Problem Analysis of Indonesia's Development Planning Method and Practices

IN THE HEART OF PLANNING: PROBLEM ANALYSIS ON INDONESIA’S DEVELOPMENT PLANNING METHODS AND PRACTICES Prepared by: Fajar Eko Antono Keziah Cahya Virdayanti Abstract Development planning is arguably among the government’s most important function to support their role in administering a country. This is due to the fact that a nation’s progress is highly dependent on the quality of its development planning, which in turn will determine the national development success. As with every planning in public sector, planning practices in Indonesia’s public sector is largely influenced by the strategic planning theory. Unfortunately, these practices of development planning in Indonesia are still constrained by problems, in which some of them are inherent to the nature of strategic planning itself. Those problems altogether cripple the effectiveness of development planning;therefore, actions are needed to improve this effectiveness. After thorough analysis, it can be concluded that there are three kinds of solution: (1) do nothing (the problem is intrinsic); (2) refinement of old mechanism; or (3) create a new, better mechanism in the practice of development planning.

Key word: strategic planning, public sector, performance indicator, participation, priority Introduction Last April, during the opening ceremony of National Planning and Development Deliberation (Musyawarah Perencanaan dan Pembangunan Nasional or Musrenbang Nasional) 2017, Indonesian President Joko Widodo gave quite an interesting remark, especially to the planners and critics in development planning.He argued that the practices of development planning nowadays still lack focus and clear structure of priorities. Moreover, he stated that budgeting in APBN and APBD is now still treated as a routine, instead of means for planning (source: www.cnnindonesia.com). His uneasiness is quite reasonable. Logically, treating planning practices as routine could be fatally harmful, especially in a large-scale planning as big as a nation. No matter how persistent the public opinion, it wouldn’t make any significant impact if the planning practice itself is not designed to encourage any breakthrough.

However, if we analyze further, what the President had stated is evidently the problem that kept hampering the effectiveness of our planning practices all this time. Theoretically, our development planning system is heavily influenced by the concept of “strategic planning”, a planning method that is popular in the 1970s.

This definition of strategic planning can be defined as formulation of strategy through formal and structured manners (Mintzberg, 1998). In this case, strategy

is emulated by the highest ranked officer(s) in the organization, while the units beneath them are only involved during the implementation. Strategy created through this process is elaborated explicitly and specifically, to ensure its implementation is as consistent as possible with its planning. The underlying concept of this planning method is the work mechanism of a machine: if every part of the machine is made accordingly to the blueprint, the machine will automatically produce the desired outcome.

According to Mintzberg in his boook Strategy Safari, the strategic planning process is consisted of 5 (five) steps. First,quantifying the objective through formulation and elaboration, because formal strategic planning requires a measurable target. Second, verifying external and internal factor, which is the further development of the Strength Weakness Opportunity Threat (SWOT) method.

One of the distinctive trait of the strategic planning listed here, which is forecasting the future scenario. Third, evaluating the strategy. In business or private sector context, this evaluation is done primarily through financial analysis, while in public sector, evaluation should be put more heavily to economic or social benefit impact.

Fourth, planning the operation of strategy. In this stage, strategy has become exceedingly detailed, and can be derived into multiple implementation hierarchies, among them are: (1) hierarchy of time, (2) hierarchy of vision and mission, (3) hierarchy of substrategy, and (4) hierarchy of program. The most commonly used hierarchy is hierarchy of time, which in Indonesia is known as long term (20 years), medium term (5 years), and short term or annual (1 year). All of this strategy-making processes at the end produce the “masterplan” as the final product, with detailed substance. Therefore, strategic planning is often associated with “control”, because its specific and binding operational procedure. Fifth, the last step of strategic planning, is scheduling, which causes the cycle to start and end at the same time, repeatedly.

The strategic planning method is now rarely or even no longer be used in private sector (source: www.hbr.com). Strategic planning has been considered as incapable of producing new strategy, as it can only analyzes and elaborates the existing strategy.

