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Research Report
Local Budget Management Performance (KIPAD) 2010
1
INTERIM REPORT
LOCAL BUDGETS STUDY 2010
Local Budget Management Performance in 42 Kabupatens and Cities in Indonesia
The Asian Foundation Seknas FITRA UKaid Royal Netherlands Embassy
Translated into English by Denis Fisher
from the Depart-
ment of Internat-
ional Development
Research Report
Local Budget Management Performance (KIPAD) 2010
2
Acknowledgements
This Report on Local Budget Management Performance is the result of cooperation between the National
Secretariat of the Indonesian Forum for Budget Transparency (Seknas FITRA) and The Asia Foundation.
The Seknas FITRA team was led its Secretary-General, Yuna Farhan, and included Fitra staff members Yenni
Sucipto and Muhammad Maulana. The Asia Foundation‘s contribution was coordinated by R. Alam Surya
Putra and Hana Satriyo. Taufik, Zulkarnain and Hari Kusdaryanto helped with data processing and
logistics.
The Report is based on findings of fieldwork undertaken by the following local researchers from 30 civil
society organizations: Baihaqi, Yulianto and Mulyadi (GERAK Aceh), Rurita Ningrum (FITRA North Sumatra),
Aryadie Adnan and Wibawadi Murdwiono (PKSBE West Sumatra), Fahriza (FITRA Riau), Ferry Triatmodjo
and Rini Budi Astuti (Maarif Institute), Muhammad Fahmi (FITRA South Sumatra), Edi Surahman
(Pinus/Mapag, North Gorontalo), Ben Satriatna (Sanggar Bandung), Khirzuddin, Syamsul, Drs. HA.Muhith
Efendy and Syaiful Mustai‘n (Lakpesdam NU), Andwi Joko Mulyanto, Eko Adi Purwanto, Arifin, Dina Nur
Solati, Rosihan Widhi Mugroho, Zaffaron, Asiswanto Darsono and Nur Hidayat (Pattiro), Nur Hadi (FITRA
Tuban), Dwi Endah (PW Aisyiyah East Java), Eka (Lensa), Denywan Putra (Legitimed), Husni Anshori
(YPKM), Milita Priatna Utami (LSBH), Zulkarnain (SOMASI) Andi Nilawati Ridha, Sudirman and Wildayanti
(YLP2EM), St. Hasmah (LPP Bone), Masitah (Yasmib), Risnawati (KPPA), Arusdin Bone (LP2G), Lim Kheng Sia
(Fakta) dan Muttaqien (Labda Jogjakarta). Members of the data verification team were: Hendriadi
Jamaludin (Somasi), Rosniaty (Yasmib), Ermy Sri Ardhiyanti (Pattiro), Devi (Maarif Institute), Nunik
Handayani (FITRA South Sumatra) dan Dahkelan (FITRA East Java) and Yenti Nur Hidayat (SANGGAR).
This research was undertaken with support from the UK Department for International Development
(DFID) and The Royal Netherlands Embassy.
The opinions, findings and conclusions contained in this report are those of the civil society groups
involved and should not be attributed to The Asia Foundation, DFID or the Royal Netherlands Embassy.
Research Report
Local Budget Management Performance (KIPAD) 2010
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Table of Contents
ACKNOWLEDGEMENTS 2
LIST OF TABLES AND ILLUSTRATIONS 5
GLOSSARY OF ABBREVIATIONS AND TERMS 6
CHAPTER I: FOREWORD: A MORE DETAILED LOOK AT LOCAL BUDGET PROCESSES 8
A. Background 9
B. Research Methodologies 9
1. Research Instrument and Scoring System 10
2. Research Structure and Methods 10
3. Documents Studied 10
4. Reliability and Validity 10
5. Index Categorization 12
C. Areas Studied 12
CHAPTER II: PERFORMANCE IN TRANSPARENCY OF LOCAL BUDGET MANAGEMENT14
A. Testing the Availability of Budget Documents 14
B. Institutional Support for Freedom of Information Services 17
C. Index of Transparency of Local Budget Management 18
CHAPTER III: PERFORMANCE IN PARTICIPATION IN LOCAL BUDGET MANAGEMENT20
A. Mechanisms for Participation and Categories of Participants 20
B. Regulatory Provisions on Public Participation 22
C. Index of Participation in Local Budget Management 23
CHAPTER IV: PERFORMANCE IN ACCOUNTABILITY OF LOCAL BUDGET MANAGEMENT
25
A. Timeliness 26
B. Mechanisms for Supply of Goods and Services 27
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C. Opinions of National Audit Board 28
D. Index of Accountability of Budget Management 28
CHAPTER V: PERFORMANCE IN PROMOTING EQUALITY IN LOCAL BUDGET
MANAGEMENT 30
A. Special Mechanisms for Womens Participation 30
B. Institutionalization of Gender Mainstreaming 30
C. Index of Performance in Gender Mainstreaming 32
CHAPTER VI: PERFORMANCE IN LOCAL GOVERNMENT MANAGEMENT 34
CHAPTER VII: RECOMMENDATIONS 37
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Local Budget Management Performance (KIPAD) 2010
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List of Tables and Graphics
TABLE 1.1 Documents Studied for KIPAD 2010 10
TABLE 1.2 Reliability of Dimensions and Cycles 11
TABLE 1.3 Correlations between Dimensions 11
TABLE 1.4 Correlations between Cycles 12
TABLE 1.5 Categorizations of Ratings of Areas Studied 12
TABLE 4.1 Regulatory Framework for Deadlines for Final Approval of Budget Documents 26
TABLE 4.2 Regulatory Framework for Timeframes for Discussion of Budget Documents 26
TABLE 4.3 Extent to Which Governments Studied Met Deadlines for Final Approval of Budget Documents
26
TABLE 6.1 Proportion of Local Govts Observing or Not Fully Observing Good Governance Principles
36
TABLE 6.2 Proportion of Govts by Area Observing or Not Fully Observing Good Governance Principles36
GRAPHIC 1.1 Areas Studied in KIPAD 2010 ............................................................................................................................................. 13
GRAPHIC 2.1 Level of Public Access to Documents by Local Government Area ......................................................... 15
GRAPHIC 2.2 Degrees of Access to Budget Documents ............................................................................................................. 16
GRAPHIC 2.3 Time Taken to Provide Documents ............................................................................................................................... 16
GRAPHIC 2.4 Level of Accessibility of Budget Documents by Budget Cycle Phase ............................................... 16
GRAPHIC 2.5 Level of Access to Budget Documents by Title .................................................................................................... 17
GRAPHIC 2.6 Areas with or without SOPs for FOI Requests ...................................................................................................... 18
GRAPHIC 2.7 Index of Performance in Transparency of Local Budget Management ................................................. 19
GRAPHIC 3.1 Mechanisms for Participation Provided by 42 Governments Studied ................................................ 21
GRAPHIC 3.2 Community Involvement by Consultative Mechanism Provided ......................................................... 21
