A Comparative Analysis of the Indonesia and Laos’ Health Policy Successes

The central theme of this report will evaluate the health systems of two developing nations in Southeast Asia. The two nations that have been studied are Indonesia and Laos. The Republic of Indonesia is a developing nation, the fourth largest country in the world by population and the world’s third-largest democracy. The nation faces challenges with improving their health system and the health of their people. The second nation Laos is known as the Lao People’s Democratic Republic (Lao PDR), a Marxist-Leninist state ruled by the Lao People’s Revolutionary Party (LPRP). Laos a low-income nation has endured social and economic transformations since the introduction of market-based economic reforms in 1986 however despite economic growth health system development has dwindled. The political issue of healthcare policy in developing nations is complicated by a lack of resources available to existing governments, poverty and corruption, which can further complicate matters. The Health policies of both these nations will be discussed after looking firstly at their history.

Indonesia claimed independence in 1945 from the Dutch Empire. This marked the start of the diplomatic and armed Indonesian National Revolution. The revolution saw forces fighting for their independence against the Dutch who didn’t formally accept Indonesia’s Independence until December 27, 1949. The Dutch government in 2005 recently accepted the correct year and date of Independence as August 27, 1945 after expressing regret over military actions of the past. (The Jakarta Post, Jakarta, 2005)

The Republic of Indonesia the world is familiar with today went through several stages before becoming the nation-state that the world knows presently. According to Aspinall the earlier governments post-independence stressed nation-building. (Aspinall, 2011) This stage saw the government being concerned primarily with the establishment of a political government system through a parliamentary or constitutional democratic governmental system. (Djoko, 2003) This first stage was led by President Sukarno who is known for establishing parliament with a ‘Guided Democracy.’ The second stage was led by President Suharto who led the government with a ‘New Order’ which saw the birth of an authoritarian government system. This stage concentrated on building the economy and political stability through the process of industrialization and rural development. Post President Sukarno’s leadership democratic elections have been held since 1999 which has seen government leaders reform their political system to a more democratic and civil society.

Laos a land-locked country which sits centrally to five bordering countries; China, Vietnam, Cambodia, Thailand and Burma. Laos was founded by the French in 1893 and later became the Lao People’s Democratic Republic in December 1975 after the forced abdication of King Sisavang Vatthana who had reigned over Laos since 1959. Laos has a population of approximately 7 million people which is made up of 49 different ethnic groups, which are all formally recognised by the Government. The land mass of Laos is 237, 000 square kilometres, with the most densely populating area being Vientiane, the capital. (Australian Government, 2014)

While the LPDR has experienced violence from groups opposed to the government it is generally a relatively stable nation. (EIU ViewsWire, 2005) The country is a communist state which remained relatively closed off to the world until the 1990s. At this time country started passing foreign investment laws, which saw Laos become a member of the Association of Southeast Asian Nations (ASEAN). Laos unlike western nations is a single-party state, which means only the LPRP is legally allowed to hold power. As a result Laos is governed by Marxism-Leninism a form of anti-conservative, anti-reactionary government that’s principles are based on Marx’s analysis of capitalism with Lenin’s theories of revolutionary action.
Indonesia’s and Laos’ Millennium Development Goals

Since September 2000 Indonesia and Laos have sets goals under the United Nation’s Millennium Development Goals (MDGs) program. The MDGs of each nation is a good measure for determining current pitfalls in the health of both nations. The nations that are a part of the UN’s program must develop a report each year to outline how gaols are progressing.

Indonesia set eight MDGs which three of were predominantly health related goals, including: improving maternal health, eradicating extreme hunger and poverty and combat HIV/AIDS, malaria and other diseases. Steps taken by the government since 2000 have included decentralizing control of services to district governments and the passing of a National Social Security System (NSSS) in 2004.

The decentralizing of services such as health in 2001 from national control to district control saw more Indonesians utilizing health care services in their districts, due to the increased funding provided with the decentralizing. A conference paper released at the German Development Economics Conference in Frankfurt 2009 looked at 320 Indonesian districts and subsequently examined the impact of district budgets on public health spending, utilization and other patterns. The paper found the decentralizing of health to Indonesia’s districts suggested “local government health spending increased sharply… reflecting the transfer of responsibility and authority from the centre to the districts.” (Kruse, Pradhan, & Sparrow, 2009) The increase in local government spending as researched by Pradhan, Kruse and Sparrow saw the average utilization of public outpatient care in districts increase from 0.073 outpatient visits per person per month (vppm) in 2002 to 0.094 vppm in 2005. The steps taken by the Indonesian government in 2001 appear to reflect positively on that nation’s goals to improve their health services.

