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Dancing to different tunes: Indonesia's Federalism in the Water Sector

Shin Kue Ryu

Idaho State University

ABSTRACT

Indonesia's President Widodo set out an ambitious policy target of 100-0-100, which is 100% access to

safe drinking water, 0% slums, and 100% access to improved sanitation facilities. It is an ambitious target

for the 4th most populous country in the world since only 42.3% of the population had access to piped

water on premises in 2015. A situation that is further complicated by a large 22.0% standard deviation

associated with the figure. The coverage increases marginally in 2017 to 45.2% coverage with a larger

standard deviation of 23.3%. The question then becomes, “Why was there only a marginal increase and

why does the large variation persist?” The explanation lies in the particular federalist arrangement within

the water sector, as responsibilities are split between different tiers of government and assistance

entities. The paper uncovers the policy and implementation actions taken by the involved entities through

interviews with 26 decision-makers and advisors over a period of 3 weeks in the summer of 2018. The list

of interviewees ranged from central government ministry personnel to local government utility

heads. Through the interviews, we are able to see how the particular federalism arrangement in the water

sector in Indonesia shapes different incentives among different actors. As a result of different actors

engaging in optimizing behaviors particular to their circumstances and in light of limited fiscal capacity

among different tiers of government, we start to see why federalism does not translate to timely

responsiveness the safe drinking water supply needs of the local constituents. The study lends us insight

to the paradoxical situation in policy and implementation, where the need on the ground and political

prioritization at the highest level of government are aligned, yet where everyone in-between dances to

different tunes of incentives.

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INTRODUCTION

Indonesia is a country located in Southeast Asia with a population of 261.1 million ranking as the 4th most

populous country in the world. The incumbent President Jokowi Prabowo, who was elected in 2014,

adopted an ambitious water, slum, and sanitation program by his outgoing predecessor President Susilo

Bambang Yudhoyono titled, 100-0-100 (Alexander, 2016). The program aims to achieve universal access

to water, eradicate slum, and universal access to sanitation by 2019.

The program is noteworthy, as it is an ambitious target given Indonesia’s service coverage in 2011 where

only 21% of the total population had water piped on premises with 64% acquiring improved water sources

through alternative means (WHO and UNICEF, 2013). According to UNICEF, 16% or 39.3 million calculated

from the 2011 total population figure of 245.7 million, relied on improved water sources open to exposure

to potential waterborne diseases. Thus, bridging the gap between existing conditions and universal

coverage was a challenge of significant magnitude.

The scale of challenge can be better assessed from more localized data. The Indonesian government

produces water supply system data through a government agency titled, BPPSPAM, which is the acronym

for Badan Peningkatan Penyelenggaraan Sistem Penyediaan Air Minum or Agency for the Improving the

Implementation of Water Supply System. As data from BPPSPAM indicates in Table 1, piped water

coverage at each Kota (city-equivalent) and Kabupaten (regency/county-equivalent) government levels

vary significantly. These government levels are the lowest tier of government to which water supply

system responsibilities are delegated to.

Table 1: Longitudinal trends of PDAM service coverage 2012 2015 2017

Average % coverage within the service area by PDAMs 38.9% 42.3% 45.2% Standard Deviation 22.0% 22.8% 23.3% Minimum coverage 2.7% 3.7% 4.0% Maximum coverage 97.1% 99.9% 100% Number of PDAMs with reported data 326 367 378

Source: BPPSPAM. 2012. Kinerja PDAM 2012. Jakarta, Indonesia: Ministry of Public Works; BPPSPAM.

2015. Kinerja PDAM 2015. Jakarta, Indonesia: Ministry of Public Works; BPPSPAM. 2017. Kinerja PDAM

2017. Jakarta, Indonesia: Ministry of Public Works.

For public administration scholars, the circumstances of Indonesia is of particular interest, as Indonesia

deliberated on rapid fiscal and administrative decentralization following the fall the Suharto’s

authoritarian regime in the late 1990s. Given the persistently low access to improved water figures during

Suharto’s reign, it raises the question on whether this is an effective reform. Rationally, it makes sense as

it reduces the distance between the enunciation over the need for infrastructure and the decision-making

apparatus responsible for infrastructure planning and financing. This longitudinal study is of further

interest due to the wide variation in service coverage of water supply systems among different kotas and

kabupatens. Despite the national reforms uniformly affecting all entities within national borders, there is

a wide variation and that variation persists over time. Thus, it raises the question on what intervening

variables are present that prevents the manifestation of rational intent to improve coverage across all

kotas and kabupatens. Thus, the study aims to unveil the institutional arrangements and their operations

that are indispensable explanatory factors in identifying how a clear outcome oriented Presidential

initiative is stymied as it gets tangled in the mixed incentives present in the different tiers of government.

