Issue 14 Informality Nov 2011

14 ISSUE

INFORMALITY INFORMAL MOBILITY IS HERE TO STAY INFORMAL ECONOMY AND INNOVATION THE LEADERLESS ORGANIZATION AND TWO EDGED APPLICATIONS INTERVIEW WITH DR. ATM NURUL AMIN 18 CITY INNOVATIONS TOWARDS BANGKOK 2030

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EDITORIAL DR. APIWAT RATANAWARAHA Department of Urban and Regional Planning, Chulalongkorn University

“Informality” as a concept first emerged in the 1960s among Western social scientists who adopted the formal-informal dualistic framework to understand urban migration and labor markets in developing countries. The International Labor Organization (ILO) picked up and popularized the idea of the informal sector, and many international donors and governments followed suit. They implemented a plethora of initiatives aiming to formalize the “informals”, who were deemed unorganized, self-employed, and poor. Then came Hernado De Soto, who celebrated the informal sector as being dynamic, competitive, and entrepreneurial. Informal activities to him are rational responses to the state’s excessive controls, providing people with “the other path to development”.

A few decades have passed, and we still see informal activities everywhere in Southeast Asian cities, partly because the rural-urban migration as the catalyst for informality is still occurring. Of course, real world phenomena evolve faster than academic concepts that try to explain them. “Informal” activities are changing rapidly due to the dynamic nature of the economy, polity, and society. Increasing globalization of information, goods and services, and technological advancement—especially in information and communication—are making the informal sector even more dynamic and volatile than ever. Informality remains a key issue with serious implications for development and poverty.

This issue of TRENDNOVATION SOUTHEAST attempts to spot some recent signals of informality in Southeast Asia. The first article traces the emerging trends and issues in the informal transport sector. Mobility has direct implications for human security and growth; without adequate and affordable means of travel, people have limited access to employment and other sources of livelihood. As the state often fails to provide such basic services, informal transport, such as motorcycle taxis, jeepneys, vans, and minibuses, gladly fill in the void.

The second article features an array of innovative solutions in the informal sector in Southeast Asia. By learning about these innovations, we see their entrepreneurial spirit, dynamism, and a great potential for development and poverty alleviation. So far policies on informality have rightly aimed at building social protection and safety nets for informal workers, but perhaps we also need to look beyond that and do more to enhance their innovative capabilities.

The third article takes a different view on informality, focusing on “leaderless” organizations that could potentially change the way in which business and development initiatives are undertaken in Southeast Asia. This type of “informal” organization is increasingly observed in various sectors, ranging from terrorism to Open Source software development.

TrendNovation this month interviews Dr. ATM Nurul Amin, Professor of the Department of Environmental Science and Management of North South University (NSU), Dhaka, Bangladesh. An expert on the urban informal sector in the region, he shares his views on the informal sector in Southeast Asia, particularly from the decent-work perspective adopted by the ILO.

Our Infographic of the month features partial results from a regional research project entitled “Towards Innovative, Liveable, and Prosperous Asian Megacities”. City Innovations towards Bangkok 2030 highlight 18 expectable and desirable innovations that correspond to three scenarios for Bangkok in the year 2030, namely, Green City, Google City, and Gray City.

Disclaimer : The opinions expressed herein are those of the authors and do not necessarily reflect the official positions of Noviscape Consulting Group ot the Rockefeller Foundation.

Copyright © Trendsoutheast 2009 - 2011. All Rights Reserved.

BY

Informal mobility is here to stay

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DR. APIWAT RATANAWARAHA

Department of Urban and Regional Planning, Chulalongkorn University

IDEA Informal transport is a basic service indispensible to urban lives in most developing countries in Southeast Asia. It provides relatively demand-responsive services to city residents who have no private vehicles and live or work where public transport is inadequate. The informal transport sector also creates jobs for low-skilled workers, many of whom are rural immigrants. In modern cities such as Singapore, informal modes are no longer seen on the streets, as governments have “formalized” them completely. But in other cities, notably Bangkok, Manila and Jakarta, informal transport not only survives but thrives. Their existence will remain partly unofficial – partly official, with some legal status but only limited institutional and state support. Despite its status, informal transport is here to stay for a while.

SCENARIOS

KEYWORDS:

Informal transport; paratransit; economic and social regulations; social protection; entrepreneurship owners. In other cases involving smaller vehicles, such as motorcycle taxis, drivers are usually independent owner-operators. Unlike in other informal sectors, such as street vending, this informal sector is male dominant.

It is rare to see female motorcycle, van, and minibus drivers. The number of female drivers may increase in the future, but probably not by much.

Cities are expected to grow and expand in Southeast Asia, and as it is not likely that mass rail and bus transits can keep up with the increasing demand, informal transits will continue to grow, so long as the authorities let them.

Chart 1: Selected Southeast Asia Percentages of Rural Population and Employment in Agricultural Sector (1987 – 2009)

Informality continues to thrive As cities keep growing and expanding to the suburbs, never could enough roads be built to meet the burgeoning travel demand, and public transport has become increasingly critical. However, due to limited fiscal and organizational capacity in transport planning, coupled with political maneuvering by interest groups, most rail transit projects have been delayed. When these services finally come in operation, too often they are not “mass” but “class” transits because the fares are too high for the poor. Bus services are often inadequate, and public bus agencies tend to be debt-ridden. The Bangkok Mass Transit Authority, for instance, has a debt worth of about 25 billion USD as of 2011. It is small wonder that they cannot improve the service quality or area coverage.