However, a further study looking at health system performance at a district level condemned the national government for not envisioning the Indonesian health system of the future while criticising the district government politicians for not looking at a health system beyond the next election. (Heywood & Choi, 2010) One pitfall of the decentralization was the government retaining the responsibility of the personnel system and human resource choices of districts. According to the research by Heywood and Choi this resulted in the central government being able to maintain and reinforce the old system resulting, in the innovation so much needed for improvement being silenced.

Aside from decentralizing control of health services to local districts an important step taken by the national government was establishing the NSSS. Although the NSSS was delayed 10-years and only just implemented in 2014 as law number 40/2004, which is similar to Social Security Law in the US. The NSSS was setup to cover five programs, “namely health insurance, occupational injuries, provident funds, pension and death benefits.” (Thabrany, 2014) Since the implementation of the NSSS one could only expect that Indonesia would be closer to meeting their MDGs. This may be true, but Indonesia is facing setbacks in achieving their MDGs of reducing mortality rates by 2015 due to a lack of health services for women during pregnancy as revealed in the Demographic Health Survey of Indonesia. According to the survey conducted by the Central Statistics Agency (BPS) 96 per cent of women received prenatal care in 2012, up from 93 per cent in 2007. Indonesia has made slow progress in improving their health care system and the health of their people but the country still faces many challenges similar to that of the land-locked country Laos.

Laos like Indonesia also set MDGs focusing on the health of their nation, the goals included included: improving maternal health, eradicating extreme hunger and poverty and combat HIV/AIDS, malaria and other diseases. From the onset we see that Laos’ Government is prepared to head in a direction similar to that of the Indonesian’s by setting similar goals to other countries apart of the MDG program.

Laos enacted a similar strategy to Indonesia in relation to their health policies. Laos started the decentralization of government services from the central government to the provincial level (the equivalent of Indonesia’s District Governments) in 1987 which allowed for the responsibilities of planning, financing and provision of health services to be transferred to the provinces. Though, unlike Indonesia the decentralization was unsuccessful and the government retook control of the provinces in 1992. Part of the reason why the decentralization was unsuccessful was due to the minimal investment from the government and lack of experienced staff and training.

When the recentralization took place the Ministry of Health set rules and regulations aimed at strengthening the recentralized health system. A study conducted by the World Health Organisation (WHO) in partnership with the Ministry of Health found during the period of recentralization utilization rates improved per 10,000 people. For example, between 1992 and 1996, 35 persons per 10, 000 utilized health services compared with previous years between 1987 and 1991 where the results were 1.5 persons per 10, 000. (Phommasack, et al., 2005) Further improvements were also seen with Laos’ ability to facilitate the establishment of more medical facilities. For example, in 1990 there were 893 private pharmacies in LPDR and by 1999 there were 2000. (Phommasack, et al., 2005)

Needless to say, it seems that both Indonesia and Laos have had health reforms led by their governments, with Indonesia finding success through decentralization and Laos finding a better health system with control under their central government. However an indicator that shows the ability for Indonesia and Laos to govern their people is their demographics shown through indicators such as the percentage of GDP spent on health care each fiscal year.

Recent results by the World Bank show that in 2011 Indonesia spent just 2.7 per cent of their GDP on health compared with Laos that actually spent 2.8 per cent of their GDP. Indonesia and Laos are two very different nations in terms of their demographics and finances, the population of Indonesia is 37 times more than that of Laos at 7 million and the GDP of Indonesia is 1.237 trillion compared with Laos’ 19.52 billion in 2012. (CIA World Factbook, 2011) With good judgement one may actually determine Laos is willing to commit more of their GDP to the health of their nation. This is reflected further with the annual percentage growth change. Between 2004 and 2012 Laos percentage of GDP change was 6.4% in 2005 and 8.4% in 2012, compared with Indonesia that rate that’s growth was 6.3% in 2004 and 6.5% at its strongest in 2011. (World Bank, 2012)

From the world development indicators discussed it’s revealed Laos has stronger growth in their economy, which may be why recentralization has proven more successful for managing a smaller population. On the other hand, if the health of each nation is analysed, Indonesia clearly has better success. For example, the life expectancy at birth in Indonesia is 71.9 years compared with 63.14 years in Laos and the infant mortality rate in Indonesia is 26.06 deaths per 1000 births compared with 56.13 in Laos. (CIA World Factbook, 2011) In essence the indicators reveal Indonesia’s health system, although it’s decentralized is better able to deal with the health and well-being of their nation, while Laos struggles with a poor infant mortality rate.

By and large the indicators show Indonesia’s choices in governance to ensure the health and prosperity of their people is far more successful than the LPDR. These reasons as discussed are largely due to the limited funds of Laos, in time it could be expected Laos’ ability to deliver healthcare will continue to improve, especially with their strong annual GDP growth.


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