GRAPHIC 3.3 Differences between Participation Index of Areas with PIKs and those without PIKs ............. 22
GRAPHIC 3.4 Proportion of Areas Providing Mechanisms for Participation by Budget Cycle Phase
.............................................................................................................................................................................................. 22
GRAPHIC 3.5 Index of Performance in Participation in Local Budget Management ............................................... 24
GRAPHIC 4.1 Ways Used to Advertise Tenders in the 42 Kabupatens and Cities Studied ................................ 27
GRAPHIC 4.2 Availability of Black Lists of Companies in the 42 Kabupatens and Cities Studied ............... 27
GRAPHIC 4.3 Index of Performance in Accountability of Local Budget Management ....................................... 29
GRAPHIC 5.1 Establishment of Gender Mainstreaming Institutions ...................................................................... 31
GRAPHIC 5.2 Use of Disaggregated Data for Certain Programs ......................................................................................... 31
GRAPHIC 5.3 Proportion of Local Government Departments Headed up by Females ........................................... 31
GRAPHIC 5.4 Index of Performance in Gender Equality in Local Budget Management ............................................ 33
GRAPHIC 6.1 Performance in Local Budget Management Based on Good Governance Principles ......... 34
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Local Budget Management Performance (KIPAD) 2010
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GRAPHIC 6.2 Index of Performance in Local Budget Management .................................................................................... 35
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Local Budget Management Performance (KIPAD) 2010
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Glossary of Abbreviations and Terms
(Compiled and inserted by translator)
APBD (or APBD murni) Anggaran Pendapatan dan Belanja Daerah—regional (local) government budget as
approved
APBD-P Anggaran Pendapatan dan Belanja Daerah (Perubahan)—revised local government
budget
BPK Badan Pemeriksa Keuangan Republik Indonesia—national Audit Board
CSIAP Civil Society Initiative against Poverty
DPA Dokumen Pelaksanaan Anggaran—budget implementation document
DPA SKPD Pen/Kes/PU Dokumen Pelaksanaan Anggaran Satuan Kerja Peringkat
Daerah/Pendidikan/Kesehatan/Pekerjaan Umum—budget implementation document
of the local government departments of education/health/public works
DPRD Dewan Perwakilan Rakyat Daerah—regional (local) legislative assembly: the legislative
wing of government at the provincial, kabupaten and city level
FGD Focus group discussion
FOI freedom of information
GBRI Gender Sensitive Budget Imitative
GM Gender mainstreaming
HoG head of (local) government
ILPPD Informasi Laporan Pelaksanaan Pemerintahan Daerah—information on regional
governance implementation report. See also LPPD.
Kabupaten The name of Indonesian local government area below the level of province and equal in
status to a city.
KIPAD Kinerja Pengelolaan Anggaran Daerah—Local Budget Management Performance
KUA-PPAS Kebijakan Umum Anggaran–Prioritas dan Plafom Anggaran Sementara—General
Budget Policies – Provisional Budget Priorities and Funding Levels
Laporan Realisasi Smt I Laporan Realisasi Semester I—report on implementation of local budget (APBD) for the first semester.
LKPD Laporan Keuangan Pemerintah Daerah—Local Government Fiscal Report
LKPJ Laporan Keterangan Pertanggung Jawaban—Accountability Information Report
Local government any sub-national government (provincial, kabupaten and city) (pemerintah daerah)
LPPD Laporan Penyelenggaraan Pemerintahan Daerah—Regional Governance
Implementation Report
Musrenbang Musyawarah Perencanaan Pembangunan—community consultations on development
planning
Perda Peraturan Daerah—local government regulation
Perda PTJ Pelaksanaan APBD Peraturan Daerah Pertanggung jawaban Pelaksanaan APBD—local government regulation
on accountability of local budget implementation
Perkada Peraturan Kepala Daerah—head of local government regulation
Perkada Penjabaran APBD Peraturan Kepala Daerah Penjabaran APBD—head of local government regulation on
detailed implementation of local budget
Perkada Penjabaran APBD-P Peraturan Kepala Daerah Penjabaran APBD-Perubahan—head of local government
Research Report
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8
regulation on detailed implementation of the revised local budget
Permendagri Peraturan Menteri Dalam Negeri—Minister of Home Affairs regulation
PIK Pagu Indikatif tingkat kecamatan—indicative funding figures at sub-district level
PKK Pemberdayaan Kesejahteraan Keluarga—empowerment of family welfare
Pokja Kelompok Kerja—working group
Posyandu Pos Pelayanan Terpadu—integrated health post
PP Peraturan Pemerintah—central government regulation
PPID Pejabat Pengelolaan Informasi dan Dokumentasi—Office for the Management of
Information and Documentation (Freedom of Information (FOI) office)
Region any sub-national area (particular government areas: provinces, kabupatens and cities)
Regional government any sub-national (local) government at the level of province, kabupaten or city
Renja SKPD Pemda Rencana Strategis Satuan Kerja Peringkat Daerah Pemerintah Daerah—strategic plans
of local government departments
Renja SKPD Kes/PU/Pen Rencana Strategis Satuan Kerja Peringkat Daerah Pemerintah Daerah
Kesehatan/Pekerjaan Umum/Pendidikan—Strategic plans of local government
departments of health/public works/education
RAPBD Rancangan Anggaran Pendapatan dan Belanja Daerah—draft local government budget
RAPBD-P Rancangan Anggaran Pendapatan dan Belanja Daerah (Perubahan)—draft revised local
government budget
RKA Rencana Kerja dan Anggaran—Budget and Work Plans
RKPD Rencana Kerja Pemerintah Daerah—Local Government Work Plans
RPJMD Rencana Pembangunan Jangka Menengah Daerah—regional medium-term
development plan
SKPD Satuan Kerja Pemerintah Daerah—local government department (work unit)
SOP Standard Operation Procedures
Sub-district Kecamatan: administrative level immediately below kabupaten and city
UU (KIP) Undang Undang No. 14/2008 (Keterbukaan Informasi Publik)—law on Freedom of
Information
Research Report
Local Budget Management Performance (KIPAD) 2010
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Chapter I
