ABSTRACT
The forces of the “information age” are expected to change our lives, but in ways that are as yet difficult to predict. This chapter argues that regulation should change fundamentally in the new information age. It illustrates the Public Performance Audit (PPA) concept with a system recently adopted by Indonesia’s Environmental Impact Management Agency (BAPEDAL) for controlling industrial pollution. PPA systems can increase both the transparency and accountability of public institutions, and make it feasible for the public to assess the government’s use of their taxes. The power of public information in regulation depends on the degree to which polluters internalise reputation effects. The Environment Ministry has thus decided that a large-scale public disclosure program may induce significant pollution abatement while the formal regulatory system is further developed. BAPEDAL hopes that pressure on factories from public disclosure will provide a low-cost substitute for formal enforcement of the regulations.