That leaves a large void for informal transport services to accommodate travel demand, particularly for those who cannot afford private automobiles. In Manila, paratransits account for 76 percent of total public transport trips, while the figure in Jakarta is about 34 percent. 1 Informal transport modes in Southeast Asia range from non-motorized traditional paratransits, such as pedicabs, to motorized ones, such as minibuses, vans, and motorcycle taxis. The types of services fall within the range between fixed routes-fixed stops, fixed routes-flexible stops, and flexible routes-flexible stops. The services are mostly run by small-scale, independent operators, who may or may not own the vehicles. In some cases where relatively large capital investment is required, such as for minibuses, drivers are often hired by the vehicle

A polio flower girl at a congested intersection in Bangkok - Copyright @PACEyes

The love-hate relationship lingers Informal transport modes have been prevalent in Southeast Asian cities for many decades, and their history is rife with tensions with transport authorities. On the one hand, slower non-motorized modes of transport are now banned in many cities because they are deemed unsuitable for congested city roads, not to mention perpetuating an image of “backwardness” that modern planners want to cast aside. Cycle rickshaws are now operated mostly as tourist attractions in restricted areas.

Motorized modes, on the other hand, have rapidly increased their presence and importance in every single major city in the region.

Public transport authorities have always been uneasy about informal transport, so they attempt to “formalize” the services through economic and social regulations.

Economic regulations include restrictions on entry and exit and price control, so public welfare is not diminished by natural monopolies and market structures with limited

Disclaimer : The opinions expressed herein are those of the authors and do not necessarily reflect the official positions of Noviscape Consulting Group ot the Rockefeller Foundation.

Copyright © Trendsoutheast 2009 - 2011. All Rights Reserved.

4 or excessive competition. But in reality governments have little say as to when and where informal operators can provide services or how much they can charge their passengers. Even when they do, the reasons are not typically out of concern for the public’s welfare. Rather, they are afraid that informal minibuses will compete against existing bus services.

Social regulations, on the other hand, aim to assure the quality of service, especially safety, reliability, and comfort, and the labor conditions. Reckless van drivers, motorcycle taxis without helmets for passengers, dirty seats, cramped space, and fatal accidents are only a few of the reasons that cry out for government regulation. As such, some aspects of informal transport are now regulated, such as vehicle and service registration, while other economic aspects, such as pricing, are left for the operators and the market to determine.

Despite the urge to over-regulate informal transport, transport planners have gradually come to terms with the flexibility, capacity, and responsiveness of informal transport in meeting travel demand. Nonetheless, most governments have not yet incorporated informal transport in their medium- and long-term transport planning.

There are also limited data and research studies on informal transport in Southeast Asian cities, which are necessary for devising appropriate transport policies.

As in any informal activity, corruption and cronyism abound in the informal transport sector. “Protection fees” are often paid to local policemen or public officials, who can bend some rules for those who pay. Often times, operators have to rely on local mafia, or they themselves may be local mafia. This is one of the key reasons why the formalization and legalization of informal transport services is a tempting solution. Consequently, several cities have been moving in that direction.

Complementarity and competition Most megacities in Southeast Asia are currently planning and building more mass rail transit systems. Such infrastructure investment will change the cities’ urban structures drastically. The question arises as to how this will affect informal mobility. The answer depends on whether the governments will install draconian measures to regulate informal transport, how quickly they will expand rail transits and improve bus services, and how much cheaper private vehicles will become.

Van services in Bangkok have already lured passengers away from traditional buses, which have been slow to adjust to rapidly changing and rising travel demand.

New van routes to transit terminals have been added quickly to accommodate the demand of rail users.

Yet, automobile sales have only been increasing in all these countries. If these trends continue, we can expect a scenario in which informal transport services will continue to grow alongside an increasing number of private cars being driven and a decreasing number of trips being taken on buses. Feeder services, such as motorcycle taxis, will continue to transport people to bus stops and rail stations.

5 Watch out for those secondary cities Although transport problems continue to plague megacities, it is secondary cities that will need closer attention in the future. These cities, such as Chiang Mai in Thailand, Bandung in Indonesia, and Cebu City in the Philippines, are all experiencing rapid urban growth.

Suburbanization is occurring in a similar fashion to that of megacities. The current public transport services are inadequate, but they are receiving even less attention than those in megacities. The rich and the middle class in these cities buy cars; the rest either use motorcycles or rely on paratransits. Population density is even lower in these cities, which makes it even more difficult for public transport to achieve economies of scale. Informal modes of transport have so far filled the gap, but as these cities continue to grow, public transport with greater capacity will become a necessity. Transport planning that integrates informal transport and bus services will sooner than later become necessary.

entrepreneurship and the strive for improvement do not exist. There are now signs that indicate increasing potential for adoption of new technologies. For instance, van service operators in Bangkok are using cell phones to inform others of traffic congestion and co-ordinate their schedules. GPS navigation systems are being considered for monitoring and scheduling purposes. In Jakarta, Go-Jek, a motorcycle taxi start-up, is offering a variety of transport services, including transporting passengers, courier service and shopping and delivery services. Launched in February 2011, the company now employs seven full-time employees and has partnered with more than 200 “ojek” drivers at 80 pick-up points across Jakarta.3 Chart 1: Selected Southeast Asia Percentages of Rural Population and Employment in Agricultural Sector (1987 – 2009)