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To better understand and to undercover the reasons behind the variation, fieldwork was done over 3-

weeks in Indonesia during the summer of 2018. A series of interviews with relevant stakeholders were

conducted following the format of other interview-engaged studies such as Agranoff’s study on networks

(2007) and Kaufman’s classic study on the Forest Ranger (1960). The difference is that this study did not

involve in ethnographical studies due to the limitation in time and resources. Because the purpose of the

research was to examine policy- and implementation- relevant actions taken by those involved in the

water supply system sector, snowball sampling was employed for primary and secondary data collection.

That is, interviewees identified and confirmed the key decision-makers in the chain of administrative

decisions impacting water supply system development and operations. Snowball sampling was effective

for this research, as the sampling process started with the Minister of Public Works, who is the final

decision-maker over matters concerning the ministry that is responsible for water resource and water

supply system development in Indonesia. Random sampling would not be applicable for the purpose of

this research, as the study’s aim is to understand the relatively insulated decision-making process in the

water sector. Snowball sampling is further justified as the optimal strategy, as the responsibilities in

Indonesia’s drinking water supply sector is fragmented yet specified, as outlined by Law No. 122 issued in

2015.

From the series of interviews with different stakeholders involved in Indonesia’s water supply system, a

couple of key findings emerged. First, the decentralized and delegated environment embedded

coordination challenges among different tiers of government. Second, these coordination challenges

were difficult to overcome due to an absence of leverage among involved parties. That is, few incentives

were available to involved parties that were attractive enough to elicit other dependent entities to fully

invest in the partnership. Neither were there any significant penalties that could be imposed to non-

compliance or non-cooperation entities. Third, these circumstances established playing field where

different entities are forced to cope and optimize their behavior based on immediate restrictions and

limitations. That is, they act in accordance to their given environment of incentives. However, by doing

so, it further reinforces the deadlocks among the different entities resulting in marginal overall

improvements in the sector while perpetuating the variation.

LITERATURE REVIEW

Taking a step back from the detailed observations characterizing Indonesia’s water sector, conceptually

the challenge can be framed in terms of why collaboration, cooperation, and coproduction solutions do

not emerge to overcome rigidities originating from traditional, organizational, and structural boundaries

of involved stakeholders (Hall & Battaglio, 2018). From a cursory view, the situation is not that different

that led to the enactment of the US Public Works and Economic Development Act of 1965. A solution that

involved establishing regional commissions to “provide the technical capacity that was lacking in resource-

poor, professionally weak local governments, and to facilitate working across geographic boundaries to

address regional problems (Hall & Battaglio, 2018, p. 499).” Thus, the remedial reactions involve

establishing a crosscutting entity or clarify inter-organizational arrangements to elicit cooperation and

coordination while providing the necessary support to technically deficient or inexperienced localities.

This normative solution is not the only approach advocated by the literature. For example, the public

network literature does not necessary suggest the establishment of a crosscutting entity, as networks in

their entirety are suitable to enact and execute the various functions expected from such crosscutting

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entity. In Agranoff’s classic study, we see public networks have either a minimal number of staff or none

in his coverage of 14 public networks (2007). Although majority of Agranoff’s studied networks do have

standing committees, three do not (ibid, p.96-99). Thus, further questioning the necessity to establish a

crosscutting permanent or semi-permanent entity to resolve coordination and collaboration issues.

Rather the entities in the network communicate through a varied combination of emails, internal and

external websites, internal web postings, external newsletters, external publications, news releases, and

project reports/studies (ibid, p. 102-3). The combination of means varies depending on the particular

values served by the networks. Networks are not all alike and can be categorized into informational,

developmental, outreach, and action networks depending on the extent they serve the following

functions and roles: 1) problem identification/information exchange, 2) identify extant technologies, 3)

adaptation of technology, 4) implement knowledge infrastructure, 5) capacity building, 6) reciprocal

programming/joint strategy, and 7) joint policymaking (ibid, p. 184-5).

The challenges facing Indonesia’s water supply system are noteworthy as it asks how applicable are the

recommendations generated by the burgeoning literature on networks (Goldsmith & Eggers, 2004;

Agranoff, 2007; Agranoff, 2012). The applicability question is valid since the water supply system (WSS)

operates as a network: a physical network of raw water source development, raw water in-take structure,

transmission pipe, treatment plant, and primary to tertiary pipe structures. When water travels across

multiple jurisdictions, it involves and requires the coordination of the multiple actors and entities.

Resource scarcity and technical expertise are natural challenges in WSS, as it is expensive and complex.

Thus, the WSS network is unlike other networks, as improvements require more than “effective transfer,

receipt, and integration of knowledge across participants in a network (Weber & Khademian, 2008, p.

337).” That is, sharing information on the problem does not necessarily equate to solving it. This is

because power is divided among many actors involved in the policy process and where the actors seek to

influence it so that it is favorable towards them (Allison, 1971; Cobb & Elder, 1975; Lindblom & Cohen,

1979; Cohen, March, & Olsen, 1972; Kickert, Klijn, & Koppenjan, 1997).

