4.1.1 Economic context
Indonesia is a country of 17,000 islands and well known for its diversity in people, languages, and islands (Houterman et al.2004). With 245 million inhabitants it is the fourth most populous country in the world and is the largest country in the pacific, occupying an area of 1,904,570 square kilometres. Nowadays, Indonesia has the 16th largest economy in the world with a GDP of 1.03 trillion dollar. The
country experienced growth rates of 6 per cent GDP in the years of 2007, 2008, 2010 and a GDP growth of 4% per cent during the economic crisis of 2009.
Major challenges for the future of Indonesia are the corruption (Indonesia is ranked 110 on the worlds corruption index (Transparency, 2010)), poverty and unemployment, the complex regulatory environment and the on-going challenge of improving the infrastructure in order to remove impediments to growth (CIA, 2011). A master plan is currently in development to improve the country’s infrastructure, worth 470 Billion US Dollar, so that Indonesia can become the world’s 12th
largest economy (Asia-Monitor, 2011). 4.1.2 Political context
After the fall of “New Order” regime of Sukarno in 2001, a process for political reform has started. Goals of these reforms were: administrative decentralization, local government and community empowerment, democracy and transparency (Houterman et al., 2004). As a result, tasks were moved from the central government to municipalities, districts and provinces. Since then, the region/local government have more power and financial authority to plan and implement social/ economic development plans (Zaman; 2002). Part of the reformation was the direct elections of mayors and governors. This took place for the first time in 2005. One of the motives of this decentralization was to restrict the excesses of local officials (Antlov et al. 2010).
This is validated by Gray (1991) who stipulates that the process of policy development and the state of the legal system in Indonesia, functions according the informal model (Gray, 1991). Characteristics of the legal system in Indonesia can be explained as indirect and direct adaptations to risks and to the high cost of information in Indonesia. As a result, politics and legal procedures in Indonesia are characterized by concentrated and unquestioned authority; emphasis is on personal relations and trusts in order to lower transaction costs; decision making is ad-hoc and informal legal processes can be shaped according to preferences of the ones in power (Gray, 1991). In Appendix 9.10, an overview is given of the formal model as applied in the Netherlands and the informal model of Indonesia.
4.1.3 Problem context
The frequency and severity of flood events at waterfront cities in Indonesia is increasing, especially, on Sumatra and North Java. The damage occurred by floods is mayor and effecting large portions of the Indonesian society (Pawitan, 2002). These floods are caused by urbanization, extreme rainfall, rise of the sea-level and land subsidence (Kops, 2008). Effects of the land subsidence are becoming more and more visible and severe. In some areas the land subsidence is of more than 19 cm/year
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and areas dry in the past are now, permanently flooded [OB8]. Core to this problem is another major problem on Java, the availability of sufficient fresh water.
The main island of Indonesia, Java, with 813 inhabitants per km2, is among the most densely
populated parts of the world (Houterman et al. 2004). Of the Indonesian population 60% lives on Java; while the island only counts for three per cent of the Indonesian landscape and four per cent of all the fresh water. Providing everyone with a sufficient amount of fresh water is therefore a mayor challenge for the coming years on Java [OB24]. One way to obtain sufficient fresh water is through extraction of groundwater, which is in turn the cause of land-subsidence.
4.1.4 National Culture Indonesia in comparison with the Netherlands
The research of Hofstede`s is used for understanding the influence of national culture on actor characteristics. In his research four dimensions of culture are distinguished, see table 3. According to the table, comparing Indonesia and the Netherlands, the most important differences are found in the individualism and power distance dimensions. Therefore, we will elaborate on these dimensions in the following paragraphs.
Collectivism vs. Individualism
The perceptions and behaviour of actors in collectivistic cultures differ from actors of individualistic cultures (Som, 2009; Markus & Kitayama, 1991). It influences how members of a culture process interpret and make use of information, body and knowledge (Bhaget et al. 2002). In collectivistic cultures there is more emphasis on context than in individualism cultures (Trandis, 2009). Indonesia is placed on the lower end of the individualism scale with a score of 14. This score indicates the collective nature of the Indonesian culture. The basis for this is found in the strong Indonesian value called, “gotong royong” (mutual assistance). This value puts strong emphasis on loyalty and
cohesiveness (Gani, 2004); in more simple terms taking responsibility for the fellow members of their groups. (Hofstede, 2011; I11; I15; D54; D82). Part of this culture is the natural avoidance for open confrontation. Indonesians, and in particular, Javanese, are generally believed to prefer compromise and consolidation (Grey, 1991; OB7). Consequently, Indonesians do not want to upset others and are therefore concerned about the effect of their actions on the feelings of others (Dirawan & Wirawanto, 2007). How something is said is more important than what is said (Trandis, 2009; I02; I19; I26]. It happens that when you ask an Indonesian can you do that, they will say I try or yes, but don’t do it, because they did not want to say no [I01, I10; I12]. Dutch culture is more informal, individualistic, and actors communicate in a more direct manner [I01; I04; OB17; I29]. These differences result, very often in communication that is confusing for both sides. If the confusion gets too big, communication and work may just stop (Katz & Freedman, 2007).
Power distance
Indonesians score high (78) on the dimension of power distance. They have a deep cultural respect for hierarchy. As a result, people will hesitate to approach those higher up the hierarchy and will not
Dimension Extend or degree to which NL IND
Power Distance Less powerful members of organizations accept and expect that power is
distributed equally
38 78
Individualism Individuals are inter-grated into groups 80 14
Masculinity The distribution of roles between genders in society 14 46
Uncertainty Avoidance
A culture programmes its members to feel either uncomfortable or comfortable in unstructured situations
53 48
Long term orientation
A persons focus on short term, respecting traditions, social obligations and loss of face vs. long term thrift and perseverance
44
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dare to contradict their superiors (Grey, 1991 Hofstede, 2005; I01]. Characteristics of the Indonesian style are: unequal rights between power holders and non-power holders, in-accessible superiors, directive leaderships, centralized power, managers’ count on the obedience of their team and vice- versa employees expect to be directed. (Grey, 1991; Hofstede, 2011) [I01]. The Dutch stand with a score of 38 to the other side of this equation. The Dutch style is characterized by: accessible leaders decentralized power, informal leadership relations focus on experience when being promoted and direct participative communication (Hofstede, 2011).