Indonesian Law Reporter (Indolawreport)

Hyperregulated Society and Its Discontents

2009-07-05T12:17:00.001-07:00

I have been reading Habermas theory of Juridification and the colonization of lifeworld. I came across my old article arguing in the same line.

Hyperegulated Society and Its Discontents
By
Mohamad Mova Al ‘Afghani*

The Jakarta Post,
Opinion and Editorial - June 28, 2005.

The recent National Legislation Program (Prolegnas) meeting listed 83 (eighty three) draft Laws to be enacted in the year 2006 and 53 draft Laws for the year 2007-2009. Interestingly, plenty of these draft Laws refers to non substantial issues.

Since 1999, there has been a trend toward “regulating everything”. Creating plenty of Laws or Undang-Undang is regarded as some sort of achievement and thus, promoting a step toward a modern and sophisticated society.

What went wrong with this paradigm is judging the modernity of a society by the number of regulations it creates. Laws can be plenty, but the question is, will enacting more laws guarantee its compliance? The more important question that should be raised is, do we actually need those Laws? Will those laws benefit the society if enacted?

Indonesian legal system recognizes hierarchy of rules ranging from the Constitution, Laws (Undang-Undang) and Government Regulations in lieu of Law (Perpu), followed by Implementing Regulations that consists of Government Regulation (Peraturan Pemerintah), Presidential Regulation (Perpres) and Regional Regulation (Perda). There had been around 8,000 something of such regulations so far. That figure still excludes bilateral treaties to which Indonesia is a party and sectoral regulations. A note must be taken that with the wake of decentralization, regions will enact regulations more often. If there are 400 cities/regencies in Indonesia and each of them creates 10 regional regulations per year, then there might be an addition of up to 4,000 regulations per year.

We should not be proud of enacting plenty of laws Laws. Every creation of new law – irrespective of its forms -- is basically limiting human’s liberty, as what is previously unregulated becomes regulated and restricted. Today, we find that everything that can be regulated will be regulated. There is a Law for everything, from Advocate to Notaries to Medical Practice to Road to Water Resources. If the Prolegnas goes as planned, we will have Laws on Agrarian Resources, Land Rights, Mass Organization, Auction, Fishery Court, Postal Service, Technological Audit, Trade, Precursor, Nurse Practice, National Heroes, Pharmacy Practice, Protection of Personal Data and Riverbanks, just to name a few. Perhaps in 30 years, the question will no longer be “what is the regulation”, but, “what is not regulated”.

What kind of society that wishes everything to be regulated? This question can only be answered by sociologist and social psychologist, but, what can be inferred from this phenomenon is that there is a tendency which assumes that legal certainty and social justice will be materialized if the rule of the game is written on paper.

Writing and defining things on paper does not ensure the materiality of social justice. The more something is defined, the more loopholes it creates. One does not need to study linguistic to know that words will be never be sufficient to describe reality. Laws attempts to limit an understanding through its provisions but what it failed to describe becomes a loophole for those who wish to bend the law.

Not only that more Laws mean more restrictions and more loopholes, more Laws also mean more bureaucracy. New Law creates new social institutions, new “councils”, new “boards” and new “committees”. Existing Laws already creates bodies such as the Indonesian broadcasting commission, the Truth and Reconciliation Commission, a National Water Resources Council and the Toll Road Regulatory Agency. Let’s not forget that these new bodies create implementing regulations and oftentimes, approve licenses too. These bodies also needs funds to operate, these funds are allocated from the State Budget. So, more Laws also means more expenses for the State Budget and more expenses for the public, as licenses generally require “administrative fees”.

The law is always one step behind science and technological improvements. If this year we create 83 Laws, in the next 5 years, those Laws would be obsolete and needs to be amended. In that regard, the House of Representative might be required to enact 83 amendment Laws to cover the outdated Laws. This would eventually leads to the inefficiency of the House of Representative’s work.

Also, more Laws means more distance with the people. Lay people generally do not understand legal technicalities and thus tends to be alienated from the Law itself. The happiest people that gained benefit from hyperegulation are of course, the lawyers. More Laws means more jobs for lawyers.

There are solutions that can probably limit the negative effect of or even avoid hyperegulation.

First, enactment of Laws shall be permitted only to address issues that are really necessary or to amend the existing Laws which are deemed to be imperfect. Laws that are enacted should be broad and all-encompassing. Details can be left to Presidential Regulations (Presidential Regulations made as an attribution power under Article 4 of the Constitution) or other Implementing Regulations. In addition to that, enactment of Laws must be accompanied by publication of its preparatory works. Today, when we find ambiguous article in a Law, we look at its elucidation. Unfortunately, oftentimes the elucidation only say “sufficiently clear” and leave us puzzled by what the legislator really meant. To overcome this, The House of Representative’s Secretariat General must prepare the travaux preparatoire (preparatory documentations during HoR member debates in enacting Laws) so that readers will be able to understand what has been discussed during the sessions. This will also be useful for judges as one method in interpreting the provision of the Law.

Second, turn to the court. Let judges ‘make’ law, instead of only citing provisions of a code and decides sentencing. To answer legal questions, one will be required to have adequate legal reasoning capability and understands the methods of legal interpretation. To this extent, the legal education needs to include interpretation theory into its curriculum. What must not be neglected is that the court is not only asked legal questions. Aside from that, the Court are supposed to determine what is just, thus, the Court are supposed to answer ethical question which completely have a different method of reasoning compared to legal reasoning. Judges must then knows methods of ethical reasoning and implement game theories in their decisions, such as “the maximin rule”.