Foreword: A More Detailed Look at Local Budget Processes
A. Background
This report on Local Budget Management Performance (KIPAD) in 2010 is a continuation of
research undertaken last year on the same broad issues. The study examines four broad areas
of sub-national (regional, local) government budgetary processes: planning when local
governments undertake a range of activities to plan what needs to be done and to prepare draft
budgets; discussion when governments discuss and make determinations about provisions of
draft budgets; implementation during which governments carry out programs contained in
endorsed budgets with funding appropriations contained therein; and, finally, accountability at
which point governments have to account for implementation of budget programs and
expenditure.
This KIPAD research project was the brainchild of a network of NGOs which also developed
and implemented it as a means of monitoring and evaluating local government budget
performance. With support from The Asia Foundation, the National Secretariat of the Indonesian
Forum for Budget Transparency (Seknas FITRA) organized the various research stages in
collaboration with 28 like-minded groups in regional areas, including NGOs, other community
groups and university research units.
The research’s overall aim was to assess the extent to which principles of good governance
(transparency, participation, accountability and gender equality) were being integrated
into local budgetary processes in areas studied. More specifically, it aimed to provide
feedback to local governments to help them to lift their performance in budgetary cycles from
start to finish. By looking at this report, local governments will be able to tell to what extent their
budgetary processes are in accord with requirements outlined and to benchmark innovative
practices put in place by other governments. The central government will hopefully also use the
study as a chance to have a fresh look at national policies for improved sub-national budget
performance throughout Indonesia. NGOs too should be able to use it as a resource for their
advocacy work, particularly on budgetary issues—especially pro-poor advocacy on budgets in
areas studied.
This report is based on the premise that decentralization can be relied upon to give local
governments space to develop innovative policies in regions. Since decentralization was
introduced in Indonesia, several innovative policies have been developed in regions aimed at
enhancing people‘s welfare. Such innovations do not just benefit areas which introduce them, but
also encourage other regions to adopt similar or even more progressive policy approaches. So, at
the very least, this report seeks to engender a spirit of competition among local governments to
help them become more efficient and effective managers—especially of their budgets.
Research Report
Local Budget Management Performance (KIPAD) 2010
10
As budgets are an integral part of political
process, they act as a vehicle for both
executive and legislative branches of local
governments to implement pro-people
policies and programs. Any region‘s
development depends in no small part on
political decisions on budgetary issues. Thus a
key factor determining people‘s well-being is the
extent to which executive and legislative
branches of local governments have the same
perspectives on how local budgets should be
framed. In other words, budgets determine the
welfare of local communities.
In making judgments on the various indicators
researched in this report, researchers looked
more deeply at issues involved than in last
year’s study. Thus to test transparency,
researchers used legal provisions in freedom of
information (FOI) legislation (known as UU KIP) and
regulations to gain access to information. To test
participation in budgetary processes, they
identified—more carefully than last year—who was
involved in budgetary planning and formulation
processes. A closer study was also made of
accountability of public tendering for supply
of goods and services. And, finally, on gender
issues, they more closely assessed how
effective institutional and other arrangements
were in promoting greater gender equality.
B. Research Methodology
The basic methodology used for KIPAD 2010
was similar to that used in the 2009 study.
Research tools and indicators used this time were
the same as for the previous study.
But the research methodology used in 2009 was fine-tuned a little for KIPAD 2010. The
changes (outlined in the following paragraphs) were based on inputs from various quarters, in
particular local governments and NGOs, after publication of the first report.
1. Research Instrument and Scoring System
Box 1.1 Important Findings of KIPAD 2009
Transparency
Planning documents were more easily obtained than budgetary documents;
ILPPDs were what local governments most often failed to produce;
Documents on planning and budgets for specific sectors were more difficult to access than others;
City governments performed better than kabupaten governments under this heading.
Participation
Opportunities for participation were fewer once the allocation of budgetary resources began;
Local governments did not generally give indicative funding figures (PIK) for planned responses to suggestions;
Most local governments did not provide mechanisms for accommodating community concerns;
Cities scored best under this heading.
Accountability
The final adoption of many budget documents was delayed;
Local legislative assemblies had insufficient time to study budget documents submitted by local governments;
The majority of local governments received qualified audit reports from the national Audit Board.
Gender Equality
Not many “focal points” for gender mainstreaming (GM) had been set up;
Local governments mostly did not have disaggregated data and those which did were not using it when formulating budgetary programs;
Neither cities nor kabupatens distinguished themselves under this heading.
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Local Budget Management Performance (KIPAD) 2010
11
KIPAD 2010’s survey instrument contained 97 questions. These were designed to cover
four elements or dimensions regarded as representative of good governance: transparency (42
questions), participation (15 questions), accountability (15 questions) and gender equality (25
questions). Each dimension was examined at various stages of the budgetary process, including
planning (28 questions), discussion (24 questions), implementation (28 questions) and
accountability (17 questions).