IMPLICATIONS Social protection and political representation are direly needed Social protection is generally lacking for informal transport workers. Even though informal operators are somewhat connected to powerful people, their collective political power is limited. Realizing they cannot simply wait for the government to take action, some groups of workers have formed associations to collectively campaign for better social protection. An example is KASAMPADYAK, an association of 2,000 “padyak” drivers in Navotas, Metro Manila. The members now have access to social protection schemes, such as free PhilHealth and other social benefits, from the Navotas local government. A modest amount of mutual aid is also allocated to every member as financial support for various needs.2 Similarly, the Thai Association of Motorcycle Taxi Drivers has been established to promote social welfare and basic labor rights. So far, only a small fraction of the more than 100,000 motorcycle taxi drivers in Bangkok have joined the group. However, the association has already co-operated with the Bangkok Metropolitan Administration and insurance companies in a campaign to offer accident insurance at low cost for motorcycle taxi drivers and their families. Ironically, they have also held a small public demonstration demanding that the city disallow some drivers who have not registered with the city to operate in overlapping routes.

A polio flower girl at a congested intersection in Bangkok - Copyright @PACEyes

EARLY INDICATORS This sector needs more attention from policy makers, aid donors, and investors. Despite the fact that informal transport innovations could potentially affect the livelihoods and quality of life of a large number of people, technology and innovation policies in Southeast Asia do not consider informal mobility to be as important as nanotechnology or other advanced fields. The potential for creating, implementing, and diffusing innovations that really matter has not yet been realized. There is also a great potential in terms of improving urban sustainability. Because of the large market and potential for economic and social returns, impact investment and social enterprises in this sector are sorely needed.

The informal transport business has mostly relied on personal savings and informal sources to finance their capital assets, primarily because the operators have limited access to formal credits. There is certainly ample room for microfinance initiatives here.

Entrepreneurship and the potential for impact investment Entrepreneurship and the potential for impact investment Informal sectors are often associated with cheap, outdated and low-tech technologies. Although that remains true in Southeast Asia, it does not mean the spirit of

Disclaimer : The opinions expressed herein are those of the authors and do not necessarily reflect the official positions of Noviscape Consulting Group ot the Rockefeller Foundation.

Copyright © Trendsoutheast 2009 - 2011. All Rights Reserved.

A polio flower girl at a congested intersection in Bangkok - Copyright @PACEyes

DRIVERS & INHIBITORS • As domestic urban migration continues, and public transport networks and services remain lagging behind, informal transport services will continue to increase.

• The cost of car ownership is expected to come down in most Southeast Asian countries, but a large number of urban residents will still be unable to afford cars and have to rely on informal services.

• Suburban sprawl without provision for public transportation will only increase informal provision of transport services.

• Informal transport is a cushion from economic shocks. Like in other informal sectors, the number of informal workers goes down when the economy booms, and goes up when the economy busts.

• Without supportive government measures, specifically in finance, technology, and security (i.e., protection from extortion), the informal transport sector will not realize its tremendous potential.

REFERENCES 1 Godard, X. (2006). Coping with paratransit in developing cities: a scheme of complementarity with institutional transport, Gothenberg, Sweden, Paper presented at Future Urban Transport Conference, Volvo Foundation for the Future of Urban Transport, April 2006.

2 Lao, R. (2009). The rights of urban informal workers and access to social protection: The Philippine experience. In United Nations Economic and Social Commissions for Asia and the Pacific (UN-ESCAP). Social Protection in Asian Cities. Bangkok: UN-ESCAP. 3 See www.go-jek.com for more information on its services.

ABOUT THE AUTHOR Apiwat Ratanawaraha is an Assistant Professor at the Department of Urban and Regional Planning, Chulalongkorn University in Bangkok, Thailand, where he teaches infrastructure planning and finance, urban management, and economic development. His current research includes projects on city innovations in Southeast Asian megacities, infrastructure justice, and inequality in access to basic services in Thailand. He has been a Visiting Assistant Professor at the Department of Urban Studies and Planning at MIT, teaching infrastructure finance and energy security. He was a Doctoral Fellow at the Belfer Center for Science and International Affairs, Kennedy School of Government, Harvard University, conducting research on infrastructure, technological development and innovation policy.

Disclaimer : The opinions expressed herein are those of the authors and do not necessarily reflect the official positions of Noviscape Consulting Group ot the Rockefeller Foundation.

Copyright © Trendsoutheast 2009 - 2011. All Rights Reserved.

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BY DR. PUN-ARJ CHAIRATANA Managing Director, Noviscape Consulting Group

IDEA Since the introduction of “the dual sector model” concept in the early 1950s, the traditional sector has been marginalized by the capitalist sector through a grand scale of industrialization and modern trade.1 For decades, a general perception on key characteristics of this small people economy can be briefly described as the economy that utilizes simple technology, is limited in capital, has no fixed business location, exists with quasi-legality or lack of registration, and employs little record keeping. It has a high proportion of unrecognized and unprotected people with an income scarcity situation that could not easily be moved into “a formal economy,” yet they still mobilize themselves into “an informal economy.” They actively engage in a highly flexible and loosely structured economy as “informal entrepreneurs” and have learned their business lessons from the success and failure of the global economy.

In this article, we explore signals for change in this unrecorded and unregulated economy and trends in innovation from an ongoing socio-economic transformation and globalization of lifestyle and business in the region, particularly in the formalization of the economy and paradigm shift in the business model.