This is due to the fact that fundamentally, strategy-making cannot be formalized: it is formed abruptly without intellegible procedure. Moreover, data used in this Mintzberg’s strategic planning can only be derived from “hard data” –the data that has already been quantified – which takes time to produce. A good planning should be responsive and adaptive to the changing circumstances, while the formalization process – the core identity of the strategic planning method – is already time consuming.

However, there are also advantages of strategic planning. There are at least three advantages of this formalized, structured strategy-making method. First, its legalformal nature forced the plan to be liable. Second, because it is produced through a system, it prevents the officer or manager in charge from becoming authoritarian and sabotaging the system-generated plan. Third, the elaborated planning document makes the implementation easier to be controlled, thus the rate of deviation can be minimized.

Development planning practice in Indonesia is regulated through Law 25/2004 on National Development Planning System (Sistem Perencanaan Pembangunan Nasional or SPPN), along with other derivative laws. Planning documents in

Indonesia can be classified into 3 (three) different groups based on the time hierarchy: (1) long term planwhich consists of National Long Term Development Plan (Rencana Pembangunan Jangka Panjang Nasional or RPJPN) and Subnational Long Term Development Plan (Rencana Pembangunan Jangka Panjang Daerah or RPJPD); (2) medium term plan which consists of National Medium Term Development Plan (Rencana Pembangunan Jangka Menengah Nasional or RPJMN), Subnational Medium Term Development Plan (Rencana Pembangunan Jangka Menengah Daerah or RPJMD), Strategic Plan of Ministry/Institution (Rencana Strategis Kementerian/Lembaga or Renstra-K/L), and Strategic Plan of Subnational Working Unit (Rencana Strategis Satuan Kerja Perangkat Daerah or Renstra-SKPD); and finally (3) short term or annual plan which consists of Working Plan of National Government (Rencana Kerja Pemerintah or RKP), Working Plan of Subnational Government (Rencana Kerja Pemerintah Daerah or RKPD), Working Plan of Ministry/Institution (Rencana Kerja Kementerian/Lembaga or Renja-K/L), and Working Plan of Subnational Working Unit (Rencana Kerja Satuan Kerja Perangkat Daerah or Renja-K/L).

The process of development planning is regulated through Law 25/2004 in article 8 to 30, andthesteps are: (1) preparation of plan; (2) establishment of plan; (3) control of plan implementation; and (4) evaluation of plan implementation. Preparation starts by drafting the Preliminary Draft of RPJPN/RPJMN/RKP. After that, Ministry/Institution prepare Renstra-K/L or Renja-K/L, which in turn will be the basis for composing the Draft of RPJPM/RPJMN/RKP. This Draft will then be discussed in Musrenbang Nasional, and the result will be used as reference by Ministry of National Development Planning for composing the Final Draft of RPJPN/RPJMN/RKP. The same process also applies to subnational development planning, with exception that the role of Minister of National Development Planning is replaced by the Head of Subnational Development Planning, and the role of Minister/Head of Institution is replaced by Head of Subnational Working Unit. The Final Draft, which has been collectively approved, will then be established by law.

According to those steps, it is clear that strategic planning documents in Indonesia, in general, areclassified based on hierarchy of time (long term, medium term, and short term), and hierarchy of governance structure (national government and subnational government). All these strategic planning documents are intertwined, in which every plan document must refers to the document in higher hierarchy, with RPJPN as the master plan according to both hierarchy of time and hiearchy of governance structure.

This further cemented the formal and binding nature of strategic planning, where every document’s objective is a derivative from the document that has been produced before (structurally higher), and changes can only be made through amendment of the legalizing law.

Throughout the practice and management of development planning in Indonesia, it can be concluded that even until now there are still problems that constrain the effort of conductinga successful strategic planning process. The success of this process will determine whether or not the planning objective will be achieved, which eventually will determine the accomplishment of national development goals. This paper is intended to discuss, and potentially to solve, the problems that hinder the implementation of strategic planning in public sector in Indonesia.

Problems and Analysis In general, there are at least 7 (seven) problems in the formulation of strategic planning in public sector in Indonesia. Those problems are described in passages below.