If technical knowledge sharing was the crucial bottleneck, the solutions then are relatively straightforward

as American Water Works Association publishes a series of WSS manuals of practice ranging from design

to management. Technical and environmental requirements of various physical components of the water

supply system have been accumulated over time. Thus, manuals exist for raw water in-take pipe, raw

water transmission pipes, water treatment plants, distribution networks, maintenance, etc. The area

where there is a dearth of references is on how technically feasible options manifests to physical presence

with construction and subsequent effective operation. The manifestation is the more complicated issue,

as it opens up the Pandora’s box on the interplay of policy, budget, and finance within the local context.

On the manifestation of knowledge being put into practice, public administration literature offers a more

nuanced explanation, as the field originated in infusing scientific approaches to executing the policies

generated by politics (Wilson, 1887; Goodnow, 1900). It is “nuanced,” as the actual formulation and

implementation is conditional to the realities on the ground. That is, politician’s promises cannot all be

executed, as policy formulation and implementation cannot be sanitized to structural constraints that

cannot be immediately dissolved. Commonly identified constrains include financial capacity and staff

capacity (McKinsey Global Institute, 2016; Lee, Jr., Johnson, & Joyce, 2013; American Water Works

Association, 1998, 2004).

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In light of realities of the ground, policy refinement occurs between the political leadership and the

bureaucrats responsible for implementation. To what extent this process is porous to technical input of

the more permanent government staff or led by the elected political leaders varies (Svara, 1994). Some

leave technical decision-making to the technical staff whereas others involve the technical staff in

producing technical feasibility studies while retaining actually decision-making authority (World Bank,

2014). That is, in the latter case, the final decision-making rests upon elected official(s) that may not

possess the technical qualifications and/or professional experience.

Despite expansive research on actors involved in policy formulation-implementation nexus in Anglo-

American settings, there still is a shortage of research on how the process unfolds in the water sector in

Indonesia. This is not to undermine some of the important findings that are emerging in the field. Most

notably, research by Guess on the impact of decentralization across different countries (Guess, 2005),

book chapter discussions by Alisjahbana on the fiscal decentralization situation in Indonesia (Alisjahbana,

2005) along with a dedicated overview on the water policy of Indonesia (Onn, 2013). There also is ample

research on political violence in Indonesia by scholars of Cornell University (Sidel, 2006; Hedman, 2008).

Australian scholars have produced significant scholarship in Indonesia, reasonably so when recognizing

the strategic importance of Indonesia due to its geographical proximity to Australia (Bourchier & Hadiz,

2003; Kingsbury, 2017). Yet, none of the existing literature addresses why we see such variation in piped

water to premises across different Kotas and Kabupatens (district-levels) in Indonesia.

In terms of explanations specific to Indonesia’s water sector, international development entities offer

more penetrating explanations. For the World Bank and the Asian Development Bank, this is driven by

the project-related feasibility studies produced as part of the lending portfolio. That is, sector overview

and analysis are provided to justify the lending. Thus, the sector overview is insightful, yet incomplete as

it does not delve further into the broader systematic aspects that is beyond their intervention abilities.

Areas that are frequently overlooked and untouched are allocations of power that is a product of the

country’s political machinery.

Taking into light the existing literature, many potential explanations emerge as explanations behind the

variation in service coverage of piped water onto premises across different kotas and kabupatens. Most

fundamentally, given that the service coverage variation is operationalized as those with pipe connections

on their premises, the variation is suspected to be a product of PDAMs’ ability to lay down the pipes. Also,

based on the calculation that service coverage is a product of not only those served but also of the

population in the service area, service coverage figures will only be maintained if, and only if, the number

of piped connections increase at the equivalent rate of population growth in the service area. Thus, this

the status quo coverage figures carries the assumption that the PDAM capacity to lay down new

connections is proportional to the growth in population within the servicing area. That is, the variation of

the PDAM service coverage expansion is assumed to be caused by variation in PDAM capacity to lay down

more new connections vis-à-vis the growth rate of population in the service coverage area. This needs to

be recognized to make proper interpretative sense of the percentage rate conversions commonly used

for coverage rates.

When examining PDAM capacity of increasing the number of connections, the “capacity” component can

be further broken down to availability of physical pipes and labor to dig and connect the pipes. However,

engineering-wise it requires the presence of primary pipes and secondary pipes in which the new tertiary

pipe connection will draw water (Bentley Systems, et al., 2007). On the financial side, it requires the

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availability of funds to purchase the necessary physical assets and secure skilled labor to execute the task

of connecting the tertiary pipe (American Water Works Association, 2005). Thus, the engineering

solutions, although simplified to illustrate a point, to deliver safe drinking water is not that complicated,

as it is well established as evident in multiple other countries with 100% coverage to improved water

sources. This raises the question then what is the literature failing to see and capture. What other aspects

are not being fully accounted for that is responsible for the intra-country variation in service coverage?

This is examined in this research.