Third, promulgate the Laws, travaux preparatoires and Implementing Regulations. The legal science recognizes the “legal fiction” that everyone is deemed to have known the law. A person cannot say that he shall be excused from his wrongdoing simply because he has no knowledge that his action or omission is forbidden by the law. This is what underlies the creation of the promulgation institution, the public needs to be told what regulations that restricts them. During the kingdom age, the promulgation is done by the king by sending its men to public places, sound the goong or trumpet and announce the king’s newly enacted law. After independence, Emergency Law Number 2 Year 1950 on the Publication of State Gazette (Lembaran Negara) and State Report (Berita Negara) through its article 2 obliges the Laws to be published in the State Gazette in an Octavo-sized Paper, while other important state announcements shall be placed in a State Report in a legal-size paper. This law has been revoked by Law No. 10 Year 2004. Unfortunately, Law No. 10 failed to address clearly on how the dissemination shall be made. However, as governmental offices already uses word processors, it would be reasonable to assume that one method of effective dissemination is by utilizing the internet, through an official-integrated law information website. The government has done so through several websites but this has been done without proper coordination and is rarely updated.

Fourth, instead of making highly detailed Implementing Regulations regulating for how many days an application shall be submitted and the sizes of photographs it should attached, transfer administrative matters such as licensing or approving things to computer software. The era of rubber stamps has nearly ended. Application forms and licenses approvals shall be available on-line. This will cut bureaucratic red tapes and end unnecessary bureaucratic “extra costs”.

Finally, the paradigm shall be shifted, a good society cannot be measured from the amount of regulations it has created. A good society is a society that has few laws but is effective, as it served their philosophical, juridical and teleological purposes. The best society – the civil society -- is in the other hand, a society that can coexist peacefully without law or any other form of coercion that intimidates them.

Franchise in Indonesia

2009-07-04T16:14:00.000-07:00

The franchise industry is booming in Indonesia, generating up to IDR 50 trillion annually, said the Jakarta Post. The legal framework for franchising has never been clearly outlined by the government. The nitty gritty of franchise agreement and the legislation surrounding it is elaborated in this page.

Rewriting the antiterror law

2009-07-04T05:20:00.000-07:00

Below is my 2005 op-ed on Indonesian Anti Terrorism Law in Jakarta Post.

Rewriting the antiterror law

The Jakarta Post , Jakarta | Mon, 10/24/2005 2:02 PM | Opinion

Mohamad Mova Al 'Afghani, Jakarta

Long unguarded coastlines, poverty, rampant corruption, a crippled legal system and widening social and economic gaps accompanied by mushrooming religious extremism have made Indonesia an easy target for terrorists. With a little cash and the misuse of Koranic verses, it will be easily possible to brainwash further candidates for suicide bombings.

All these factors have triggered the demand to amend the existing Antiterror Law with a new one that gives more powers to the government. A high ranking official referred to Malaysia's Internal Security Act and the U.S.' Patriot Act as benchmarks of antiterror law.

As a ""post-modern"" crime, the crime of terrorism is in many senses different from that of usual crimes. Unlike most ordinary crimes, terrorist attacks are often not accompanied by explicit demands, thereby blurring their true motivation. The terrorist organization often has networks in various countries, backed with enormous financial support and its cells successfully mingle into society, making it difficult for would-be terrorists to be singled out from innocent people. Not only that, their unpredictable, suicidal actions go against most normal people's sensibilities.

To cope with these extraordinary crimes, the world's legal systems have tried to introduce legislation that deviates from normal criminal laws. Several countries have permitted actions, including a derogation of an individual's civil rights, such as the quick detainment of suspects without judicial intervention, or arrests using intelligence information that deny the right of suspects to obtain legal counsel.

The first problem to these laws is that there is no accepted standard legal definition of the term ""terrorism"". The term is more political than legal. According to the law and common doctrines, terrorism consists of two elements, namely violence or threat of violence and the spread of fear or terror. Plainly speaking, only the psychological element -- the spread of terror -- is what distinguishes terrorism from ordinary crimes. However, using this concept, many ordinary criminal offenses could still be categorized as terrorist acts, so long as they had managed to result in public fear.

This is what makes antiterror laws in this world generally bad laws: The crime itself is ill-defined. It is very difficult to measure the parameters of ""causing the spreading of fear or terror"". This element cannot be quantified and will depend heavily on the subjective interpretation of its users. This has so far been proven by how these laws have been put into practice.

Other than an elastic and broad definition of these crimes, antiterror laws commonly permit a quick detention of suspects without trial. Fortunately, our laws still require judicial intervention before detaining a suspected terrorist. The requirement to have judicial intervention in detainment and arrest originates from the notion of the Rule of Law. This means that every non-criminal is essentially free to move from one place to another.

Another practical reason to keep the judiciary involved in determining who is a terrorist is that our antiterror law permits the apprehending of individual based on intelligence reports alone. Elucidation of the law states that intelligence information could be derived from almost any relevant state institution, such as the Ministry of Foreign Affairs or the Ministry of Finance. This is a very loose and elastic provision as intelligence information is not as strong as ""preliminary evidence"" used normally in detaining a suspect under criminal procedural law.