Strategic planning as a legal-formal process. One of the characteristics of public sector’s strategic planning is the that it is conducted legally and formally. Some evidents that indicate this are: (1) the strategic planning process is guided by a legalized manual, in which its method, schedule, and content (including the outline) have been previously determined; (2) the final strategic planning document is authorized by law, which will directly bind the implementation of the plan (in both its program and its budget); and (3) there is obligation to review the document after 2 to 3 years of implementation, which has also been stated through binding law.

On one side, legalization and formalization of planning process and strategic planning document provide benefits in the form of stability, both in the process and in the planning product. Because of legalization and formulation, the planning product or the planning itself will certainly be implemented accordingly with the approved mechanism. Therefore, the possibility of deviation will decrease to a minimum.

Moreover, legalization and formalization are also essential as they improve the accountability of planning document.

However, the same legal-formal characteristics have also been proven as obstacles during the process of strategic planning. First, they drive the strategic plan to become rigid; hence the implementation can no longer be flexible. Secondly, modification of the strategic plan has to done through specific, time-consuming mechanism, which consists of deliberation and legalization. In reality, though, changes in the strategic environment of an organization happen unpredictably, thus strategy adaptation cannot be prepared or structured (Rummelt, 2011).

Furthermore, the number of laws and regulations that must to be referred during strategy formulation have also become challenges, whether in the form of document in the higher plan hierarchy or Norm, Standard, Procedure, and Criteria (Norma, Standar, Prosedur, dan Kriteria or NSPK). These regulations serve as multiple point of views that have to be considered during strategy formulation, regardless whether they’re parallel, or even contradict each other.

Fallacy in objective-setting. In line with the legal-formal characteristic, there is not much flexibility in objective-setting. Due to the hierarchy of planning document, objective in each of the document must be derived from planning document in higher hierarchy, in both time and governance hierarchy. If the objective is wrong, it may causes clash between objectives in different planning documents.

The error stated above may occur because some of these factors. First, strategic planners don’t fully comprehend the planning documents that are supposed to be referred. Second, different cycle of “planning horizon” – e.g. elections held asynchronously. Therefore, there is possibility that the objective is wrong, especially in planning document in lower hierarchy, for example RPJMD that isn’t in line with the RPJMN, or Renstra K/L that is inconsistent with the RPJMN, and so on. Third, the

objective-setting process doesn’t include cost-benefit analysis, therefore the final objectives are not essentially the most beneficial.

Like a ripple effect, wrong objective consequently causes the program and budgeting to be incorrect as well – they can cross or even betray the national development objective that has previously been agreed upon. The long and arduous mechanism of document amendment also makes changing the objective impossible to be done quickly.

Moreover, wrong objective also leads to difficulty in performance measurement, due to inconsistency in performance indicator used. As a result, it is hard to measure different, but correlated planning documents simultaneously – e.g. correlated ministry, province and its cities, etc.

In reality, planners in governmental institution tend to defend their planning documents regardless of its mistakes, just because those documents are lawfully approved. That tendency also spurs from the planners’ awareness that document amendment is difficult and time-consuming. For example, altering the current RPJMD so that it’s consistent with the newly approved RPJMN is very time-consuming, that by the time the newly revised RPJMD is approved, there isn’t much time left to implement it.

Difficulty in forecasting the future. As stated by Mintzberg, strategic planning as a method requires forecasting over multiple factors that affect the implementation of the strategic plan, those factors are: annual target volume, available budget, risks that will potentially jeopardize the plan, etc. Forecasting is needed especially because of the long period of “planning horizon” that probe the need for estimation of critical factors that directly affect the planning result.

However, forecasting is easier said than done, especially in a dynamic, fast-paced environment. In public sector nowadays, forecasting practice is still being dominated by linear thinking, with the tendency to use past circumstances as assumptions to predict the future. This surely limits the future possibilities being predicted, and makes the prediction inaccurate. As a result, a lot of assumptions in strategic planning don’t come into fruition; hence causing the plan to be irrelevant to the actual circumstances.

Nowadays, one of the most recurring problems during strategic planning process is the tendency to be overly optimistic toward resource availability in the future.

