Centralization Case Study

POLICY RECOMMENDATION

CENTRALIZATION

Currently, little coordination exists between the support systems provided through the national level public sector, the state, and other sectors. The government should take necessary measures to lessen the existing fragmentation of various social protection schemes. The Social Security Organization can act as an intermediary to strengthen the link between various implementing agencies. Centralization can be defined as the act to govern social security protection organization by centralizing the administration so that there is one authority that has the power to maintain the administration of the social security. This is to avoid red-tape bureaucracy. Red-tape can be defined as the excessive bureaucracy

This is due to the country confronts rapid population aging issue contributed by the demographic transition of longer life expectancy. Since the current social insurance schemes generally cover only until 58 years old, this social protection cover protection only until 58 years old this social protection system appears inadequate in ensuring financial sustainability during retirement. The government needs to devise a number of policies to restructure the overall social protection expenditure system because the budgetary pressure is caused by the large expenditure on social insurance programs. The investment approaches and strategies of the resources under the EPF system and pension fund needs to be strengthened in order to ensure financial sustainability among the elderly population. Greater transparency in the investment policies and performance of the civil service system need to be monitored. The government needs to increase the retirement age of 58 years to 60 years to 62 years similar to neighboring country, Singapore. For example, Singapore's social security framework is founded on the self-reliance and self-funded. This is to ensure that the long-term fiscal sustainability and reduce reliance on the state government. Participation for the social security protection in Singapore is mandatory for all employed Singapore citizens and Permanent Resident and also mandatory for the self-employed employees.

It includes the mechanisms required to balance the powers of the members and their primary duty of enhancing the prosperity and viability of the organization. To make the social security organization have strong governance government need to make a reformation towards their administration. One common area needs to be reform is to strengthen the institutional and administrative capacity of social security organization. A well functioning social security organization must be equipped with the adequate institutional capacity. It is proven that the poor countries such as China, Indonesia, and Vietnam have pronounced to have a lack of capacity in the institutional. The core function of the social security organization such as accurate data and record keeping systems should not be diminished. The basic organizational reform such as strengthening institutional and administrative capacity need to be completed before broader systemic reform. Secondly, the reformation is in terms of the improvement in the governance and regulation of social security organization. Strong governance and regulation are the basic necessities for the efficiency and transparency of the social security organization. Examples of specific measures to promote governance include better accounting,