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12
Available choices under each question were allocated a value (with the lowest score being 0
and the highest 100). Every question carried equal weight in index calculation, which ipso facto
meant that each index ranged between 0 and 100. That made them easy to read and compare.
An area‘s overall budget performance (KIPAD) index was calculated by taking the average of
the answers to all 97 questions. The same applied to calculation of indices for each element of
good governance (transparency, participation, accountability and gender equality).
2. Research Structure and Methods
In line with the evidence-based approach used in this research, all answers had to be
supported by solid evidence. Various tools were used to verify answers given: documentary
evidence, interviews and focus group discussions (FGD). Every region studied had a specially
trained assessor, who evaluated research done on the area concerned. Following that
evaluation, assessors sent their findings to verifiers whose job it was not just to verify answers
given but also to assess the extent to which supporting evidence was compelling. Verifiers—
positioned by geographical area—were each responsible for between 5 and 8 assessors. No
verifier could double as an assessor and making ―expert judgments‖ was the preserve of
verifiers.
3. Documents Studied
This KIPAD study examined 21 different sorts of planning and budget documents. 19 of
them were also studied in the 2009 study. One document studied last time, Local Government
Medium Term Development Planning (RPJMD), was not considered this time because it was not
available across regions. Two documents—regarded as containing information important for
local people— were looked at for the first time this year: Local Government Accountability
Reports (LKPJ) and the Local Governance Implementation Reports (LPPD))
Table 1.1 Documents Studied for KIPAD 2010 Planning Documents Discussion
Documents
Implementation
Documents
Accountability
Documents
Pertanggungjawab
an
Local government
wo
General budget
Local regulations
on
1st 6 mth report
work plans policies (KUA) and APBD & APBD-P APBD outcomes (RKPD). provisional budget HoG regulations
on Perda on public
Work plans of three priorities & funding APBD and APBD-P. accountability local government levels (PPAS). of APBD.
departments (SKPD) Budget & work Budget
Implementation LKPJ
studied: public
works,
education and
health.
plans (RKA) in the
3 sectors studied:
public works,
Implementation documents (DPA) for 3 sectors studied: studied : public
LPPD (local
Governance
Reports) education
and health.
public works,
educat. &
health
4. Reliability and
Validity
The survey instrument’s reliability is supported by three factors. Firstly, a verification tool was
3
Research Report
Local Budget Management Performance (KIPAD) 2010
13
used to minimize measurement errors during the research. In technical terms, verifiers evaluated
assessors‘ findings on the basis of evidence advanced and decided whether that evidence was
sufficient to justify the findings. If evidence was judged to be insufficiently strong, assessors were
obliged to produce another verification tool to support their findings. The re-verification of a
finding could be accompanied by an ―inter-rater reliability‖ test.
A second source of support for our research instrument’s reliability is the “split-half
test”. For a research instrument containing 97 questions like that used in this study, it is more
appropriate to use the split-half test than the so called Chronbach‘s Alpha test. The latter is
sensitive to the number of questions asked, whereas the split-half test produced a correlation
of 0.731 between two sections of the instrument. That can be regarded as a strong
correlation.
A third source of support for the survey form’s reliability comes from calculation of
Chronbach’s Alpha coefficients in the imaginary situation where the survey’s 4 segments
(each with its 4 cycles) are regarded as distinct research instruments. Table 1.2 shows
that, in that situation, all 4 instruments have a satisfactory level of reliability and that even in
the case of accountability which has the lowest Alpha values those values can be regarded as
moderate.
Table 1.2 Reliability of Dimensions and Cycles
Instrument Total No. of
Questions
Chronbach’s Alpha
Transparency 42 0.911 Participation 15 0.793 Accountability 16 0.575
Equality 25 0.877 Planning Cycle 28 0.779 Discussion Cycle 24 0.862 Implementation Cycle 28 0.827 Accountability Cycle 18 0.824
The research instrument’s validity is supported by the solid foundations on which its
composition was based. Various legal requirements (enshrined in State law and
regulations) were factored into their formulation in so far as they had a direct bearing on
research content and validity. An attempt was made to ensure that every question was
formally correct, thereby guaranteeing that the research instrument would elicit the
information which it was intended to elicit and was therefore ―valid‖.
A second argument supporting the research instrument’s validity emerges when its four
dimensions (each with its four cycles) are regarded as separate research instruments.
When that is done, it becomes evident that the four dimensions and cycles studied are in fact
interrelated in ways in which they should interrelate in theory. Such interrelationships are
Research Report
Local Budget Management Performance (KIPAD) 2010
14
evidence of a high level of convergent validity. Tables 1.3 and 1.4 provide details of the
correlations between the four dimensions and cycles.
Table 1. 3 Correlations between Dimensions
Transparency Participatio
n
Accountability Equality
Transparency
1 .334* .336* .801**
Participation 1 .516** .458**
Accountabilit
y
1 .416** Equality 1
Table 1.4 Correlations between Cycles
Planning Discussion Implementatio
n
Accountability
Planning 1 .652** .719** .537**
Discussion
1 .718** .621**
Implementatio
n
1 .641**
Accountability
1
5. Index Categorization
Unlike the 2009 KIPAD, this study attempts to break new ground by categorizing areas
studied as “very good”, “good”, “adequate” or “poor”. These categorizations were arrived
at on the basis of expert judgment. Specifically, researchers answered every question in the
questionnaire and made judgments about what answers they might well have expected to
receive. For example, on question No.1 concerning public access to regional Government
Work and Budget Plans (RKPDs), researchers would take the view that, given its importance, a
―very good‖ government should have made this document available within 1-10 days, a
―good‖ government within 11-17 days and an ―adequate‖ one sometime after 17 days. By
contrast, in response to question No. 79 on when local governments presented revised
budgets (APBD-P) to local legislative assemblies (DPRDs), a ‗very good‖ performance would
have been ―before October‖, while submission ―during October‖ would be regarded as
―good‖ or ‖satisfactory‖.