The existing law obligates the police to obtain a warrant from the chief of a district court before conducting an arrest. Prior to issuing a warrant, the judge will have to conduct an examination of the preliminary evidence or intelligence information submitted to them within three days. It is thus understandable that the National Police have complained that judicial intervention in terror-related arrests has caused bureaucratic problems and hindered their work.

However, totally eliminating the judiciary's role in the detainment process is a very bad idea. What could be reformed is the length of the detention, which could be made shorter. The warrant-making authority could also be transferred to higher branches of the judiciary in a bid to simplify the bureaucracy.

The law also permits the random detention of highly suspected terrorists for seven days. This requirement is already tough and needs not to be extended. The police could use intelligence to monitor the suspected terrorists upon their release, or request the court for an extension of the arrest if new evidence is discovered. Efforts to reform the Antiterror Law must be conducted carefully so as not to infringe the international or constitutional rights of individuals. Indonesia has ratified civil rights conventions and would therefore have the international obligation to adhere to their provisions.

Protection from arbitrary arrests and detention is provided under the International Covenant on Civil and Political Rights to which Indonesia is a party. The Amended 1945 Constitution, Article 28D, also provides stringent protections of civil rights.

In the past, we have allowed a retroactive provision to be enforced against terrorism cases. Protection against non-retroactivity is actually something that is paramount under International Law and the Constitution. Although finally annulled by the Constitutional Court, the fact that the government and the House of Representative approved its use, is evidence that our community is becoming more permissive towards the use of excessive authority, although it has undermined the Rule of Law.

These are unpleasant signals in a society that is just beginning to succeed in building democracy. Oftentimes, the answer to social problems lies not in giving more power to the state to supervise the conduct of its citizens, or to restrict peoples' rights, but by social approaches.

These should be performed through civil education and the promotion of religious tolerance, accompanied by explicit support and real actions in combating terrorism through this nation's influential religious bodies, such as the Indonesian Ulema Council (MUI) and other relevant institutions.

Hierarchy of regulations in Indonesia

2009-06-30T09:26:00.000-07:00

I have been asked several times by my fellow lawyers working in foreign jurisdictions about the hierarchy of rules and regulations in Indonesia. This post will try to clarify.

The hierarchy of rules based on the old People Consultative Assembly Decree is no longer in force. The new hierarchy of rules and regulation is enumerated under Law 10/2004 on the formulation of laws and regulations, Article 7:

1945 Constitution
Laws/Govermental Regulation in Lieu of Law
Governmental Regulation
Presidential Regulation
Regional Regulation (provincial/municipal/village level)

Ministerial decrees and the decrees of non departemental chiefs do not have the binding power as regulations. They are binding in their respective sectors as an administrative decision.

Indonesia ranks 62 in FP failed states index

2009-06-29T16:28:00.000-07:00

Indonesia's rank is 62 (out of 177 states) with a total score of 84,1. See the report here. Indonesia is colored orange, in the "warning" zone. Complete report is here, methodology is obtainable here.

Public Service Law was passed by the House

2009-06-27T09:42:00.000-07:00

The House of Representative passed the Public Service Law last Tuesday (June 23). This law is expected to boost Indonesia's public service performance. The Law imposes sanctions to government officials in breach of public service obligations, in the form of warning, suspension and even termination of employment. An Ombudsman Commission will be set to monitor the implementation of this Law. Click here to view the final draft version of the law (In Bahasa)

Bringing patients to court may not be efficient

2009-06-19T02:45:00.000-07:00

This is my recent op-ed piece in JP. I tried to argue that litigating is not always the best option, both for producer and consumer in cases where credence good is involved.

Unlike buying clothes in a department store, the quality of a particular health, legal and financial service is hard to ascertain. Even if consumers have experienced the service, the long-term effect of the service remains unknown. Is there any guarantee you will not be sued for following your lawyer's advice, or that you will not experience any side effects for taking medication? No.

Health, legal and financial services exploit the high degree of information asymmetry between seller and buyer. Put simply, the service is there because laypersons don't know what to do. Clients don't know the law and patients don't know their disease.

As such, consumers rely heavily on their service provider. Demands are created by the service provider and not by the consumer alone. So clients follow their lawyers on which transaction structure they should enter into and patients follow their doctors on which pills they should buy and swallow.

Hence, at the tip of the business is trust and reputation. Reputation may be worth more than the actual quality itself. As reputation is earned through sustainable efforts in performing high-quality, honest services and a good relationship with consumers, it is the Achilles' heel of this business.

Do courts resolve tarnished reputations through their verdicts? The news that a former patient has been victimized by a health service provider is more likely to be good news for the media than news that a hospital wins a lawsuit over its former patient.

People are naturally more interested in stories where they can be projected into the situation. Hospitals are impersonal institutions owned by corporations, therefore it is not in the interest of the layperson to hear a story of them winning a lawsuit.

Is criminal libel a good recourse to repair a damaged reputation? One thing about going to criminal proceedings is that external factors come into play in the process - namely the police and the prosecutors.

Once a case has been lodged with the police and transferred to the prosecutors, it is no longer in the full control of the "victim" or their lawyers. Unlike lawyers, the police and the prosecutors worked on behalf of the state in the pursuit of (bureaucratic) justice, not in the interests of both parties.

It is not within their consideration if the hospital is interested in maintaining reputation and the former patient just wants to go home. As such, criminal justice institutions may decide to proceed with imprisonment although it may not be in the best interests of any party.