More broadly, this research also investigates the paradox of Indonesia’s safe drinking water situation

relative to theory. Indonesia is a democracy and is decentralized. Democracy is a system of governance

that is responsive to citizens’ demands (Dahl, 1998). Decentralization is an administrative arrangement

that allows improved responsiveness (World Bank, 1999; Musgrave & Musgrave, 1973; Oates, 1972;

Tiebout, 1956). However, neither attribute is a good predictor of the slow pace of the safe drinking water

coverage expansion nor why variation in service coverage among PDAMs persists. This research also

contributes to this body of literature by investigating the key intervening variables that the literature is

overlooking. Thus, it contributes to discussion on rational policy design that aims to improve policy

outcomes through the application of policy-relevant and policy-specific knowledge to policy-making

process (Howlett, 2011). This which in turn cannot be discussed separate from the policy environment,

as policy design’s content is largely dependent on specific historical and institutional context (Clemens &

Cook, 1999; Ryu, 2019).

DATA

Data on the outcome variable was collected from BPPSPAM. The national agency collects performance

data for PDAMs on a regular basis. PDAM performance data has been reported since 2008 (BPPSPAM,

2009). Figures for financial operations, production, and coverage are reported. For the purpose of this

research, the service population was divided by the population in the service area to calculate the

percentage of population.

As for the search for missing variables, it was done through a series of interviews with identified

stakeholders involved in the drinking water supply system. Indonesia’s water supply system

responsibilities are delineated with the Law 122 issued in 2015. Building on the stakeholders listed within

the law, 26 people were interviewed during a period of 3 weeks in the summer of 2017. The interviewees

were the most senior ranking person within the stakeholder. The interviews lasted a minimum of an hour

with few extending beyond an hour. Probing was actively employed to ask for clarifications (Rubin &

Rubin, 2005). The interviews were accompanied by an Indonesian-English translator. Most interviewees

were comfortable with expressing their thoughts in English. In those instances, the translator was not

employed. However, those particularly at the local government level were comfortable with their native

language. Hence, in those situations, the translator intervened and provided the translation.

The interviews were recorded and transcribed. This was so that none of the important contents were

omitted. The exact transcripts are available upon request. The transcripts were redacted of personal

identifiers to uphold anonymity.

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Table 2: List of Interviewees (by position title only)

Agency/Institution Comments

Ministry of Public Works and Housing, Directorate General of Human Settlements, Directorate for Water Supply System Development

National (2 people)

Ministry of Public Works and Housing, Directorate General of Human Settlements, Directorate of Special Water Supply System

National (1 person)

Ministry of Public Works and Housing, Directorate General of Housing Finance

National (2 people)

BPPSPAM (Agency for the Improving the Implementation of Water Supply System)

National (2 people)

West Java Provincial Government, Housing Settlement Department Provincial (1 person)

West Java Provincial Government, Bappeda Provincial (1 person)

Special Capital Region of Jakarta, Jakarta local water company Local (1 person)

Sukabumi District Government, Sukabumi local water company Local (1 person)

PDAM Bogor Local (1 person)

Government of Kulon Progo Regency Local (1 person)

University of Indonesia, Center for Political Studies Academic (2 people)

University of Indonesia, Center for Governance, Public Policy, and Business Studies

Academic (3 people)

Bandung Institute of Technology Academic (2 people)

Indonesia-Australia Center Bilateral think-tank (1 person)

PERPAMSI (Indonesian Water Supply Association) Non-profit (1 person)

Asian Development Bank Urban Development Multilateral financing institution (1 person)

Asian Development Bank Water Resources Multilateral financing institution (1 person)

World Bank Rural Water Supply Multilateral financing institution (2 people)

Total 26

ANALYSIS

The transcripts were analyzed with a focus on better understanding what is actually occurring among the

different stakeholders involved in policy implementation. For clarity of analyses, the different

responsibilities in drinking water service provision among the different tiers of government are outlined.

This is then followed with a summary of how the different stakeholders execute their outlined

responsibilities. This is then followed by a discussion of local academics/advisors and multilateral

development agencies see the interactions. This is then followed by a discussion of how an in-depth

Indonesia case study on water further refines the State-Implementation Synthesis Framework for

Catalyzing Access to Water (Ryu, 2019).

The basic contours of responsibilities between the various involved entities in Indonesia are more recently

clarified in Law Number 122 issued in 2015. The responsibility of providing safe drinking water is a split

responsibility across different levels of government. Article 38-41 of the law outlines the authorities and

responsibilities of the Central Government and they are as follows:

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1. Compile and create the National policies and strategies of drinking water supply system

management

2. Compile and create SPAM Intra-Province plan

3. Establish norms, standard, procedure, and criteria

4. Implement drinking water supply system management that has distinctive characteristics,

national strategies priority, and are intra-province

5. Create national state-owned enterprise and/or [national] technical implementation unit

6. Provide a license to the business entity to do drinking water supply system management

7. Provide assistance and monitoring to the local government

8. Ensure the ability of raw water for intra-province drinking water supply system management

9. Cooperate with local government

10. Provide assistance and monitoring to the state-owned enterprise and technical implementation

units (UPTs)

As for the Provincial government, the authorities and responsibilities are as follows:

