Conclusions

In setting out conclusions, a distinction needs to be made between on one hand, general conclusions about governance, and on the other, specific conclusions relating to particular sectors or firms. It is often the case that important aspects of governance issues need to be tackled at the firm or industry level rather than through an economywide approach. Many issues relating to law reform in Indonesia, for example, are specific to the legal sector and therefore broader generalizations about governance are of quite limited relevance. But broader generalizations can be useful as well, at least in setting out a main framework for reform in any particular sector. The main conclusions which emerge from the issues set out above are as follows.

First, effective governance reform at either the national (macro) level or at the level of any specific (micro) sector usually involves at least four key elements:

• The identification of a strategy or vision for change.
• The translation of the strategy into a detailed program for reform; programs should best identify expected results or outcomes set out in measurable performance indicators (MPIs).
• The effective implementation of the program.
• A focus on outcomes or results, and especially including the monitoring of progress against the initial MPIs.

Each of these steps is important. The steps would seem straightforward enough but many efforts at reform fail at one or other of the stages.

Second, many issues of governance in Indonesia remain unsettled and contested. This contributes markedly to a worrying situation where many observers comment on the "lack of rule of law" and the fact that arrangements in Indonesia are felt to be kacau. Measures that might be taken to respond to these issues include:

• Defining the official rules of the game more clearly in each sector; but doing so bearing in mind the current severe constraints on the capacity of the state.
• Streamlining government by simplifying regulations and procedures because, given the limited capacity of the state, there is over-regulation in many sectors in Indonesia at present; government agencies might be encouraged to prepare lists of functions that they intend to eliminate so that they can focus on areas of higher priority.
• Accepting rather then resisting the role of markets; accepting, also, that attempts to suppress prices are frequently counterproductive and have many negative sideeffects.

Finally, there are many important issues of governance in Indonesia not addressed in this paper: these include the large decentralisation of government in recent years, the overall financing of the military budget, the continuing need to tackle a gamut of issues related to the role of SOEs, and the need for legal reform. Each of these topics, however, is properly the subject of a separate paper.

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