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The Role of Subnational Governments, Local Parliaments and Non- Governmental Organisations in Negotiating Project Governance

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Loans for Infrastructure in Indonesia: The Role of Subnational Governments, Local Parliaments and Non- Governmental Organisations in Negotiating Project Governance by Raden Mas Suryo Guritno Thesis submitted to Flinders University for the degree of Doctor of Philosophy College of Business, Government and Law 19 July, 2018 DECLARATION I certify that the whole thesis does not incorporate without acknowledgement any material previously submitted for any degree or diploma in any university; and that, to the best of my knowledge and belief, it does not contain any material previously published or written by another person except where due reference is made in the text. Raden Mas Suryo Guritno 19 July, 2018 ii ACKNOWLEDGEMENTS Praise be to Allah the Almighty for giving me the blessing, knowledge and strength to complete my PhD thesis. I am also indebted for the support of many people and institutions that have been involved directly and indirectly during the completion of this thesis. First of all, I would like to express my sincere gratitude to my principal supervisor, Associate Professor Gerry Redmond, and also my associate supervisors, Dr Priyambudi Sulistiyanto and Professor Adam Graycar. Their strong guidance, encouragement, insightful advice and critique have been very significant in improving my thesis. I would also like to acknowledge the support from the Australia Award Scholarship and my institution, the Ministry of Finance (in Indonesia), that has allowed me to pursue my PhD study in Australia. I have also appreciated the support from the College of Business, Government and Law, Flinders University, and from the administrative staff for their kind and helpful assistance. My gratitude also goes to my colleagues Mochamad Mustafa, Sukendar Sodik, Mohammad Yoga Pratama, Mujahiduddin, Jackwin Simbolon, Yadi Hadian, and Abby Witts for their huge support and fruitful discussions as I developed my PhD thesis. I am also indebted for all the support provided by the Indonesian community in Adelaide for its warm welcome, knowledge and friendships. I would also like to acknowledge the support from many institutions and from the research participants both at the central and subnational government levels at the Ministry of Finance, Pusat Investasi Pemerintah (PIP), South Sulawesi Province and Surakarta Municipality that have provided access and assisted me during my fieldwork in Indonesia. Last, but not least, I would like to express my deepest gratitude to my family: to my wonderful wife Elita Febrianty and my lovely daughters, Azalea Kinara Dasha and Rania Mahira Dasha, for their patience, love and support during my PhD life in Adelaide. My deep gratitude also goes to my sister and both my parents and my parents-in-law for their sincere thoughts and endless prayers during my study. May Allah bless us and protect us. iii TABLE OF CONTENTS DECLARATION .............................................................................................................................. ii ACKNOWLEDGEMENTS ............................................................................................................. iii TABLE OF CONTENTS ................................................................................................................. iv LIST OF FIGURES ......................................................................................................................... ix LIST OF TABLES ............................................................................................................................ x ABBREVIATIONS ......................................................................................................................... xi ABSTRACT ................................................................................................................................... xiii CHAPTER 1: INTRODUCTION ..................................................................................................... 1 1.1 Introduction ........................................................................................................................... 1 1.2 Aims ....................................................................................................................................... 3 1.3 Significance of Study .............................................................................................................. 5 1.4 Thesis Structure ..................................................................................................................... 6 CHAPTER 2: LITERATURE REVIEW .......................................................................................... 9 2.1 Introduction ........................................................................................................................... 9 2.2 Concepts of Good Governance ............................................................................................ 10 2.2.1 Relationships of Transparency, Participation and Accountability ............................... 11 2.2.2 Transparency ................................................................................................................ 13 2.2.3 Participation ................................................................................................................. 19 2.2.4 Supply and Demand Sides of Governance (The Effectiveness of Good Governance) .. 21 2.3 Decentralisation and Good Governance in Indonesia ........................................................ 23 2.4 Implementation of Good Governance in Indonesia ............................................................. 28 2.5 Governance and Infrastructure Development ..................................................................... 31 2.6 Conclusion ........................................................................................................................... 34 CHAPTER 3: STRUCTURE OF SUBNATIONAL GOVERNMENT, BORROWING AND LOAN APPROVAL PROCESS ..................................................................................................... 35 3.1 Introduction ......................................................................................................................... 35 iv 3.2 Structure of Subnational Government ................................................................................. 36 3.3 Subnational Government Borrowing in Indonesia .............................................................. 44 3.3.1 Subnational Government Borrowing in Pre-Decentralisation Era .............................. 44 3.3.2 Subnational Government Borrowing during Decentralisation Era (1999 to present) . 46 3.3.3 Sources of Borrowing ................................................................................................... 49 3.3.4 Types of Borrowing ....................................................................................................... 49 3.3.5. Borrowing Requirements .............................................................................................. 50 3.4. Central Investment Agency (Pusat Investasi Pemerintah [PIP]) ........................................ 51 3.4.1. PIP Borrowing Mechanism .......................................................................................... 54 3.4.2 PIP Borrowing Procedure ............................................................................................ 55 3.5 Perda-Making Process ........................................................................................................ 57 3.5.1 Objections during the Perda-Making Process ............................................................. 59 3.6 Conclusion ........................................................................................................................... 61 CHAPTER 4: RESEARCH METHODS ........................................................................................ 63 4.1 Introduction ......................................................................................................................... 63 4.2 Case Study Approach ........................................................................................................... 63 4.2.1 Rationale for Adopting Multiple Case Studies ............................................................. 68 4.3 Methods of Data Collection ................................................................................................. 71 4.3.1 In-depth Interviews ....................................................................................................... 72 4.3.2 Documentation .............................................................................................................. 73 4.4 Selection of Research Participants ...................................................................................... 75 4.5 Thematic Analysis of the Case Studies ................................................................................ 78 4.6 Research Framework ........................................................................................................... 80 4.7 Research Ethics .................................................................................................................... 82 4.8 Conclusion ........................................................................................................................... 83 CHAPTER 5: SOUTH SULAWESI PROVINCE .......................................................................... 84 5.1 Introduction ........................................................................................................................
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