1. Compile and create province policies and strategies of drinking water supply system management

2. Compile and create intra-Kabupaten/Kota drinking water supply system plan

3. Implement drinking water supply system management that has distinctive characteristics,

provincial strategies priority, and are intra-Kabupten/Kota

4. Create regional state-owned companies and/or regional technical implementation unit

5. Provide a license to the business entity to do drinking water supply system management

6. Monitor and evaluate drinking water supply system management in its Kabupaten/Kota

7. Report monitoring and evaluation of drinking water supply system management result to the

central government

8. Provide assistance and monitoring to the local government

9. Ensure the ability of raw water for intra-Kabupaten/Kota drinking water supply system

management

10. Cooperate with the central government and other local governments

The Kabupaten/Kota government responsibilities are as follows:

1. Compile and create the Kabupaten/Kota policies and strategies of SPAM management

2. Compile and create drinking water supply system Kabupaten/Kota plan

3. Implementing the drinking water supply system management in the region

4. Create regional state-owned companies and/or regional technical implementation unit

5. Takes complaints records that come from the communities

6. Provide a license to business entity to do drinking water supply system management

7. Provide assistance and monitoring to the village and communities in the region

8. Report drinking water supply system management monitoring and evaluation results to the

provincial government

9. Ensure the ability of raw water for the drinking water supply system management in the region

10. Cooperate with the central government and other local governments

As outlined by the law, the responsibilities of the different tiers of government in the service of safe

drinking water provision are clear. Safe drinking water delivery in the metropolitan areas are mainly

anchored through the state-owned enterprises. This is because due to the large capital investment

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requirement for surface water in-take, transmission, and treatment facilities. In absence of government

owned enterprises, community groups and business entities are permitted to service those underserved

areas under Article 49 and 52. These entities are known to primary extract groundwater in developing

their small water supply systems due to their size. Yet by doing so it, it also potentially undermines the

compliance of clause 5 within the Article 49, as the sustainability of raw water resources comes under

threat, especially in light of outstanding sanitation facility development challenges in the country.

As for Central Government responsibilities, they are responsible for setting up national policies and

strategies. The process entails linking together the provincial cycle to the national cycle as depicted in

Figure 1. More specifically, the provincial cycle feeds into the national cycle, as provincial governments

requests the national government to fund the expensive investment components of their urban water

infrastructure. The split in responsibilities between the different tiers are the illustrated in Figure 2.

At the national level, their concerns are multifold. First, through the administrative and fiscal

decentralization, the central government is strapped with financial resources. Thus, they are only able to

finance the capital investment of a limited number of projects. Given this situation, they engage in a

selective process. This project selection process is comprised of two components. It is dependent on

preparedness of the provincial government with regards to their proposed project. That is, the provincial

government has to allocate significant time and resources on producing a report that satisfies the

standards required by the central government. This is a bottleneck in itself because through the

interviews, it was revealed that few satisfy this criteria. The central government does not review any

applications that are incomplete. Thus, there is an automatic self-filtering step incorporated into the process.

Figure 1: Proposal Program Cycle and National Budget

Source: Indonesia Ministry of Public Works.

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Figure 2: SPAM Development Funding Scheme

Source: BPPSPAM 2017

Second, within the pool of submitted applications, projects are selected based on national priority. That

is, projects deemed to carry greater national importance are selected and funded. Although this is a

rational process, it automatically deprioritizes project applications in remote and marginal provinces. That

is, those with low industrial and commercial economic activities with low population densities face an

uphill battle in receiving financial assistance from the central government. Further, this is accentuated

due to the criteria of how much of the local government is willing to invest in the project. That is, those

provincial governments that are willing to invest more are prioritized, as the local governments are

eventually responsible for investments in the other parts of the water supply systems. However, this

requirement also works to the disadvantage of the local government because the size of the counterpart

contribution depends on the economic robustness of the locality. The process is also systematically

stacked against local governments with smaller economic base because the completed applications that

do not receive funding in a given year does not automatically get a priority consideration. Instead, they

are re-pooled in the next year’s set of applications for a newly started review process. Thus, awarding

investment is independent of duration and repeated efforts, which is discouraging for the local

governments that are not on high visibility and priority of the national government.

The provincial governments’ roles and circumstances are unique. Unique in the sense that they are largely

overlooked by both the local and central government due to their financial plight. Through the fiscal

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decentralization reforms, the fiscal transfers from the central government by-passed the provincial

governments went directly to the local governments. Thus, the responsibilities are outlined yet there are

few resources to leverage and elicit the cooperation of different kapupatens and kotas necessary in

constructing a regional water supply system. They are reliant on the local governments for their voluntary

participation because they hold the decision-making the authority to make decisions on necessary

counterparty contributions that increases the attractiveness in receiving central government funding.

Thus, they may devise a plan but they suffer from their inability to force a decision and commitments from

local governments. As a consequence, they only hold meetings with the kabupatens and kotas without

much progress. This is also in part to the challenges to the low popularity of kabupaten elected leaders

on granting development and extraction of their surface water resources to support the growth of

adjacent kotas. The concern arises on the front of the compensation. However, with compensation

comes rising water tariffs, which is another unpopular outcome for kota mayors. Thus, a paralysis on

negotiations emerge with no clear resources at the provincial level to shift the equilibrium.