SCENARIOS Formality of the informal economy: A more intensive symbiotic relationship It seems to be a mission impossible to have full formality of the informal sector. Partly, this is because of the increasing complexity in business transactions, interdependency and the changing role from being only business of the poor and criminal to an alternative social safety net when the global economy goes wrong. Leading economies in Southeast Asia have tried to formalize this sector for sometime.

In the coming decade, the governments in Southeast Asia will increasingly add more measures and regulations to the informal economy in order to integrate taxable activities into a gross domestic product (GDP) 1 2

KEYWORDS:

Formality; collaborative consumption; informal enterprise; modern trade

calculation. There will be more intense competition and interaction among regional agricultural and tourism micro-SMEs from ASEAN5 and CMLV countries2 in order to survive when the ASEAN Free Trade Agreement (AFTA) and ASEAN Economic Community (AEC) have become fully functional in January 2015. A transformational process, supporting schemes, and standardization of labor and job markets will be among the priority issues for the national governments in Southeast Asia in order to reduce poverty and promote integration.

On the bright side, enterprises-alike regimes, e.g. street vendors, together with micro-small and medium-sized enterprises (m-SMEs), and temporal self-help business groups would benefit from some supporting schemes, and a single market, while social and governmental protection and a public governance standard will be leveraged. Still, there will be no guarantee that all vulnerable individuals may receive such benefits as it will take a long time to include a majority of unregistered labor into the system. The existing informal economic regime will evolve to accommodate those unfortunate laggards. The duality nature of the above economies will be into an intensive symbiosis relationship between the formal and informal economy through an acceleration of the shift on the regional market and leveraging of the domestic economy. The Southeast Asia informal economy will be more diverse, more specialized and involve more tacit knowledge, while limitations on access to funding will still exist, and issues on rights and job security for informal workers will become more complex, especially in service-oriented activities in tourism and the care provider economy.

By default, the public sector in the region utilizes such a framework as a paradigm platform to expand a protection and benefit regimes to its citizen.

Still, a mainstream economic transaction that underlines the architecture of business is mismatched with the current evolution of this economy. Rights and ownerships are among the key issues of poverty reduction in developing and less developed economies, while accessibility to information and services have been coined by a group of IT geeks and the young generation in developed countries.

In Southeast Asia, land ownership and access to knowledge and information are among the key issues which can derail a better living quality standard and the rights of small farmers and peasants from the development track. There will be a high tendency that a diffusion of the concept of sharing and accessibility of information and content will be transformed and extended into the bottom of Pyramid economy, particularly on ideas or solutions dealing with the utilization of public space and land, co-creation of social business among local authority, and the poor.

The informal collaborative consumption or a learning economy version of the informal sector would pop up from a redistribution accessibility to economic spaces (both in the city for street vendors and the rural area for micro-SMES and agriculture), and healthcare services, a collaborative lifestyle (sharing and exchanging time, space, and skills), and an expansion of existing product and service systems into local and smaller units.

The Dual Sector Model concept that aims to explain how developing economy moves from an agricultural base to a manufacturing led economy was developed by Sir Arthur Lewis, a Nobel laureate in economics from Saint Lucia.

ASEAN5 comprises of Indonesia, Malaysia, the Philippines, Singapore, and Thailand. CMLV countries comprise of Cambodia, Myanmar, Laos, and Vietnam.

• Increasing of labor mobility in rural areas or less developed neighboring countries in Southeast Asia could accelerate the process of de-ruralization through establishment of industrial estates and a transformation of peasants into factory workers, particularly in Cambodia, Laos, and Vietnam.

• There are around 43 border crossings in Thailand.

The increase of border trade around the lower Sub-Mekong basin would expand the size of the informal market value along the Myanmar-Laos, Laos-Thailand, and Cambodia-Thailand borders.

• Currently, some of the informal enterprises already transformed into community enterprises, which have been promoted and supported by the national and local governments in order to leverage the business capacity of villages, and entrepreneurial capability of villagers through the development of domestic economy and the standardization of small-scale production. More statistics have been collected through “one product, one village” initiatives (particularly in Indonesia, Malaysia, the Philippines, and Thailand).

• Collaboration among various groups of vulnerable people has been increased partly because of threats from modern trade and lack of public services offering. For example, an expansion of international retail and wholesale giants in Thailand has accelerated the pace of m-SMEs with limited financial resource to shift their business model and transaction to survive through creative marketing and networking with the local consumer.

IMPLICATIONS Process innovation: • It will be a Long March for the national governments to formalize unregistered labor into the existing system in order to legitimize their right to various public benefits, especially for unskilled and migrated laborers. Instead of focusing on accelerating the process and offering incentives to formalize the labor, the customization of services or social supports on education and healthcare through social enterprises and NGOs can be accelerated to allow the inclusiveness of those schemes.

An informal collaborative consumption: From ownership to accessibility It is not so surprising that there are many emerging concepts dedicated to the formal economy, e.g. creative economy, social economy, green economy, knowledge economy, sharing economy, etc. All of these embrace a dimension of poor people being taken into account.

EARLY INDICATORS

A blind lottery vendor at the corner of a business district in Bangkok - Copyright @PACEyes

Paradigm innovation: • There are quite a few ideas from the proposed concept of economy that could be applied to the informal economy. Among these, there is “collaborative consumption,” which is an economic model based on sharing, swapping, bartering, trading or renting access to products in lieu of ownership; only formalizing the sector may not

Disclaimer : The opinions expressed herein are those of the authors and do not necessarily reflect the official positions of Noviscape Consulting Group ot the Rockefeller Foundation.

Copyright © Trendsoutheast 2009 - 2011. All Rights Reserved.