Conventional wisdom suggests going to court in libel cases to get an injunction - that is, to get a court order for the defendant to stop defaming the client.

However, this is effective only in the age of the printing press, not in the Internet age. Court injunctions are meaningless, as the cost of distributing and multiplying information for every user is very low. Once an email is sent, there is no way to stop it from spreading.

Rather than go to court, I would argue for a market-based solution. From the plaintiff's point of view, going to court means they have to pay litigation costs and legal fees. If they win in civil court, they may not be able to recover the costs as the defendant may not have enough money to pay. If it is the insurance company they are suing, the insurance company may decide to appeal, which means more costs and more publicity for the plaintiffs. If at all they finally win the case, it will not bring the damaged reputation back, so they will still need to pay a public relations company to repair the damage.

From the defendant's point of view, the judicial process is lethargic, cold, cumbersome, costly and often does not reflect their sense of justice. From the taxpayers' point of view, legal proceedings mean a burden for their tax money. Taxpayers pay every penny for electricity, water and other utilities spent by the police, the prosecutors and judges. Yet, like laypersons, judicial professionals do not know about medicine.

That is why judges need doctors to stand as expert witness. If there are two expert witnesses with conflicting views, one from the plaintiff and one from the defendant, judges will just have to choose the most convincing one and take the opinion into their decision. The end result could be far from we call "the truth".

In a market-based solution, the parties stay out of court. If the health service provider does something wrong, they pay the patient and the patient can agree not to sue at a price. If providers don't do anything wrong, they ask the patient to issue a public apology and a sum of money to the extent that they can pay. The cost expended in this mechanism is much lower compared to going to court.

This mechanism requires the government to reduce information asymmetry in the market as parties can only negotiate when the evidence is available.

In practice, this means medical records should be made available to the patient. Criminal, administrative and civil sanctions should be introduced for those who tamper with medical records or retain them from patients.

This setting will provide incentives for honest behavior. It will make information discovery cheaper for patients and insurance companies, and also prevent burdening taxpayers through complicated judicial proceedings.

The writer is the founder of the Center for Law Information.

Housewife on trial for defamation

2009-06-03T06:25:00.000-07:00

Prita Mulyasari, the housewife detained for sending letter about her experience of (alleged) medical malpractice will undergo her first criminal trial tomorrow. Prita was brought to both civil and criminal suit by PT.Sarana Meditama Internasional Cs (presumably the legal incorporation of RS Omni where she was treated). She had lost the civil suit, but was nevertheless detained by the police for the criminal prossecution.

If I were the plaintiff's lawyer, I would recommend to revoke my client's criminal offense complain to the police. With internet activists standing behind her, it would be a bad move to go on with criminal proceeding. The reputational damage caused by media blow-up does not worth the penny the hospital spent for litigation costs and public relations costs.

Tanggerang District Court website has an op-ed column about this case.

HP 3 Rights, What Strategy for NGOs?

2009-05-19T06:32:00.000-07:00

Following my Articles on HP-3 in Jakarta Post ("The need for Clarification on HP-3 Rights" and previously "Coastal Management Law Review?") it is relevant to ask question on which course of (legal) action would our Civil Societies colleagues take, in response to the enactment of Coastal Law.

I can think of three possible actions by Civil Societies:

Judicial Review. Most activist would blame the Law for its interest in privatizing coastal areas. As such, they would be inclined to invalidate Law 27/2007. But what reasons can be used to submit the JR? Roughly speaking, I would say that any attempt to invalidate Law 27/2007 will have a very minimal chance of success. I do not see any provision under the Law which diametrically contradicts the Constitution. True, that the implementation of the Law may deprive certain members of the societies (such as the Adat Community) from their Constitutional rights, but in general, the black letters of Law 27 guarantees the preservation of existing traditional rights. Thus, if JR is to be opted, the most convincing hole would be to contradict the ill-defined HP-3 rights against "legal certainty" provision of the Constitution. I am not suggesting that this measure would be effective as property rights needs not to to be fully defined (a 'complete' property rights is impossible anyway), but there is a chance of success since "legal certainty" is weighed considerably by the Court. In any case, a move in reviewing Law 27 must not be aimed at winning the case completely (which result in the complete invalidation of the law) but simply in getting partial invalidation of harmful articles or, if not possible at all, in gaining the Court's recommendation for safeguarding its implementing regulations.
Legislative Review. If one thinks that the Law is insufficient or defective invalidation may not be the option. The Court's function is in ensuring that provisions of Laws are Consistent with the Constitution. So, if there are provisions of laws which is consistent with the Constitution but is nevertheless defective, the Court may choose to reject the petition to invalidate and recommends it for a legislative review. However, when a Law is recommended for a legislative review by the Court, it does not necessarily follows that the parliament will take the Court's suggestion. There are so many Bills that the Parliament needs to enact in any given year and there are political (as well as administrative) costs for rediscussing an already-enacted bill.
Implementing Regulation and Its Reviews. Law 27 will require plenty of government regulations and regional regulations to be implemented. In terms of technicalities, this measure is the most technically feasible. It is easier to change implementing regulation than annuling a provision of a Law or modifying it through legislative measures. Option #1 involves proceedings at the Constitutional Court and option #2 involves deliberation by parliament members. Option #3 however, only involves the government. It is easier for the government to enact regulations which are friendly to the cause promoted to Civil Societies. But because Option #3 rests on the discretion of the government alone, there is always a chance of capture by business interests. A way of rejecting an enacted government regulation is by conducting an appeal to the Supreme Court. Note however that the appeal for Government Regulation (against a Law) in the Supreme Court would take a very long time, as the Supreme Court has a very high case-load.