Meanwhile in reality, the phenomenon of backlog, especially in funding, is not uncommon. This phenomenon, eventually, will prevent the objectives to be achieved.

Therefore, we need a better, more accurate method of forecasting in the future.

Likewise, we also need to perform risk management better, so that risk of failure would be included as a part of the strategic plan itself.

Strategic planning as a non-participatory process. In management literature, a strategic plan basically consists of organization vision and mission that will direct the course of the organization. By all means, a strategic plan then must be fully comprehended by all member of the organization, from the high-ranked officer to the

newly recruited staff. Complete understanding of organization’s strategic plan will influence members on conducting organization’s product activities, which eventually will contribute to the accomplishment of organization’s vision and mission itself.

If we take a look at public sector organizations or government institutions, generally their organization structures are expansive and contain numer ous staffs and officers. This is why their strategic plans are only comprehended by the high-ranked officers, or the planners in the planning unit.

On one side, the situation described above is actually the repercussion from “division of labor”, that is used to divide the duty and function in a bureaucracy system.

However, as a tool that drives the course of the organization in the long term, strategic plan should be fully understood by all of the organization’s members, regardless of their duties and functions.

Undoubtedly, a thorough understanding of strategic plan will direct all decisions and actions made by the organization’s members to the organization’s desired course.

Likewise, understanding of strategic plan will prevent decision or action that cross the strategic plan, or even harmful to the achievement of vision and missions.

Difficulty in creating systematic and tiered architecture of program and structure of performance. The government’s strategic plan is basically an integration of structure of plan, structure of budget, structure of organization and structure of performance. Therefore, strategic planning document should encompass not just plan of activities, but it should also be equipped with tiered performance indicators, which are: (1) Performance Indicators of Activities (Indikator Kinerja Kegiatan or IKK); (2) Performance Indicators of Programs (Indikator Kinerja Program or IKP); (3) Performance Indicators of Strategic Objective (Indikator Kinerja Sasaran Strategis or IKSS), as stated in Bappenas Ministrial Decree 05/2014 about Guide on Preparation and Analysis on Renstra K/L Year 2015-2019.

In general, the relationship between those three indicators is analogous to the organization structure whereas IKK represents output, which is the product of Echelon II Organizational Unit’s performance; IKP represents outcome, which is the product of Echelon I Organizational Unit’s performance; and finally IKSS, which represents impact of the Ministry/Institution as a whole. As a result, performance indicators have to be structured and leveled, so that they correctly portray the performance of each level of organization and the relationship between those indicators in the right hierarchy.

In the existing planning documents, it can often be found wrong and unsystematic structure of performance, for example: wrong performance indicator; wrong indicator unit; using indicator unit that is hard to measured or whose data is unavailable; weak causal relationship between performance indicator and its objective; using indicator that is outside of the organization’s scope of control; et cetera. Generally, those mistakes were made during the drafting process of IKP and IKSS, while IKK is easier to prepare as it can be directly derived from the output of the activities, so mistakes are mostly avoidable.

Mistakes in making the performance indicator surely have serious negative impact on the quality of the strategic plan, especially in measuring the performance of the plan.

Without clear structure of performance, the organization’s achievement would be hard to measure, which at the end will reduce the accountability of the organization itself.

In the future, it should be obliged that planning document is accompanied with the right set of indicators, so evaluation of plan would be optimum.

Difficulty in measurement and management of performance’s outcome and impact. Still closely related with previous point, problems are often found during performance measurement process, especially for IKP and IKSS. Those two indicators are hard to be measured, unlike the direct output in IKK. This is surely a critical problem, as it jeopardize the performance reporting system in governmental institutions.

There are some factors that lead to this difficulty. First, difficulty is caused by the mistakes made during the making of IKP and IKSS itself. Second, the indicators require data that has to be specifically and continuously monitored, unlike the IKK which is measured from direct output of activities. Third, performance of IKP and IKSS that is often treated as a lower priority compared to IKK, whose measurement is needed for project administration.

