Between Revenues and Public Service Delivery

Abstract

This article examines the development of policies regarding the state-owned enterprises ( SOE  s) and public service agencies ( PSA  s) in Indonesia. In 2004, the government of Indonesia introduced PSA  s—government agencies that were given large autonomy to manage their financial affairs. The rationale behind this autonomy is consistent with the New Public Management ideal: the creation of more market-oriented government institutions with the objective of increasing the efficiency and effectiveness of public service delivery. The PSA policy has increased state revenues significantly, yet the quality of services and accountability has not improved accordingly. A comparison with SOE  s reveals that the restructuring of government agencies and SOE  s took place before a supportive framework was set in place. We argue that to tackle informality and to safeguard the social functions of public services, the spearheads of efficiency and revenues in Indonesian bureaucratic reform policies require a strong foundation, consisting of regulatory and ideological components.