The Leaderless Organization and Two Edged Applications

8 be enough to leverage a livelihood for the poor.

Instead, legitimizing the right for social exploitation and access to public resources would benefit a people empowerment regime, particularly in farming machinery for sharing a waste land, for holistic garbage trading, and for street vendors.

Business model innovation: • Modern trade, especially retail & wholesale, the supermarket, and the department store, has already dominated the domestic consumption market, and enjoys semi-monopoly status. It looks very difficult for the small individual to compete with them. Looking a bit on the bright side, the globalization of trade and lifestyle can be seen as a bridge between the formal and informal sectors, and there is always room for the creative and social entrepreneur to take advantage of the existing business model of this sector and learn from many success and failure cases from both local and international entrepreneurs. Small entrepreneurs and m-SMEs could find a niche area and an opportunity from a shift in the consuming lifestyle among baby-boomers and their dependents.

DRIVERS/INHIBITORS • The formal sector cannot generate enough jobs or employment for the majority of the population.

• High transaction costs price some SMEs out of the formal sector.

• A fully operational and functional ASEAN Economic Community and Free Trade Agreement in 2015.

• Criminalizing street vendors in major Southeast Asian cities

REFERENCES Asia Monitor Resource Center (2011). Constituting political collective bargaining power of informal workers Informal workers organizing in South East Asia region (Occasional Paper).

Retrieved from http://www.amrc.org.hk/node/1148 Finnegan, G. and Singh, A. (2004). Role of the Informal Sector in Coping with Economic Crisis in Thailand and Zambia. SEED Working Paper No. 42. International Labour Organization. Retrieved from http://www.ilo.org/wcmsp5/groups/public/---ed_emp/-- -emp_ent/documents/publication/wcms_093979.pdf Maligalig, D. S. & Guerrero, M. F. (2008, June 6). How can we measure the informal sector? The Philippine Statistical Association, Inc. mid-year conference. Retrieved from http://www.adb.org/Statistics/reta_ files/6430/How-Can-We-Measure-the-Informal-Sector.pdf Rogers, R. & Botsman, R. (2010). What’s mine is yours: The rise of collaborative consumption: Harper Business Press.

Rossouw G. W. (2011, January 11). Innovation in the Informal Sector.

Retrieved from http://ezinearticles.com/?Innovation-in-the-InformalSector&id=5772570 Vandenberg, P. (2009). Micro, Small, and Medium Enterprises and the Global Economic Crisis: Impacts and Policy Responses. International Labour Organization.

ABOUT THE AUTHOR Dr. Pun-Arj Chairatana is the Managing Director of NOVISCAPE CONSULTING GROUP and the Principal Investigator of TRENDNOVATION SOUTHEAST NEWSLETTER. He has been involved with various regional scenario buildings and future exercises since 2000. As a policymaker, he was Director of the Policy Entrepreneur and Foreign Affairs Department at Public Policy Development Office (PPDO), the Office of Cabinet Secretariat.

He has a background in economics for technological change, innovation management, health and nuclear physics. His expertise is in the areas of strategic foresight, technology and innovation management, public policy, trend analysis and political economy.

A street food vendor in Bangkok’s central business district - Copyright @PACEyes Disclaimer : The opinions expressed herein are those of the authors and do not necessarily reflect the official positions of Noviscape Consulting Group ot the Rockefeller Foundation.

Copyright © Trendsoutheast 2009 - 2011. All Rights Reserved.

BY KAN YUENYONG Founder, Siam Intelligence Unit

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The first anticoup protest by network of student and activist in front of Siam Paragon, Thailand. September 22, 2006. Photo by Kan Yuenyong

KEYWORDS:

leaderless organization; self-organizing; sweet spot; community; Network; Wikipedia; Open Source.

IDEA Each organization requires a specific style of leader, but the role of the leader may vary. In the conventional organizational style such as in the hierarchical or centralized organization, the inspirational leader who responded by providing the organization’s ideology, and the leader who responded by giving operational direction would have been the same person. 3 In contrast, in the “leaderless organization” (decentralized, cellular) the two leaders will be different people, and most of the time the operational leader acts on his or her own but tries to correspond to the ideology from the inspirational leader. In this sense, ideology is like the glue for all decentralized units.

However, a prominent remark was made by Justin S. Hsu and Brian C. Low in their Naval Post Graduate School thesis, in which they asserted that the effectiveness of the “leaderless” organization depends on the contexts of the state or the society. Also, the 2006 bestselling book by Ori Brafman and Rod A. Beckstrom proposed a similar concept and challenged the reader to rethink leadership styles and organizational structures; “leaderless” may not be the appropriate terminology. The key question regarding Southeast Asia is if a separatist organization using this concept can thrive in the Southeast Asian context. A more challenging question is whether the concept can be applied to an organization to form positive results, such as disaster relief and the pooling of resources to help poor people.

SCENARIOS Whether we like it or not, the leaderless organization concept is widely popular nowadays; to understand its reality is vital for not only handling the security side, but also helping enlarge an opportunity to make a flexible and efficient pooling of resources to cover any emergency moment. At the moment, the real “leaderless” movement is yet to be seen in Southeast Asia, due to a different context we will discuss in more detail below. But the dynamic and a closer view of the global-sociological factor generated by technology cannot be overlooked.