At the local government level, multiple disincentives exist in pursuing water supply system development.

First, certain localities do not pursue additional investment in the existing system because the water

treatment facility is already operating at full capacity. Thus, there is no point in increasing investment to

expand coverage since there is no water to pump through the water supply system. Thus, they require large

investment by the central government to build new treatment facilities to support the expansion in

requested connections. However, there are also three additional barriers or disincentives in pursuing this

remedial courses of action. First, it requires that access to surface water is secured. This means the adjacent

kabupaten has to be willing to grant surface water extraction, which is a challenge in itself as they require

compensation and are shielded in their decision-making due to the administrative and fiscal decentralization.

Second, any remedial action carries a tariff reform. Tariffs will have to be adjusted upward in light of new

investments. This is a politically sensitive subject since raising water tariffs are popular to no one. Third,

due to the lengthy process of putting together the investment application coupled with the ambiguity of

actually receiving investment, the elected official faces a difficult decision on whether he or she wants to

devote limited local government resources for water supply system development that may not happening

during their time of office. The electoral timeline along with other structure disincentives does not make

pursuing the water supply system development route an attractive option.

In light of the disincentives to pursue water supply system development, the lingering question is then how do

the local leadership deflect the demand for clean water by their constituency. The reply was that the

vocalization of people demand for clean water is stunted due to the three factors. First, Indonesia experiences

heavy rainfall due to its location on the topical equator. The World Bank records the country’s annual

precipitation at 2,702 mm (World Bank, 2014). Thus, citizens do not decry shortness in water. Although there

is a clear distinction between clean water, i.e. water physical and chemically treated to rid of contaminant with

known health consequences, and naturally occurring water, the abundance of natural water sheds the public

perception on the urgency for water. Second, it was noted that people can still acquire water even without

access to the water utilities. Groundwater is readily abundant and only requires drilling. The local governments

do turn a blind eye on such developments and proactive initiatives because there is no capacity to supply

additional connection through the water utilities due to capacity constraints. Thus, small water supply systems

operate in lieu of water utility connections. This initiative is often taken by the housing developers, as they

resort to these facilities to grow their housing business. There are no regulations in Indonesia requiring houses

to be connected to local water utilities, as the water utilities face capacity constraints. Third, the public health

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concerns are dampened by the growing reliance on consumption of bottled water. Given that most of the

public health concern revolves around the consumption of the poor quality drinking water, drinking water

solves this issue. Interestingly, local water utilities are also getting involved in the bottled water business as

well since due to the marketing efforts of the private bottled water companies people prefer to purchase

bottled water out of perception that they are the healthier option. Due to these influences, water service

provision through water utility service connections are not a forceful as one would expect. This then also

incentivizes the local elected official from dedicating a significant portion of their limited government resources

to pursue water utility improvement schemes.

Further discouraging investment action from the local government are the poor legacy conditions of the

water utilities. The water supply system investments took place during the past authoritarian regime era

(Indonesia Ministry of Public Works, 2011). Given the concern over central government and local

government relationships during the authoritarian regime era, where the pairing of capital investment

funds allocation and actual construction were questioned, the local government officials questioned the

utility of making more investments. This concerned was further accentuated when taking into

consideration that the antiquated water supply systems were often coupled with high non-revenue water

(NRW) performances depicted in Figure 3. That is, if they perceive they are working with a failing system,

any investment are risky, as they anticipate gaps in investment and performance.

Figure 3: Non-Revenue Water (2014-2016)

Source: BPPSPAM 2017

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The situation becomes further grim when recognizing that a significant number of the water utilities are

operating at a financial loss. NRWs are contributing to the situation. What this means to the elected local

officials is that to turn around their water utility performance, it will require a sizable investment. They

need to pour resources in identifying and remedying the NRW situation. The latter involves either fixing

the water supply system in cases of leaks, legally barring those with illegal connections, or raising the

water tariffs for cost recovery. The first requires economic resources. The other two would require

political resources. Even in the calculation of modified tariff rates, it will be a challenge to keep water bills

below 2 percent of income that is recommended in other countries (American Water Works Association,

2000). The required investment and its spread in costs will constrain what is possible without heavily

burdening the population. This financial conditions of the water utilities also dampens the viability of

public-private partnerships arrangement due to concerns over financial sustainability (World Bank, 2014;

Menzies, 2016).

Figure 4: Water utilities operating in losses

Source: BPPSPAM 2017

The academics/advisors provided in-depth political explanations to the water supply system development

situation in Indonesia. The different incentives among the different tiers of government are further fueled

by the post-authoritarian democratic politics in Indonesia. The end of Suharto’s regime was followed by

a rapid increase in the number of political parties. The fragmentation in Indonesia’s political landscape

has serious ramifications. This is because now different and often competing political parties were

representing different tiers of government. Thus, rivalry and opposition were more explicit in post-

Suharto democratic politics. The challenge this brings is that due to the administrative and fiscal

decentralization reforms, arbitration means were undermined. That is, in vigilant efforts to remove

means to revert back to authoritarian arrangements, no one is in a dominant position to force a decision.