This method of categorization was assessed as being superior to a method which
arbitrarily attributed values to differing performance levels. Use of ―expert judgment‖
allowed researchers to apply their knowledge to local situations and to make judgments
about them based on existing regulatory requirements. By contrast the ―arbitrary values
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Local Budget Management Performance (KIPAD) 2010
15
approach‖ was regarded as not sufficiently sensitive to differing local dynamics or to the
extent to which local situations were in accord or not with what researchers might have
expected to find. Table 1.4 allocates values to various categories within the KIPAD index.
Table 1.5 Categorization of Ratings of Areas Studied
Category Index rating
Transparency
Index rating
Participation
Index rating
Accountability
Index rating
Equality
KIPAD Index
Overall Rating V. good 84.17 –100 77 –100 94.33 –100 89.40 –100 85.98 –100 Good 67.98 – 84.16 66.33 – 76.99 76 – 94.32 71.40 – 89.39 69.85 – 85.97 Adequat
e
50.24 – 67.97 52.33 – 66.32 50.67-‐75.99 57.20 – 71.39 52.42 – 69.84 Poor 0–50.23 0–52.32 0–50.66 0–57.19 0–52.41
C. Areas Studied
This research was conducted in 42 kabupatens and cities marked on the following map (see
Graphic1.1) The areas studied were target areas of the Civil Society Initiative against Poverty
(CSIAP) and the Gender-Responsive Budget Initiative (GBRI) developed by The Asia Foundation
with local partners. CSIAP and GBRI had virtually the same objectives, namely to bolster the role
of civil society groups (both NGOs and other community organizations) in changing local
budgetary policies to make them more pro-poor and gender-responsive. CSIAP was supported
by the UK Department for International Development (DFID) and GBRI by the Royal Netherlands
Embassy.
Graphic1.1 Areas Studied in KIPAD 2010
AREAS STUDIED IN KIPAD 2010
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Chapter II
Performance in Transparency of Local Budget Management
Law No. 14/2008 on Freedom of Access to Public Information (UU KIP) is based on article 23,
paragraph (1) of the Constitution which states that the State budget shall be implemented in an
open and accountable manner in order to best attain the prosperity of the people. UU KIP
guarantees the right of every citizen to obtain information from public institutions including sub-national
governments, including information and documents on budget management. The following formal legal
provisions require that budget management processes be transparent:
1. Article 23 of the 1945 Constitution: ―The State Budget, as the basis of the management of state
funds, shall be determined annually by law and shall be implemented in an open and accountable
manner in order to best attain the prosperity of the people‖
2. Article 3 paragraph (1) of Law 17/2003 concerning State Finances: ―The nation‘s finances
shall be managed in an orderly way, in accordance with the provisions of law, efficiently,
economically, effectively, transparently and accountably, keeping justice and propriety front and
centre.‖
3. Article 5 of Law No. 10/2004 concerning Enactment of Legislation: ―The formulation of
regulations issued to enact legislation must be based on good principles of law enactment which
include clarity of objectives, appropriate institutional arrangements, consistency of content, ability to
be implemented, ease of use, outcomes-focused, clarity of formulation and transparency‖.
4. Article 23 paragraph (2) of Law No. 32/2004 concerning Regional Government: ―The
management of regional government finances referred to paragraph (1) shall be conducted
efficiently, effectively, transparently, accountably, correctly, justly, appropriately and in conformity
with law.
5. Article 4 of Government Regulation No. 58/2005 concerning Management of Regional
Government Finances: ―Regional government finances shall be managed correctly, in accordance
with law, efficiently, effectively, transparently and accountably, keeping in mind principles of
justice, propriety and being of benefit to the people.
Two indicators were used in this study to measure transparency performance. Firstly, to test
observance of the law on FOI (UU KIP), the study sought to assess how readily budget management
documents were made publicly available. Second, the extent to which local governments had made
institutional arrangements to service FOI requests from the public was assessed. Both these
indicators aimed at assessing the level of local governments‘ transparency in terms of both their
granting of routine public access to information at each part of the budget cycle and their being
prepared to implement UU KIP‘s provisions.
A. Testing the Availability of Budget Documents
The study tested freedom of access to public information using the procedures for making FOI
requests laid down in UU KIP. Responses were sorted into several categories: documents already in the
public domain; documents made available within 0-10 working days of receipt of requests; documents
provided within 11-17 working days of lodgment of requests; documents supplied after more than 17
days; documents produced internally but not provided publicly; and documents not produced at all.
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UU KIP was a quite powerful incentive for local governments to start being open to FOI requests. Of
the 882 documents for which researchers submitted requests, 56% were obtained via formal lodgment of FOI
requests. In fact, 5% of the documents sought were already in the public domain (on websites or in other
mediums accessible to the public). The kabupaten of Malang performed best in this area, publishing on its
website www.malangkab.go.id more documents than any other area. Of the 21 documents which the
kabupaten of Malang was asked to
Graphic 2.1 Level of Public Access to Documents by Local Government Area
supply, 8 or almost 40% had already been published on its website, among the most important being its
APBD and APBD-P.