Without adequate measurement of IKP and IKSS, it would be hard to measure the overall performance of governmental institutions, in regard to program management.

In general, nowadays, organization’s performance depends more heavily on IKK performance, specifically output of projects that are considered as strategic, or the main output.

Additionally, it would be difficult to improve the program implementation, as its feedback mechanism, in the form of IKP and IKSS, is poorly inadequate.

Furthermore, it would also be problematic to measure the achievement of organization’s vision and mission, which essentially is the accumulation of all executed projects.

Finally, the most critical question in every public sector organization is how far the programs and the projects have generated impact, and how far they have contributed to public welfare. It should be kept in mind that although output is inevitably needed to create outcome and impact, in reality output delivery doesn’t necessarily guarantee the realization of outcome and impact, as there are external factors that are beyond the organization’s scope of control. Therefore, special efforts are required to ensure the project’s outputs are maximizing the chance of outcome and impact realization.

Theoretically, this operation is known as benefit realization management, which sadly has not been widely practiced by public sectors in Indonesia.

Difficulty in prioritization of program and budget. Strategic planning’s success in achieving its vision and mission largely depends on the product of the projects that are being executed continuously during its planning horizon. Those projects will produce performance that is measured through IKK, which in turn will contribute in IKP and IKSS achievement, which will finally at the end support the realization of the organization’s vision and mission itself.

In the context of program management, theoretically, strategic planning is used to select the best combination of project portfolio, that optimizing the achievement of its vision and mission. According to Peter F. Drucker, a management expert, this scheme is also known as “doing the project right”, which is essentially different to project management where success heavily depends on the direct output of the project itself, or “doing the project right”.

Oftentimes, organizations choose set of projects that are simply wrong and unparallel with their strategic objective or organization’s vision and mission. Even if those projects have been executed perfectly, accordingly to project management principle – on time, highly qualified, and right on budget – they won’t contribute as much to the strategic planning or program management performance.

One of the main cause that prompt the organizations to select wrong set of projects is because those selected projects are mostly compulsory, that are derived from: higher planning document, political decision, et cetera. This situation impedes the planner to conduct analysis or simulation to produce the best combination of projects in accordance to program management principle.

Therefore, program and budget arrangements have to be conducted specifically in order to produce highest leverage from the perspective of vision and mission achievement. However, organizations are faced with budget constraint, thus trade-off or prioritization is needed to let go the least beneficial projects, in order to achieve maximum success. As a result, a set of tools or comprehensive criteria is needed to compose the best scenario to reach organization’s objective, through combination of programs and certain budget allocations.

Conclusion From the description above, it can be concluded that problems in strategic planning of public sector in Indonesia can be divided into three categories: (1) Intrinsic problems that couldn’t be avoided, (2) Problems that could be avoided by improving the existing mechanism, and (3) Problems that could be avoided by utilizing new mechanism.

The first category is intrinsic problems, which are the results from the character of the strategic is planning itself; namely the legal-formal nature of strategic planning. Rigid planning implementation and its legally binding laws are trade off that has to be paid to achieve stability, accountability, and minimum deviation, in planning process and its derivative products.

Whereas, the second category is problems that could be avoided by improving the existing mechanism, those improvements, among them are: hold the regional elections simultaneously to adjust the planning horizons; set one single unit and indicator for the same activity in different planning documents to facilitate performance measurement accurately; conduct efforts to accustom the non-planner staffs and officers to the organization’s strategic plan; and create performance indicators that are easier to measure continuously, especially for IKP and IKSS.

Ultimately, the strategic planning system that is being used in Indonesia is predicted to not change much in the future, as it already complies with the public sector planning guidelines in Indonesia. Nevertheless, as has been elaborately described in the prior passages, there are many aspects of this strategic planning system that can and still need to be improved. Every parties involved in this strategic planning system should evaluate their performance and be actively involved in improving the planning mechanism, regardless of whether they are planners or not. With these efforts put in practice, hopefully strategic planning in Indonesia in the future would be more effective and finally able to produce meaningful breakthroughs, as expected by Indonesian President, Joko Widodo.

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