This was a problem because arbitration was limited to bringing stakeholders together. If one side decides

050

100

150

Fre

quen

cy

-40000000 -30000000 -20000000 -10000000 0Losses after tax for 2017

14

to entrench oneself in a non-compromising position, there is little that the meeting organizer can do force

a speedy conclusion.

Another aspect that further fuels this challenge is the rotations within the public administration bodies. The

rationale for rotations is to prevent corruption. However, this also undermines the ownership on a multi-

year project such as water supply systems. There are doubts on whether the handover from one official to

another official is done properly to minimize loss of the both explicit and tacit knowledge that are essential

to the continued uninterrupted process on the project. It was noted that officials may find themselves

having to learn things from scratch as they are transferred to a position. Due to the complexity and the

stalemate involved in water supply system development, the transferred bureaucrat may choose to wait it

out until their next rotation rather than actively choose to address the issue that may result in nothing.

As for the multilateral development banks (MDBs), they face a conundrum as well. This is because MDBs

are structurally constrained to mainly work with the central government entities. Thus, their engagement

is restricted to assisting and supporting the resource capacity of the central government entities. Due to

this restriction, they are not able to address other structure obstacles that are pervasive in Indonesia’s

federalism and delay catalytic clean water service coverage. There are efforts to boost public-private

partnership (PPP) in the water supply sector. However, this involves resolving multitude of

aforementioned issues at the sub-national tiers of government. Thus, in light of contextual challenges,

the water supply systems that are able to put together a robust PPP proposal with demonstrated strong

financial standing are the ones with relatively weaker need for alternative financing arrangements and

subsidies from the central government. That is, as poverty alleviation banks, the MDBs wishes to be more

actively involved in expanding service coverage at the marginalized areas. However, in order to do so, it

needs to operate at the sub-national level and remove the inhibiting factors.

The question then becomes, “How can we better pull together all these disparate parts to enhance our

understanding on paths to catalyzing clean water service coverage?” A suggestive framework on that

particular topic is the State-Implementation Synthesis Framework for Catalyzing Access to Water depicted

on Figure 5 (Ryu, 2019). The framework was developed from a fieldwork-based cross-country water

sector development comparison of five countries. It builds on the implementation literature in public

administration with refinements from the state literature in comparative politics, which are further

refined interviews with water sector policy makers in those countries. The question is then whether we

can fit the newly collected observations into this framework. Also, another question is whether the

framework can be further refined through the inductive approach of newly collected observations.

When applying the expanded observations collected from Indonesia to the State-Implementation

Synthesis Framework for Catalyzing Access to Water, modification to the framework are needed. First,

the rural components are removed for clarity, as local water utilities service urban areas. Second, the

framework needs to highlight the different tiers of Indonesia’s government. Third, the framework from

the approach of consolidating the enabling factors and critical components in catalyzing access to clean

drinking water coverage. Thus, it does not elaborate on the inhibiting factors or implementation obstacles.

Given that the rich and detailed primary data from Indonesia, we are able to highlight those factors within

the framework. These aspects are highlighted in red in Figure 6. As for the interlinkages, the question

marks indicates more research is needed to ascertain where those relationships exist. The X’s indicate

15

Figure 5: State-Implementation Synthesis Framework for Catalyzing Access to Water

Source: Ryu, Shin Kue. 2019. “Variation in Access to Safe Drinking Water across different countries: An Explanatory Framework.” Social Science

8(2): 68.

16

Figure 6: Modified State-Implementation Synthesis Framework for Catalyzing Access to Water for Indonesia

17

concerns over the existence, and if so, the strong viability of such relationships. The interest aspect is that

a suggestive pattern emerges within the policy formulation and policy design components. It is the

increased fragmentation and isolation of formulation and design components at the local government

level. A situation that is further undermined by the various structural and agency obstacles within the

implementation components. Due to the multitude of challenges, it truly becomes a chicken-or-egg

conundrum in the sense that the question is where do you start? Due to the multitude of inhibiting factors

and obstacles, devoting resources to one segment of the problem will not produce immediate results.

Thus, any solution will require a multi-pronged approach which should start with better identifying and

inventorying the aspects highlighted in red in Figure 6.

CONCLUSION

This study embarks on an ambitious goal, which is to better identify and explain the variation in coverage

of clean drinking water in Indonesia. It does so by interviewing both the relevant and influential decision-

makers and stakeholders in the water policy sector. Based on the interviews, certain themes emerge

repeatedly as the cause behind the persistent variation witnessed in service coverage of urban drinking

water supply systems. One of the leading structural causes behind the inability to expand service coverage

was the lack of water supply provision, i.e. lack of water to push through the pipe distribution system.