0 5 10 15 20
Already published obtained between 1-17 working days
Obtained within 11-17 working days obtained after more than 17 working days
Produced but access not given not produced
Kab. Malang
Kota Blitar
Kab. Kendal
Kota Surabaya
Kota Pare-‐‐Pare
Kab. Semarang
Kab. Sleman
Kab. Bone
Kab. Garut
Kab. Boyolali
Lombok Tengah
Lombok Timur
Kab. Bojonegoro
Kab. Sidrap
Kota Banjar
Kab. Sumedang
Kota Semarang
Kota Surakarta
Dompu
Sumbawa Barat
Lombok Barat
Sergai Pekan Baru
Padang Panjang
Padang
Bandar Lampung
Kota Palembang
Aceh Utara
Aceh Besar Aceh Barat
Kab. Bondowoso
Kab. Situbondo
Kab. Gorontalo Utara
Kota Gorontalo
Kota Palu
Kab. Wajo
Kab. Polman
Kota Pontianak
Kota Palangkaraya
Kota Pekalongan
Kab. Pekalongan
Kab. Cilacap
Research Report
Local Budget Management Performance (KIPAD) 2010
18
Only five areas (the kabupatens of Semarang, Bone
and Serdang Bedagai and the cities of Pekalongan,
and Padang Panjang) furnished all the budget
management documentation requested either in a
form already published or in response to
researchers‘ formal requests .
The study found that 35% of the documents
sought could not be accessed, even though
formal requests for access had been lodged.
Either deadlines set for receipt of documents were
not met or requests for access to documents were
simply ignored. Areas providing the least number of budget documents in response to
researchers‘ formal requests were the kabupatens of North Aceh and Wajo, which each refused
to release 17 documents. Among those documents were, most importantly, local departmental
work and budget plans (RKA SKPD) on education, draft local budgets (RAPBDs), mid-year
revised budgets (APBD-Ps) and detailed instructions on how APBD-
Ps were to be implemented.
The time taken to obtain copies of budget documents
which were received was generally fewer than 17 days.
This showed that the provisions of UU KIP imposing a 17 day
limit as the timeframe in which public institutions have to
provide information were an effective incentive for local
governments to meet the legally prescribed deadline. The
study showed that 87% of all the documents formally
requested were supplied in fewer than 17 working days.
Indeed 56% arrived in fewer than 10 working days. Only 12%
came to hand after more than 17 days but all were received
within 20 days.
Budget planning documents were more easily
obtainable than budget discussion, implementation
and accountability documents. Planning documents
were generally expositions on proposed work programs
and overall budget policy directions without any
information on proposed spending per activity or program.
The five budget documents which were most easily
accessed were: Local Government Work Plans (RKPD);
General Budget Policies, Provisional Priorities and
Expenditure Levels (KUA-PPAS); local government budget
regulations (perda); Accountability Information Reports
(LKPJ)—submitted by local governments to local legislative
assemblies; and local head of local government regulations
on implementation of approved budgets (Perkada
Penjabaran APBDs). Budget implementation documents
generally contained detailed funding information as well as
details on the number and location of funded activities. It
was difficult to gain access to such documents because of
55.8
Graphic 2.2 Degrees of Access to Budget Documents
5.2 4.2
34.8
Not printed
Not accessible
Obtained by request
Published
56.5
Graph 2.3 Time Taken to Provide Documents
12.6
30.9
> 17 working days
11-‐‐17 working days
1-‐‐10
working days
45
40
60
55
50
56.8
Graph 2.4 Level of Accessibility of Documents By Budget Cycle Phase
49.8
48.1
49.7
Planning Discussion
Implementation
Accountability
Research Report
Local Budget Management Performance (KIPAD) 2010
19
“More really serious political negotiation on budgets occurs during the process of approving Perda on APBD-Ps, than during approval processes for Perda on the original budget (APBD murni).
(Khairiansyah Salman, Expert Staff, national Audit Board)
the detailed funding information they contained—information regarded as secret and accessible only
for government officials with a need to know. By contrast, anyone could have access to planning
documents because they contained no details of funding to be provided. This study found that the
hardest documents to access were Budget and Work Plans (RKAs) for local government departments
responsible for education and public works, apparently because they contained even more information on
funding than documents used as a guide for budget implementation (DPAs).
Regional Governance Implementation Reports (LPPDs) were the most widely published of all local
budget documents. Twelve (29%) of local governments studied had published their LPPDs on their websites
in accordance a requirement in PP No.3/2007 that LPPDs be published in both electronic and written form.
This situation was especially interesting given that KIPAD 2009 concluded that LPPDs were least likely to be
produced at all by local governments.
Access to regional government regulations (perda) on APBDs (as originally approved) and on
implementation of APBDs was somewhat easier for this study. But perda on revised budgets (APBD-
Ps) and head of government regulations on implementation of APBD-Ps remained the most difficult
to obtain of the 21 documents sought. In 55% of all 42 areas studied perda on APBD-Ps were
unobtainable. By contrast, documents on APBDs and their implementation were available in 70% of areas
studied. This situation served to reinforce suspicion of many that real power play over budgets occurs not so
much when APBDs are approved but rather when they are revised mid-year. Another angle here is that
central government sanctions imposed on regional governments for lack of timeliness in budget approval
are applicable only to the original APBDs and not to mid-year revised APBD-Ps.
Graphic 2.5 Level of Accessibility of Budget Documents by Title (See Glossary (page 6) for explanation of abbreviations of titles of documents referred to in this graphic)
Research Report
Local Budget Management Performance (KIPAD) 2010
20
B. Institutional Support for Freedom of Information Services
Most local governments had yet to establish offices for management of information and
documentation (PPIDs) to provide freedom of information (FOI) services. Only nine areas studied—
the cities of Surakarta, Gorontalo, Bandar Lampung and Padang and the kabupatens of Sumedang,
Bojonegoro, Aceh Besar, North Aceh and Serdang Bedagai— had established some kind of PPID in
accordance with FOI law (UU KIP) which requires all public institutions to set up PPIDs. Other areas had not
done so, perhaps understandably, because UU KIP‘s enabling regulation (PP No. 61/2010) set August
2011as the deadline for the establishment of PPIDs.1
Box 2.1 Functions and Role of Office for the Management of Information and Documentation (PPID)
An Office for Management of Information and Documentation (PPID) will be an office with responsibility
for the storage, documenting and provision of public information and/or the provision of freedom of
information services to the public. The role and responsibility of the PPID will be to manage the process of
providing freedom of information services, including processes relating to the storage, documentation, and
provision of public information and freedom of information services. The PPID will have the task of gathering
information from all areas of the public institution under the direction of the head of institution.
