of Government Eastern Kentucky University.Y.L. In the theory of NPM. Placement and promotion of public employees should be based on competency standards. Some documents are still likely containing the numbers that government wants to spend. Kolthoff. Since the availability of performance standards and performance measurement is not perform well.

(Homepage of Wikipedia) (online) Available at: en.kr.co. 2010. (2010) Pemerintahan. com/read/2010/01/07/080849/1273191/471/ Accessed at 07/01/2010 Rahman. A. . New Public Management.wikipedia. (Homepage of KedaulatanRakyat) (online) Available at: http://www.php?sid=189404& actmenu =44. BPPK (2009) Reformasi Birokrasi: Sebuah Catatan Penerapan New Public Management di Indonesia (Homepage of BPPK) (Online) Available at: http://bagkeu-bppk. Accesed January 12th.net/content/reformasi-birokrasi-sebuah-catatanpenerapan-new-public-management-di-indonesia) Acessed at Accesed January 12th.http://suarapembaca.id/web/detail.detik. 2010. 2010. Wikipedia (2010).org/wiki/ New_Public_Management Accessed January 11th.

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