Therefore, there is no point of adding connections at the local government level because it cannot be

serviced adequately with existing water supply production. This is also supported by the BPPSPAM data,

as 125 out of 367 local water supply systems reporting performance data in 2015 provide less than 128

liters per capita per day (LPCD) to their served population. The 128 LPCD reference point is used as it is

Europe’s average, which is more conservative consumption rate than the United States (EurEau, 2017).

Figure 7: Difference between actual served population and original design service population

Source: BPPSPAM 2017

050

100

150

200

Freq

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0 200000 400000 600000 800000Difference between actual served population and original design population

18

However, if you calculate this based on residents in service area rather than served populations, which is

a very important distinction since not everyone in the service area are actually served by the utilities, 320

out of 367 utilities is producing less than 128 LPCD for those in their service areas. There is a significant

difference between the two as depicted in Figure 7. Another way to interpret this is that only 47 out of

367 utilities reporting in 2015 produced enough water through their treatment facilities to provide 128

LPCD or above or residents in their service areas. The concern is accentuated when you realize even this

calculation assumes that there is no production-to-service loss, i.e. the pipes are all in working order

without leakage. This is an unrealistic assumption, especially in light of the period in which the water

utilities were construction and the poor maintenance that were frequently mentioned of those utilities

registering low and negative profits.

The solution to the challenge in Indonesia’s drinking water sector requires involving plans to increase bulk

water supply production. However, increasing bulk water supply production is a challenge in itself. This

is because it would mean that costs for water provision will go up with the new bulk water supply system.

This is because the bulk water supply system will levy an increased bulk water supply fee to the local

drinking water supply systems, as the latter is responsible for distribution and final end-user tariff

collection. The solution of constructing additional bulk water supply system is particularly less favorable

or even perceived as impossible for the 190 utilities that are registering losses after tax. That is, any

additional investment will have to involve a subsidy arrangement or a long-term financing arrangement

to ensure local resident buy-in to utility services. However, this also then runs into limited resources

within the subsidizing or long-term financing entity.

Even if the financing arrangement is enabled, there is the question on whether the local governments will

push for additional investment in bulk water supply. This is because on the engineering front, it depends

on where the raw water source is located. If the raw water source is within their own kota/kabupaten,

then there is a strong incentive to apply for additional funding from the national government to develop

the raw water sources and increase water production. This is because if the raw water source is located

within their single kota/kabupaten, then there is less of a problem of acquiring permits as the mayors and

regents weld great concentrated authority within their district borders. The incentives are structured

differently when raw water sources are located outside of their districts. This is because it involves a

greater group of decision-makers with equivalent authorities. That is, there is little a mayor of one district

can do force a hand of a decision onto another mayor of another district. Due to additional complexity

on collaboration among parties when raw water sources outside of their own district need to be

developed, it imposes a disincentive for mayors to commit resources and invest their valuable time within

their term to engage in such action. Such action is risky for the mayors since success and progress is

dependent on the decision of multiple actors outside the control of the mayor. Then there is the political

competition component.

In search of solutions and actions to remedy the slow progress in clean drinking water service coverage,

the State-Implementation Synthesis Framework for Catalyzing Access to Water was applied. With newly

collected data from fieldwork, the obstacles were identified and positioned within a broader explanatory

framework. It serves to help develop a comprehensive understanding of how various potential inhibiting

factors relation to one another. It also serves in better explaining why there is slow progress when efforts

are poured in removing an identified obstacles. It is because other factors are at play.

19

Although the research lens us greater insight to longitudinal variation in clean water service coverage in

Indonesia, the study is not perfect. There are inherent limitations. First, the interviews were restricted

to the Java Island within Indonesia. It was reasonable starting point since two-thirds of Indonesia’s

population resides on the island. It is also home to the capital of Indonesia. However, the study could

have been more robust as other major islands were included in the study. Sumatra, Kalimantan, Sulawesi,

and West Papua vary significantly in terms of ethnic population composition. Thus, by including decision-

makers in those regions would have improved the study. However, given the limited time and resources,

the study inherently carries this shortcoming.

Second, a more robust analyses of local government electoral outcomes would have strengthened the

conclusions drawn from the study. However, this was an inherent limitation in this study. The researcher

did engage in the necessary efforts to acquire this data through attempts to visit the National Electoral

Board. Yet, visitation was not granted to the facilities. Furthermore, there was no complete and

comprehensive database that was available in the local universities as well. The closest to a complete

dataset was held by a researcher at the Indonesia-Australia center. Thus, future studies would involve a

collaboration with the researcher.

Third, a more thorough discussion on how the modified implementation framework converses with recent

theoretical developments would be desired. More specifically, a discussion of how the framework

integrates with the works of Howlette’s substantive versus procedural policy implementation tools would

further strengthen the discussion on theoretical contribution. This should and would be written shortly

as a follow-up to this manuscript.

Despite the shortcomings, the study contributes to the field with newly collected observations and

development of a modified implementation framework to better fit and arrange the findings. The latter

should be of utility to the policy-makers and implementing bodies in Indonesia working on water. It also

enriches the very necessary discussion on why do close to 700 million people still do not have access to

safe drinking water.

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