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Conventional organization

Leaderless organization Figure 1: Leadership in the leaderless organization and conventional organization

As long as the inspired leader continues to exist, even if the operational leader in each cell is decapitated, a new cell will emerge and continue its operation. The analogy is the regeneration of a starfish’s organs that have been cut off or destroyed (Figure 1). Whereas, in the conventional organization the organization would be defunct if the leader was eliminated. This implication was realized in the survival of Apache when attacking Spanish troops, and the survival of P2P players in the music industry.

A Cruel Leaderless Organization: The Blade Indonesia’s Jemaah Islamiyah (JI) should not be viewed as a leaderless organization; it has a hierarchical military style structure, which is trying to establish a pan regional caliphate in Southeast Asia. JI is comprised of regional units or mantiqis, as follows: • Mantiqi 1: Singapore, Malaysia (excluding Sabah) and the Southern Thailand • Mantiqi 2: Indonesia (excluding Sulawesi and Kalimantan) • Mantiqi 3: Sabah, Sulawesi, Kalimantan, and the Southern Philippines • Mantiqi 4: Australia and Papua New Guinea

In the book The Starfish and the Spider: The unstoppable power of leaderless organizations, the inspired leader is called “the catalyst”, while the operational leader if referred to as “the champion”.

10 JI’s leader Abu Bakar Ba’asyir was found to have acted as a spiritual and operational leader. JI made some impact on Indonesia; at least the secular state finally adopted some Sharia law. The Naval Post Graduate School’s thesis stated that JI, as a conventional organization, had some success more than its ally Al Qaeda because of the context of the state. Indonesia can be considered as a shallow and narrow state, when measured in term of “depth” (ability to exercise power simultaneously across many aspects of life), and “breadth” (ability to exercise power simultaneously across territory).

According to Hsu and Low the quantitative indicator differentiating between the shallow and deep state involves the ability to collect taxes (taxes by GDP): less tax will be considered as indicating a shallow state, while more tax will be considered as a state with depth.

In comparison, the indicator on breadth is police force per people: less police will be considered a narrow state, more police will be considered a broad state. Thus the conventional organization works well in a shallow and narrow state like Indonesia, while in Southern Thailand the insurgency would be considered more of a leaderless organization, because of its breadth and depth characteristics when compared with Southeast Asia standards.

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Figure 4: South East Asia states’ characteristics

The author collected all related data from countries in Southeast Asia (see sources on reference) and summed them up into the state breadth and depth matrix (see Figure 4), and then categorized each respective country.

In Thailand, leaderless organizations such as “Yellow shirts” and “Red Shirts” are equipped with different ideology and can be considered as effective to some degree. Although, in the current political contest they ally themselves with conventional organizations such as with some factions in the establishment, the Royal Thai Army and the Democrat party in the Yellow shirt case, and the Thai Rak Thai / People Power / Phuea Thai party in the Red shirt case. However, they both have and will continue to act independently from their allies.

The movements have influence on the country reform process both in anti-corruption and democratic reform.

This characteristic also can be applied in Malaysia’s Bersih 2.0 and its ally, the opposition coalition, Pakatan Rakyat (PR). They both have influence on the ruler coalition parties, Barisan Nasional (BN), to accept some form of election reform. Nevertheless, there have been criticisms of both the Thailand and Malaysia cases that an allying strategy of these organizations with opposition political factions cannot provide enough political legitimacy to the movements.

A Peaceful Leaderless organization: The Olive

Figure 2: Breadth indicator: Police per 100,000 people

Figure 3: Depth indicator: Tax by GDP (%)

We can also apply the leaderless organization concept to the social movement with social and governance projects. Many Open Source software projects, such as Linux, Apache and Mozilla, can be considered as examples of the decentralization movement. Other non-software projects such as Wikipedia and Creative Commons have applied the same model. Bessen (2005) pointed out that when compared with the commercial software ecosystem, commercial firms will continue to choose to join with Open Source software projects for greater benefits.

Open Source software can help lower total ownership costs and thus play a significant role in decreasing the digital divide for low income people, as we can see by the use of Open Source software in cheap Tablet or Notebook projects. Localization (l9n) and internationalization (i18n) of open source software projects in various countries - most notably in Thailand, Laos, and Vietnam - can be counted as a sample of the movement,

Disclaimer : The opinions expressed herein are those of the authors and do not necessarily reflect the official positions of Noviscape Consulting Group ot the Rockefeller Foundation.

Copyright © Trendsoutheast 2009 - 2011. All Rights Reserved.

although its effectiveness is yet to be reviewed.

Volunteer management in disaster relief can also be considered as one kind of leaderless organization management. If we borrow a concept from the Naval Post Graduate School’s thesis, the leaderless organization should work well in depth and breadth countries, such as in Thailand and Malaysia. The volunteer effort cooperated well during the 2004 Tsunami, and various other flooding incidents in Thailand. Other countries in Southeast Asia should rely on their own official mechanisms, or external assistance, like during Cyclone Nargis in Burma during 2008. An informal group of people for managing or pooling resources to help improve poverty or solving problems in remote areas can also be an effective approach. However, the communication and information exchange center between each of the volunteer units should be well equipped.

EARLY INDICATORS There has been a lot more attention and a much higher expectation for the movement called the “leaderless” organization.

• There has been the emergence of a self-organizing movement called Occupy Wall Street in 2011. The movement in similar form also spread to different cities throughout the US, as well as in Canada, Italy and Japan. There is also an on-going discussion about how to organize similar movements in Singapore among Facebook users.

• The Arab spring, without clear leadership, has proven it could topple most governments in the MENA (Middle East and North Africa).