From these options, I would suggest Civil Societies to first submit a JR to the Constitutional Court. This must be done with a caveat that it has a minimum chance of success, so the aim of the JR should not be in entirely invalidating the Law but in obtaining partial invalidation and recommendation from the Constitutional Court in safeguarding the Law's implementing regulation.

This move will benefit Civil Societies developing monitoring and stakeholder participation capacity during and after the property rights setting takes place, as institutional set-up for HP-3 (zoning, etc) and its implementation are prone to capture.

The need for clarification on HP-3 rights

2009-05-14T03:57:00.000-07:00

I published an article in today's Jakarta Post:

Law 27/2007 enables private ownership of coastal zones through a system called HP-3 (which governs the right to commercialize coastal waters). The idea behind this system is to allow the exploitation of the currently neglected, but potentially profitable, 81,000 thousand kilometers of Indonesian coastline and its 12 mile wide territorial sea.

A HP-3 grants ownership to water columns (above the seabed to the water surface) in Indonesian territorial zones. In most cases, the Law stipulates that HP-3s will be granted by local governments. The Law says that the first period of ownership is granted for a period of 20 years but can be extended. As the law does not impose any limitation for extension, it is presumable that HP-3s could be owned perpetually. It is also worth noting that a HP-3 certificate can be used as collateral to secure a loan.

We know from theory that in order to be functional, property rights must fulfill the "3Ds" rule: definability, defensibility and defeasibility. Property rights can only be efficient within these three aspects, and only if transaction costs are low.

With respect to definability, the Law stipulates that a HP-3 covers a three dimensional space from the seabed up to the surface. This would mean that the seabed falls under another system of regulation. There is however, some interface between the seabed and the water column, and this becomes an issue in sea mining operations. If there is an overlap of ownership between the two (the seabed is granted to an oil company and the HP-3 on the surface is granted to an aquaculture company, for example).

A way of preventing this problem is by coordinating the awarding of property rights between the two areas. That is to say, the awarding of any marine mineral resources exploitation license by the central government must be coordinated with local government.

In another scenario, if both a seabed exploitation licenses and a HP-3 for the adjacent surface are owned by the same entity, disputes could occur from one area to another, which could dilute the value of the property of the neighboring HP-3 owner. One way to anticipate this is for the local government to stipulate which area is used for what. Zoning mechanisms must be very solid in order to prevent property rights disputes.

The law also does not define exact rights within a water column. A water column may be an area passed-though by highly migratory species protected under international law, which therefore cannot be harvested, even by HP-3 owners. A way to address this issue is by clarifying the dos and don'ts for HP-3 owners when implementing regulations.

Another significant problem is that marine boundaries constantly change because of natural phenomenon. HP-3 limits could be confused if the baseline used to measure a sea boundary also changes because the sea level rises. I am not certain as to what mechanism could be used to adapt to this problem.

As for defensibility; defending a property rights in the ocean is relatively more difficult than on land. On land, one can install fences in order to defend and mark their property. This is not possible in the sea. Nets can be used, but if used too extensively they could capture protected species. The surface structure could be used, but that should not hinder navigation for vessels passing through the area. And in any case, it is difficult to exclude traditional fishermen from fishing in HP-3 zones, as they may not be equipped with GPS.

HP-3s are interestingly defeasible enough. Defeasible basically means that the property rights can be transferred. In theory, a property right must be defeasible in order to enable exchange, so that a market can develop. The Law does stipulate that HP-3s can be transferred or encumbered with a mortgage. It is not yet clear which government department would be responsible for the registration of the mortgage. As long as the government has not clarified any institution responsible for the mortgage registration, the idea of mortgaging the sea will not be enforceable. Mortgage is an important part of the whole scheme, as it allows banks and other investor to enter and finance the project.

As we can see from the above explanations that property rights in the sea could be very costly in terms of its definability, defensibility and defeasibility. A huge amount of information would be required to define the property rights. Sonar imaging, GIS interpretation or anthropological studies on the existence of traditional fishing rights would expend a huge of amount of cost.

But these things are essential because, without a clear definition of property rights, future disputes may occur. Defending property rights is also difficult and the costs will be borne by the owners. If the cost of defending the property rights is more than the benefit of exploiting it, then it will not be a worthy investment. As for defeasibility, there is a high cost for institutional set-up. An institution will need to be established in order to maintain marine cadastre and administer HP-3 titles and their encumbrances.

Preemptive Strike

2009-05-10T10:18:00.000-07:00

I found my old article about preemptive strike (2004). The article was written when John Howard (who, at that time was racing for another period of premiership) issued a statement that he will employ preemptive attacks to terrorist bases, when necessary. As you remember, the war on terror was the hype in 2004.

Australia had been active in the regional diplomacy, leading a multinational armed forces responsible for the security of post-referendum East Timor. Meanwhile terrorist activities in Indonesia was reaching its peak period (The Bali Bombing, Marriot and the Bombing of Australian Embassy). Morever, preemptive strike has always been Bush'es doctrine. So Howard's statement was important in this context. Implicitly, it appears that he wanted to show that Aussie has some muscle to maintain security in South East Asia.