(Source: : Law No. 14/ 2008 and Central Information Commission Regulation No.1/2010)
Most local governments did not have standard operating procedures (SOP) for handling
freedom of information (FOI) requests. For the purposes of this study, a SOP was taken to mean
information issued by a local government on procedures to be followed by the public to gain access,
in a structured and institutionalized way, to public information, including on budgets. Only fifteen of
the areas studied had SOPs for handling FOI services—established by local government regulation or
otherwise. In four areas—the kabupatens of Garut and Sumedang and the cities of Blitar and
1 Article 21 paragraph (1) of Government Regulation No. 61/2010 (which entered into force on 23 August 2010) reads: ―PPIDs must be
established within one year, at the latest, of the entry into force of this regulation.‖
Already published Obtained by request within 1-10 working days
Obtained by request within 11-17 working days Obtained by request after more than 17 workdays
Produced but unobtainable Not produced
42
36
30
24
18
12
6
0
LKPJ
LPPD
RKPD
Perd
a P
TJ
pela
ksa
naan A
PBD
Lap. R
ealis
asi S
mt I
Perk
ada P
enj. A
PBD
P
Perk
ada P
enj. A
PBD
Ren
ja S
KPD
ke.
Ren
ja S
KPD
Pen
d.
Ren
ja S
KPD
PU
DPA S
KPD
Pen
d.
Perd
a A
PBD
P
Perd
a A
PBD
RKA S
KPD
Pen
d.
ILPPD
DPA S
KPD
PU
DPA S
KPD
Kes
.
RAPBD
RKA S
KPD
PU
RKA S
KPD K
es.
KU
A-P
PAS
Planning Discussionn
Implement-ation
Accountability
Graphic 2.6 Areas With or Without SOPs
for Processing FOI Requests
No
SOP for
FOI requests,
27
With SOP for FOI
requests,
15
Research Report
Local Budget Management Performance (KIPAD) 2010
21
Palembang—a head of government regulation (perkada) had been the vehicle.
C. Index of Transparency of Local Budget Management
Based on the above findings, the overall level of transparency of budget management of local
governments studied was categorized as adequate. Although no single area could be put in the
category of having a very good level of transparency, ten were classified as having a good level of
transparency. Highest on the list was the kabupaten of Bone, followed by the kabupaten of Serdang Bedagai
and the city of Pandang Panjang. In Bone researchers were able to gain access to all documents sought
within 1-10 working days of requests being lodged. The documents obtained included those which were
hard to access in other areas. They included revised budgets (APBD-Ps); implementing regulations for
APBD-Ps; and work and budget plans (RKAs) and budget implementation guidelines (DPAs) of local
departments of education, health and public works. Bone had also published its regional government work
plans (RKPD) and information reports on regional governance implementation (ILPPDs). The performances
of Serdang Bedagai and Pandang Panjang matched that of Bone, except that they took longer to provide
some documentation (11-17 working days).
Seventeen governments were classified as having an adequate level of transparency and fifteen as
having a poor level. Within the latter group the kabupaten of Wajo was ranked lowest. Not only had
many of Wajo‘s budget documents not been published, they had also not been made publicly available
even in response to formal freedom of information requests.
Research Report
Local Budget Management Performance (KIPAD) 2010
22
Graphic 2.7 Index of Transparency of Local Budget Management
Category Score
Very good level of transparency 100-84.17
Good level of transparency 84.16-67.98
Adequate level of transparency 67.97-50.24
Poor level transparency 50.23-0
11
Kab. Gorontalo Utara
Kota Palangkaraya
Bandar Lampung
Kab. Bondowoso
Kota Pekalongan
Kab. Bojonegoro
Kab. Pekalongan
Kota Palembang
Padang Panjang
Sumbawa Barat
Lombok Tengah
Kab. Sumedang
Kota Gorontalo
Kab. Situbondo
Kota Pontianak
Kota Semarang
Kab. Semarang
Kota Pare-‐‐Pare
Kota Surakarta
Lombok Timur
Kota Surabaya
Lombok Barat
Kab. Boyolali
Kab. Polman
Kab. Malang
Kab. Sleman
Kab. Cilacap
Kab.Kendal
Kota Banjar
Pekan Baru
Aceh Utara
Aceh Besar
Kab. Sidrap
Aceh Barat
Kab. Garut
Kota Blitar
Kab. Wajo
Kab. Bone
Kota Palu
Padang
Dompu
Sergai
0 10 20 30 40 50 60 70 80 90
29.5
32.4
35.2
35.2
40.0
41.0
41.8
42.4
42.4
43.8
44.3
48.6
48.6
49.0
50.0
51.4
51.9
52.9
53.3
55.2
55.2
55.7
55.7
56.2
56.4
56.9
58.1
59.5
62.4
63.6
64.8
65.7
68.1
68.8
72.6
73.6
74.3
75.7
78.1
78.5
79.9
81.7
Research Report
Local Budget Management Performance (KIPAD) 2010
23
Chapter III
Performance in Participation in Local Budget Management
Public participation is an important indicator of good governance. A participatory approach
demands that a government treats people as active participants in development activities and budget
management. That means that people should be involved in every decision making process. Indonesia‘s
legal regulatory framework guarantees the right of people to be involved in the formulation and
determination of public policy. Law No. 25/2004 concerning Development Planning Systems and Law No.
32/2004 concerning Regional Governance both provide for public participation in the development
planning process. It is every citizen‘s right to share responsibility for the public domain, for bringing
together issues of concern, for planning community agendas and for overseeing the performance of
elected representatives and governments to ensure that they faithfully discharge popular mandates. This
applies especially to political decisions on development and budgetary issues that impact directly on
people‘s welfare. Following are details of provisions in Indonesian law on public participation:
1. Article 53 of Law No. 10/2004 concerning Enactment of Legislation reads: ―The people shall
have the right to provide oral and written inputs for preparation and discussion of draft local
government laws and regulations.‖
2. Article 139 of Law No. 32/2004 concerning Regional Governance reads: ―The people shall have
the right to provide oral or written inputs for preparation and discussion of draft local government
regulations.‖
3. Article 2 paragraph (4) point d, Article 5 paragraph (3), Article 6 paragraph (2) and Article 7
paragraph (2) of Law No. 25/2004 concerning Development Planning Systems stipulate that
development planning shall make optimal use of the involvement of the people.
