Institutional design for the establishment of strategic agencies under the president from the perspective of the hierarchy of laws and regulations

This study analyzes the constitutional issues surrounding the establishment of strategic state agencies through Presidential Regulations within Indonesia’s constitutional system. The primary focus of the study is on the use of Presidential Regulations as the basis for establishing state agencies that have a permanent structure, broad authority, strategic public functions, and utilize substantial amounts of the State Budget (APBN). This study employs a normative legal method using a statutory approach, a conceptual approach, and a comparative law approach. The research findings indicate that, theoretically, a Presidential Regulation is essentially delegated legislation of a technical-administrative nature, serving to implement norms established in laws or Government Regulations. Therefore, a Presidential Regulation should not serve as the primary instrument for establishing strategic state agencies that perform broad national public functions. The establishment of such bodies should derive its legitimacy from legislation because it is directly related to the principle of constitutional budgeting, the House of Representatives’ oversight of the use of the State Budget, and the mechanism of checks and balances in a democratic state governed by the rule of law. An analysis of bodies established based on Presidential Regulations, such as Danantara and the National Nutrition Agency, indicates that these institutions possess the characteristics of strategic bodies because they implement large-scale national programs, involves cross-sectoral coordination, utilizes significant portions of the national budget, and has a direct impact on the social rights of the public. Comparative practices in the United States, South Korea, and India also show that national institutions or programs related to the management of large public budgets generally derive their legitimacy from legislation. Furthermore, this study found that establishing strategic agencies solely through Presidential Regulations risks expanding executive power, creating bureaucratic bloat, causing overlapping authority among institutions, and opening the door to the politicization of state institutions as tools for post-election government power consolidation. Therefore, a restructuring of state institutions is needed that places legislation as the primary basis for the formation of state strategic agencies to ensure democratic accountability, legal certainty, bureaucratic effectiveness, and oversight of the use of state finances.