Some quote:

Australian Prime Minister John Howard recently said he would not hesitate to order preemptive strikes against terrorist bases overseas. The statement was further clarified that such an attack would not be directed against "able" countries such as Indonesia.
However, this statement would seem to require a serious response, as this was not Howard's first concerning the issue.
The spread of "preemptive-ism" across the region is something of concern, since a preemptive strike will likely raise distrust among nations, provoke international anxieties and undermine the UN's role in maintaining peace and security.

Here you can find Visa Credit Cards for your needs.

The Boss is in Time 100

2009-05-01T10:03:00.000-07:00

SBY made it to Time 100's, "Leaders & Revolutionaries" #9:

The time is right for Indonesia, as the world's most populous Muslim nation, to assume a more prominent position in Asia and throughout the Muslim world. In response to President Obama's warm overtures to Muslim countries for a new phase in relations with the U.S., Yudhoyono can take the lead and chart a new course for the region.

I didn't wrote that, it's Anwar Ibrahim's remark for Time magazine.

Just a perfect timing.

Nice job people... :p

Disclaimer: I am not trying to campaign anything here.

Transparency in water utilities

2009-03-23T07:44:00.000-07:00

I argued in my newspaper op-ed that the natural monopoly character of water services justifies its transparency. The purpose of water services regulation is to reduce natural monopoly and decreases information asymmetry. Transparency mechanisms work in that direction by allowing information to be interpreted by competing interest groups, thereby enhancing the regulator's capacity in deciphering information and producing more qualified decisions. Read more.

Economists have agreed that in every regulatory case, governments can never attain the same level of information as the company. Companies always know more about their own situation compared with the governments that regulates them.

The danger with this information asymmetry is that companies may inflate their actual costs and pass it on to consumers to pay. They may choose to deal with particular suppliers related to them (possibly a subsidiary of their parent company) rather than other suppliers offering lower prices.They may refuse to expand their network to slums or scarcely populated areas citing the reason of lack of capacity, although they actually can. Or, companies may conflate the number of leakages to add to the cost component.

As a result, governments must then be very well-equipped to be able to regulate water companies effectively; they must have all the technical, financial and legal auditing capability to discern and decipher information about water utility. The problem in most developing countries is that governments lack these regulatory capacities both in terms of human resources, technology and budget.

One way to mitigate this problem is by introducing transparency to the sector. Stakeholders can complain if they know that the company prefers to strike a water supply deal with real estate developers rather than invest in poor areas.

Potential suppliers can complain that they have been discriminated against, despite their ability to supply with cheaper costs. With transparency, governments can have help in interpreting information from other water companies, creditors, suppliers, consumers, NGOs, academia, the press or other interested parties.
However, it is difficult to make water utility companies agree to transparency. This response is natural as it is always better for them to conceal information than to be transparent.
Companies protect their information through confidentiality clauses in contracts and through trade secret laws. Freedom of Information laws typically do not work as they provide a blanket exception to disclosure when it comes to commercial confidentiality.

“Obstruction of performance” under Article 86(2) of the EC Treaty and its application to the water sector

2009-01-15T09:08:00.000-08:00

My master thesis attempts to define "Obstruction of performance" under Article 86(2) of the EC Treaty and how this category can be applied to the water industry. The thesis argued that Obstruction of performance has to be narrowly interpreted and necessity/proportionality of the measure has to be taken into account in order to invoke "Services of General Economic Interest" (SGEI) justification under the EC Treaty. Comparing with electricity and gas sector, I conclude that specific situations in the water industry may justify its exclusion from general EC Competition rule. Scenarios where "obstruction" in the water industry occurs were explored.

Preiview:

Provision of water and sewerage services has traditionally lies upon the responsibilty of the state for ages. Internal market integration and liberalisation processes so far had always exclude water sector from its agenda. Even until today, there has been no sectoral regulation adopted by the EU concerning liberalisation of water and sewerage services. The Parliament in its Resolution makes clear of its position that it rejects water being put in a sectoral directive due to its regional characteristics, but calls for “…without going as far as liberalisation, for water supply to be ‘modernised' with economic principles in accordance with quality and environment standards and the needs of efficiency”.

However, the Comission had shown its interest in liberalising water and sewerage service. The annual turnover of the water sector in EU is estimated at 80 billion Euro, more than the turnover of the gas sector. The Commission has expressed concerns that horizontal and vertical restrictions from long term supply dealings “…may be harmful and contrary to EC law even where national law allows them”. In its internal market strategy for 2003-2006, water is listed as one of the area where” new action may be required”, by reviewing legal and administrative situation in the water and waste-water sector, which include an analysis of the competition aspects.

Download the full thesis here.