IMPLICATIONS The leaderless organization is a concept or managerial tool. It’s a two-edged sword, because it can be used in negative way as a platform for a terrorist network on the one hand. On the creative side, it can be used as a platform for collective effort for creating software or networking for volunteers for disaster relief. Suggestions for policy developers are as follows: • On the leaderless terrorist network, try to engage with the inspired leader and its ideology. While, in the case of the operational leader there is the need for more intelligence work to identify and deal with him/her.

• On the creative social leaderless project, avoid the “free rider” effect. Increase the level of communication to win more public support.

• R. van Wendal de Joode et al. (2003) suggested that government should allow and support both traditional market mechanisms and Open Source schemes.

• Government can apply the leaderless organization concept for decentralization or participatory governance on public projects. It can help cut public expense and support for direct democracy.

DRIVERS & INHIBITORS Drivers: • Internet and Social Media will help ease communication among citizens, thus easily form and drive leaderless organization.

• Strong scenarios such as political conflicts, natural disasters and trade monopolies will lead to the creation of the inspired leader, thus an originator of a leaderless organization.

• The number of participants will generate natural operational leaders which will create further multiple cells.

• Public support will definitely define the leaderless organization’s fate.

Inhibitors: • Shallow and narrow environments in society will not properly foster the leaderless organization.

REFERENCES Bessens, J. (2005). Open source software: Free provision of complex public goods. Boston University School of Law and Research on Innovation, USA. Brafman, O., & Beckstrom, R. A. (2008). The starfish and the spider: The unstoppable power of leaderless organizations. Portfolio Trade, USA. Hsu, J. S., and Low, B. C. (2010). The leaderless social movement organization: Unstoppable power or last ditch effort? Naval Post Graduate School, USA. McCants, W. (2011). Al Qaeda’s Challenge: The Jihadists’ war with Islamist democrats. Foreign Affairs, 90(5), 20-32.

Van Wendel de Joode, R., de Brijn, J. A., van Ecten, M. J. G., Schmidt, A. H. J., Bonenkamp, B. J, and van Tongeren, P. E. (2003). Protect ing the Virtual Commons: Self-Organizing Open Source and Free Software Communities and Innovative Intellectual Property Regimes. Cambridge University Press, UK. Wikipedia. List of countries by size of police forces. Retrieved from http://en.wikipedia.org/wiki/List_of_countries_by_size_of_police_forces Wikipedia. List of countries by tax revenue as percentage of GDP. Retrieved from http://en.wikipedia.org/wiki/List_of_countries_by_ tax_revenue_as_percentage_of_GDP

ABOUT THE AUTHOR Kan Yuenyong is a co-founder and executive director of Siam Intelligence Unit (SIU) http://www.siu. co.th, an alternative think tank and research service on various social, environment, business and economic issues. He is now studying in the advanced certificate course on Promotion of Peaceful Society (class 3) at King Prajadhipok’s Institute. He was selected by The Friedrich Naumann Foundation to represent Thailand in seminars on Strategic Planning and New Public Management in 2009, held at the International Academy for Leadership, Germany. He formerly worked at Internet Thailand Public Company Limited.

Disclaimer : The opinions expressed herein are those of the authors and do not necessarily reflect the official positions of Noviscape Consulting Group ot the Rockefeller Foundation.

Copyright © Trendsoutheast 2009 - 2011. All Rights Reserved.

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INTERVIEW BY

DR. APIWAT RATANAWARAHA

Department of Urban and Regional Planning, Chulalongkorn University

Q

A

What are the emerging trends in the informal sector in Southeast Asia?

“Southeast Asia consists of countries at different levels of economic development. The informal economy tends to shrink as the overall economy grows. But when recession takes place, it grows again as has been observed in Thailand. It works as a shelter, cushion of shock. This trend will perhaps continue in the future too. To be sure let me explain.”

“In the cities of Southeast Asian countries, some of which experienced rapid economic growth during the mid-1980s to the mid-1990s, many of the precarious jobs had started to disappear. This has clearly been the case in Bangkok, as typified by fewer ‘salengs’ who go to the residential areas to buy recoverable wastes and by the near disappearance of ‘samlor’ drivers whose work has largely been replaced by ‘tuktuk’ drivers, ‘soi’ motor bike services and taxis. To a lesser extent, such change began to take place in Jakarta as well, but before this trend could reach its logical end, economic collapse and political turmoil set in. This is now leading to the restoration, if not to an increase, of various forms of precarious work in the informal sector.”

“Women’s presence in the informal sector appears to be higher in Southeast and East Asia than in South Asia. However, the difference may not be as large as it appears because many informal sector surveys do not include domestic workers and piecerate homeworkers who are mainly women and who may be hidden in the South Asian countries for cultural reasons.”

“The work of children in the informal sector is a major concern. The presence of children in the labor force of the East and Southeast Asian countries is very limited.

In contrast, it is widespread in the South Asian countries. This suggests an association between level of economic development and work of children. Again, the most disconcerting fact is that children tend to work in low-paying and hazardous occupations such as waste-picking, domestic work, apprentice and casual labor. Many efforts of UN agencies, donor

W

I

T

it started to grow with financial-economic collapse in 1997. This happened because many jobless Thais had to move back to the informal sector for earning an income to live. This is what we now generalize as the informal sector’s transitional role between (a) low level and higher level of development and (b) economic recession and recovery. Let me also add that more marginal and low-productivity occupations grow during low level of development and economic recession. This phenomenon is known as ‘involutionary’ growth in the informal economy since it serves as a last resort to live. In contrast, the composition of the informal economy during economic upturn is marked by growth of dynamic enterprises as a response to stronger subcontracting linkages with the formal economy.”