The New Law on Coastal Management

2008-04-15T07:30:00.000-07:00

Here's my recent Article on Coastal Management Law in JP:

Theoretically, there could be around 12 nautical miles times 81,000 kilometers of "greenfield" spaces in the sea, ready for exploitation, for up to 20 years. This is indeed a huge business opportunity. For companies whose core business is aquaculture (shrimp ponds, fishes, coral reefs, pearls) and eco-tourism, HP3 would be a crucial issue. What makes HP3 even more valuable is the fact that it can be used as security for loans.
HP3 is also considered to be a pro-rich policy, as it would be unreasonable for traditional and local fishermen to enter into such a scheme which entails high administrative costs.
Let us first consider the arguments above. Indeed, some parts of our coast could be vulnerable of tsunamis, but those located in internal waters are likely to be less exposed to the dangers. For the vulnerable parts, disaster mitigation measures might require the building of artificial or ecological infrastructure (sea defenses) in order to break the waves and such measures -- they argue -- might be in collision with HP3 rights. This concern is nevertheless already addressed by the law.
The second argument on public participation is important. Our Constitution specifically states the economy must be carried out as a "common endeavor" based on familial principle. The Coastal Management Law does say that when granting and monitoring HP3, public aspirations must be taken into account. But this role is only consultative as the public takes no part in the final decision-making process.
In addition to the lack of clarity on the participation of local communities in the granting of HP3 as explained above, the current law also opens a wide opportunity for private parties to apply for HP3 certificates, while ignoring that local and traditional communities have capacity constraints in doing the same thing.
The granting of HP3 certificates might be expensive, as there are quite a few prerequisites that the applicants must fulfill. As corporations are closer to banks, they can get loans easily. On the other hand, local and traditional fishermen may not be as bankable as corporations and the decision-making process there may entail higher transaction costs compared to corporations.
So, there is an asymmetrical position between the players here. The weaker parties must be granted facilities due to these asymmetries and the current law does not seem to guarantee this.
The law actually accommodates existing practices by obligating HP3 holders to "respect" the adat (customary) law. Nevertheless, the language of the law reflects that the rights of traditional societies are not treated on equal footing with certification-based rights. So, there are risks of "expropriation" of the pre-existing customary rights. Adat communities with fishery practices would therefore have a legal standing before the court, as their interest is clearly affected.
Another crucial point would be anticipation of the risks of the HP3 market. As explained above, HP3 could be used as a security for loans. If the market is good, it is theoretically possible to purchase as much HP3 certificates as possible (with loans from banks) and then re-sell to another company for a profit, while the field remains neglected.

Its a huge business opportunity, Im telling you ;)

mma

My position on the 'Fitna' Film

2008-04-04T22:19:00.000-07:00

Some friends and colleagues have asked my opinion on the Fitna film. For now I have no time to write a lengthy review and my stance on religious freedom has been quite clearly represented through my previous writings (see here, here and here).

So let me just state my position briefly:

We must protest but we cannot restrict.

More on blasphemy law

2008-01-19T23:19:00.000-08:00

I wrote an article on how the law on blasphemy and the abuse of religion could contravene the constitution. There, I conclude that the Indonesian Constitution contains no specific reference to any religions and that Article 29(2) of the constitution was meant to protect not only major religions but also all beliefs. Any attempt to prohibit certain religious interpretation such as done through Articles 1 and 3 of Presidential Enactment number 1/PNPS/1965 on the Prevention of Blasphemy and Abuse of Religions would therefore infringe the constitution.

In another recent article, I explained that Article 4 of Presidential Enactment 1/PNPS/1965 which contained a provision of 5 years of imprisonment for those “who deliberately, in public, which in essence sparked hostility, insulting or abusive views towards religions with the purpose of preventing others from adhering to any religion based on God” could be in conflict with human rights (HR) norms.

Blasphemy laws could be permitted by HR only when it is intended to prevent harm to others. I wrote:

Thus, a Human Rights-compliant blasphemy law should contain very restrictive conditions, namely that it is applicable only when it is “…necessary to protect public safety, order, health or morals, or the fundamental rights and freedoms of others”. And, not only that the restriction must be “necessary” in order to prevent harm, it must also be “proportional” to the goal.

The Presidential Enactment (vis a vis Article 156a of the Criminal Code) has other purpose than preventing harm. Thus, it may be inconsistent with international human rights instrument.

Read more here.

My other article discussing Prophet Muhammad Cartoon.

CSR/GCG for utility companies

2007-12-24T01:47:00.000-08:00

I wrote a paper explaining why certain Good Corporate Governance (GCG) and Corporate Social Responsibility (CSR) norms needs to be practiced by utility companies. You can download the paper here.

Abstract:

This paper argues that utilities delivers basic services to society, a function that was previously undertaken by the state. Given the problematic nature of corporations, the prevalence of natural monopoly in utilities, the asymmetric information present in certain utility markets and the social costs that may occur due to utilities privatization, stronger government intervention in utilities might be desirable. It must however, be conducted in a manner which aligned the corporation's self-interest of profit seeking with the social cost. The inspiration for such regulation can come from the recently growing CSR and GCG norms.

Safeguarding Water Contracts (peer-reviewed version)

2007-12-08T01:44:00.000-08:00

Abstract:

The The provision of water and sewerage services has been in the public sector for thousands of years. However, the trend towards privatising these basic services has recently been growing. When dealing with Multinational Corporations (MNCs), governments face risks in the form of legal asymmetries.

This paper explains the theory and practice of water privatisation in Indonesia. It analyses the legal anatomy of privatisation, from the regulatory to the contractual levels. It attempts to highlight important issues and risks that governments and other stakeholders need to focus on when dealing with privatisation.

We've made some significant editing for this version. Download the full paper here.

State and Religion relationship in Indonesian Constitution

2007-12-07T01:53:00.000-08:00

An excerpt from my newspaper article:

Unlike in theocratic states, in Indonesia, clerics may issue a verdict (fatwa) but this verdict is not legally binding.
It is important to note that the word "God" appeared many times on the Indonesian constitution. Nevertheless, unlike the UK/Greece model, Indonesian Constitution is silent with regard to recognition of a particular religion.
There is no single article in our Constitution that mentions the name of a particular religion. Article 29 stipulates "the state is based on the belief in the One and Supreme God" but does not explain further -- "God according to who?"
Moreover, although Indonesia "is based in the one and only god", the constitutional practices in the past allowed non-atheistic beliefs (as implemented by the Indonesian Communist Party and local beliefs such as kejawen) to grow.
I therefore tend to conclude the Indonesian model sits somewhere between the German and the Greece/UK model.
The Indonesian Constitution is not neutral towards religion. It is "pro-religion" in the sense that it prefers and supports a theistic worldview rather than the non-theist worldview, but is nevertheless neutral on which theistic view it prefers the most. Thus, the idea of "state-acknowledged religions" (agama yang diakui negara) actually has no constitutional basis.
A pro-religion constitution means that religious adherents may enjoy more freedom of religion in positive terms (the freedom to exercise) through state facilities compared to adherents of non/atheistic beliefs.
However, the negative freedom (the freedom not to be forced toward a particular religion or belief) of all persons remains protected. The power struggle within a particular religion is clearly not the business of the state.
The state has no constitutional authority to dictate its citizens on which version of God it shall worship. Forcing a particular religious interpretation would infringe article 29 (2) of the Constitution.

That means, if you are a moslem and works at public institution, you can wear a scarf (in Germany this could be prohibited if you work as a teacher, as it tends to influence the pupils, whereas the state has to be neutral from religion) and government offices can also be used for religious activities. However, if you are an atheist, you cannot expect the government to allow you to use their facilities to perform your ritual. You can do it somewhere else of course, at the government needs to protect that.

Foreigners has no right of judicial review

2007-11-19T16:42:00.000-08:00

A colleague of mine explained eloquently in his blog that only Indonesians -- and not foreigners -- are entitled to request judicial review to the constitutional court. This does not mean that foreigners do not have legal rights. They are guaranteed with legal rights -- as well as constitutional rights, however they do not have the formal procedural previleges to request a review.

This brings me a question. Supposed foreigners are legally harmed by a provision of a law, then who would have the standing to challenge the law? Indonesians will not have such standing as they do not sustain legal injury (and not the "adressat" of the norm). This will leave the problem in a legal limbo. The laws would be left unchallenged.

Jakarta's water problem

2007-10-26T16:10:00.000-07:00

Pfff, check this out:

In my recent visit to Jakarta I found out that things are worse than I had envisaged. What I have feared has become reality. Lands in northern parts of Jakarta have subsided. Jakarta bypass has subsided by 50 centimeters since it was laid. The deep wells in Jakarta have to go deeper and deeper to produce water, and their output has been dropping off with time and many wells have been producing undrinkable water. Seawater has infiltrated as far as 7.5 kilometers from the coastline into the land and corrupted the groundwater such that it has become undrinkable.

Hopefully their mitigation plan works.

Where is the "wealth of nations"? Answer: Rule of Law

2007-10-06T18:39:00.000-07:00

An interesting story from Reason Magazine:

A Mexican migrant to the U.S. is five times more productive than one who stays home. Why is that? The answer is not the obvious one: This country has more machinery or tools or natural resources. Instead, according to some remarkable but largely ignored research—by the World Bank, of all places—it is because the average American has access to over $418,000 in intangible wealth, while the stay-at-home Mexican's intangible wealth is just $34,000.

But what is intangible wealth, and how on earth is it measured?

...the World Bank finds, "Human capital and the value of institutions (as measured by rule of law) constitute the largest share of wealth in virtually all countries." According to their regression analyses, for example, the rule of law explains 57 percent of countries' intangible capital. Education accounts for 36 percent.

Average per capita wealth in OECD countries is $440,000, consisting of $10,000 in natural capital, $76,000 in produced capital, and a whopping $354,000 in intangible capital. (Switzerland has the highest per capita wealth, at $648,000. The U.S. is fourth at $513,000.)

By comparison, total wealth for the low income countries averages $7,216 per person consisting of $2,075 in natural capital, $1,150 in produced capital and $3,991 in intangible capital. The countries with the lowest per capita wealth are Ethiopia ($1,965), Nigeria ($2,748), and Burundi ($2,859). In fact, some countries are so badly run, that they actually have negative intangible capital. Through rampant corruption and failing school systems, Nigeria and the Democratic Republic of the Congo are destroying their intangible capital and ensuring that their people will be poorer in the future.

It's really about the people, not the nature.

Concession markets in Indonesia

2007-09-10T02:46:00.000-07:00

Here's a link to an OECD article on the role of KPPU in supervising concession markets in Indonesia and other set of regulatory framework. This article only discusses the peripherals, but is nevertheless not bad as a start.

Download here.

Poor water infrastructure in Kupang?

2007-08-28T04:53:00.000-07:00

Have a look at this reader's comment on the Jakarta Post 28/08:

Money from the water budget seems to be spent improperly every year. Kupang does not have even the simplest water treatment plant, while poor maintenance has caused the deterioration of old PDAM infrastructure for years.
The result is that people have to buy water from tanker trucks that has been pumped from highly polluted rivers and wells.
Several tests have shown this water is not fit for human consumption. But it's still being sold by the Kupang city administration.