“International mobility of workers (international migrants) will also affect the future of the informal economy. Although labor is not as mobile as capital, people can still move. Many such migrants work in the informal economy. This is another reason for the continuation of informal economy even at a relatively higher level of development of a country.”

H

Dr. ATM Nurul Amin communities, governments, trade unions and NGOs are underway to eliminate children from such work. There is an indication that despite poverty, parents do want their children to go to school.”

“In some countries, such as Laos and Vietnam, the informal economy grew as these countries opened their markets. Many informal enterprises are dynamic, flexible, entrepreneurial, and are able to explore the new market. They play ‘market enhancing roles’. The relationship between formal and informal economy is often close. The formal economy enterprises subcontract to the informal economy to create flexibility in their enterprise operations.”

Q

A

What do you see as the future scenarios of the informal sector in Southeast Asia?

“The most optimistic hope on the informal sector has been that it plays a transitional role between low level and higher level of development. In other words, with economic development, the size of the informal sector declines. It was hoped that more and more jobs will be created with a momentum of job growth in the urban-industrial sector.

Thus, the job-seeking individuals in the labor force left out for working in the informal economy will be fewer.

Evidence does show such an inverse relationship between the level of economic development and the size of the informal economy.

But such decline has not often last long. We observe that the informal economy size does not only vary with level of development but also with economic ups and downs. For example, my study on the Indonesia informal economy in the early 1990s showed that during economic recession the informal economy size increased in Indonesia. It seems to have been the case because job availability in the formal economy declined, whereas, we also recorded data showing that the size again started to decline with economic recovery. This pattern we observed even more strongly in Thailand.

For example, because of economic boom during 19871996, the size of the informal economy in Thailand declined significantly but

Disclaimer : The opinions expressed herein are those of the authors and do not necessarily reflect the official positions of Noviscape Consulting Group ot the Rockefeller Foundation.

Copyright © Trendsoutheast 2009 - 2011. All Rights Reserved.

Q

A

What are the roles of the state in dealing with such future scenarios?

gration of the informal economy in Asian cities do exist. Indeed policies on the informal sector, vis-à-vis urban planning, have started to change in recent years from outright hostility to benign neglect and eventually towards support and promotion. These changes reflect a new understanding of urban environmental problems and developmental issues. Policies, programs and projects are still, however, somewhat remote from the majority of the workers. The inadequate attention of physical planners, to the content of urban growth stimulated by economic and market forces, is part of the problem in this respect.”

“Extortion and corruption is another problem. Workers in the informal economy are often subject to extortion by powerful people. In order to deal with this, the workers need to be better organized in the form of association or professional groups so that their collective power may counter balance the mafia power. The state may have to play role in supporting the effort to organize the informal groups. Secondly, the law enforcement has to be in place. Thirdly, political patronization of local touts (influential guys) will have to be stopped, particularly by the ruling party’s local level leaders.

Media coverage of harassment of the informal economy workers by law-enforcing agencies or local touts helps to create an overall conducive environment.”

“First, the state needs to change its attitude and perception toward the “informals”. They need to become more accommodating instead of being hostile. Yogyakarta in Indonesia has got example of accommodating the informal economy.”

“Capacity building is very important. Some informal activities are concentrated in specific areas, so the state can target them and provide capacity-building programs.”

“Integration of informal economy into urban planning and management: right now the informal economy is not integrated into urban planning and management. This has to change.”

“No need of informal economy workers is of greater importance than space (on average they occupy 2-3m2 area per each activity as reported by a Jakarta survey). Yet this need has received the least policy attention. All cities experience severe problems in managing the informal sector because of their “unauthorized” locations. The most common policy responses have been harassment or outright eviction. Some cities have adopted relocation policies without taking into account the importance of the work-shelter nexus and the need to locate their work in a place conveniently accessible by customers.”

“Although relocation policies largely fail, some examples of successful accommodation and inte

ABOUT DR. ATM NURUL AMIN Dr. ATM Nurul Amin, Professor of the Department of Environmental Science and Management of North South University (NSU), Dhaka, Bangladesh, is currently the Dean of NSU’s School of Engineering and Applied Sciences. Prof. Amin was a faculty member of Asian Institute of Technology (AIT), Bangkok, Thailand, during 1987-2008. His specializations and research interests include urban informal sector and urban environmental management. One of his recent publications is The Informal Sector in Asia: Public Policy and Actions toward Decent Work.

Disclaimer : The opinions expressed herein are those of the authors and do not necessarily reflect the official positions of Noviscape Consulting Group ot the Rockefeller Foundation.

Copyright © Trendsoutheast 2009 - 2011. All Rights Reserved.

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Dr. Pun-Arj Chairatana Dr. Apiwat Ratanawaraha Kan Yuenyong

Co- Principal Investigator

Dr. Donald Arthur Johnson

Editor

Preeda Chaiyanajit

Project Co-ordinator

Passapong Boonlueng

Graphic Designer

Regional Horizon / Environment - Scanning (HS/ES) and trend monitoring for issues relevant to people. life, and regional transformation across the Sotheast Asian region.

Dr. Pun-Arj Chairatana Dr. Apiwat Ratanawaraha Kan Yuenyong Dr. ATM Nurul Amin

Author/Information Specialist

Trendnovation Southeast Newsletter is published by

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