Two indicators were used to measure performance in facilitating public participation. Firstly, the
study looked at the extent of existing mechanisms for public participation and who was invited to use them.
Second, it examined the content of local government regulatory provisions on public participation in budget
management. Public participation indicators were based on answers to 15 questions in the research
instrument.
A. Mechanisms for Participation and Categories of Participants
Local governments still had only limited mechanisms for public participation in budgetary
processes. The only mechanism consistently used by local governments was what is termed
musrenbang (community consultations on development planning). Beyond that, executive branches of
local governments conducted very little public consultation when preparing draft budgets (RAPBDs),
Research Report
Local Budget Management Performance (KIPAD) 2010
24
revised budgets (APBD-Ps), basic documentation on budget policies and funding (KUA-PPASs) and
accountability documentation. That said, the study found that local legislative assemblies (DPRDs) were
starting to take the initiative in this area. They were consulting more widely than the executive by holding
public consultations on the documents referred to above. In fact, researchers found that 50% of DPRDs
were holding such public consultations before taking decisions on these documents. Of the three local
government departments surveyed, public works was worst at providing mechanisms for participation.
Research Report
Local Budget Management Performance (KIPAD) 2010
25
The kabupatens of Serdang Bedaga and Malang and the city of Padang were more innovative
than other areas in providing mechanisms for public participation in budgetary processes. These
three areas employed all the consultative mechanisms used in the study as measures of performance in
participation. These results show that overall people are being provided with increasing opportunities
to have a say in the formulation of local budget policies.
Graphic 3.1 Mechanisms for Participation Provided by 42 Governments Studied Public participation—especially of women, NGOs and delegates to community development
conferences (musrenbang)—was at its height during the musrenbang process but fell away when
discussion of budget documents (KUA PPASs and APBDs) commenced. Professional organizations
and institutions of higher education consistently played a greater role in any public consultation process
JNo.
of M
echanis
ms
use
i
11
10
Comments on LKPD Pub Cons (in DPRD) on PTJ APBD Public Consult (in DPRD) on RAPBD
Pub Cons (in DPRD) on KUA-‐‐PPAS Pub Cons on PTJ APBD Public Cons on RAPBD
Pub Consultations on KUA-‐‐PPAS Musrenbang Pub For Pub Works
Public Forum on Health Public Forum on Education
4
9
8
7
6
5
3
2
0
1
Kab. Situbondo
Kab. W
ajo
Kota
Palu
Kota
Goro
nta
lo
Kota
Pala
ngkara
ya
Kab. S
idra
p
Kota
Pare
-Pare
Kab. Goro
nta
lo U
tara
Ace
h B
ara
t Ace
h U
tara
Bandar Lam
pung
Lom
bok B
ara
t D
om
pu
Sum
baw
a B
ara
t Kab. Pekalo
ngan
Kab. Sem
ara
ng
Kota
Pekalo
ngan
Kota
Sem
ara
ng
Kab. Garu
t Pekan B
aru
Kab. Kendal
Kota
Sura
karta
Kab. Sum
edang
Kab. Bone
Lom
bok T
engah
Kab. Bondow
oso
Kab. Bojo
negoro
Kota
Sura
baya
Kab. Slem
an
Kota
Pontianak
Kab. Boyo
lali
Kab. C
ilaca
p
Kota
Banja
r Kota
Pale
mbang
Kab. Polm
an
Kota
Blitar
Ace
h B
esa
r Padang P
anja
ng
Lom
bok T
imur
Kab. M
ala
ng
Padang
Serg
ai
Percentage of Participation by Community Group
The h’capped other groups Womens groups
NGOs private companies musrenbang.
Professional organizations local assembles drafting team
Research Report
Local Budget Management Performance (KIPAD) 2010
26
than other community groups. A more complete picture is provided in Graphic 3.2.
Graphic 3.2 Community Involvement by Consultative Mechanism Provided
Public discussion of APBD
Pub. Part. in framing APBD
Public discussion of KUA-‐‐PPAS
Pub. Part. In framing KUA-‐‐PPAS
musrenbang
Public Works Cons
Public forums on education
pendidikan Public forums on education
0% 20% 40% 60% 80% 100%
Research Report
Local Budget Management Performance (KIPAD) 2010
27
Suggestions put forward during the musrenbang process were not taken up and funded. In the main,
musrenbang consultations were a formality used to hear what people wanted without any follow up in
terms of funding. More than 60% of governments studied did not provide indicative funding figures at
the sub-district (kecamatan) level (known as PIK). As a result, musrenbang discussions were just so much
hot air; and there was no one in a position to follow up on them to make sure that suggestions were
funded in APBDs. On the basis of the correlations carried out in this study, it emerged that governments
with PIKs in place (38% of those studied) tended to have more public participation than those without
them.
Graphic 3.3 Participation Indices of Areas with PIKs and Those without PIKs
B. Regulatory Provisions on Public Participation
Existing local government regulations provided a disappointing basis for development of public
participation in ways which met people’s needs. Although more than 60% of areas studied had
regulations in place ―guaranteeing‖ public participation in budgetary processes, public involvement was
nonetheless largely confined to development planning conferences (musrenbang). It was not so evident in
subsequent processes, where real budget negotiations occurred. Indeed this study concluded just that:
public consultation dropped away once budget cycles entered the discussion phase (Graphic 3.4).
Par
ticip
atio
n In
dex
Sco
re
40
70
60
50
30
20
10
0
Padang
Padang P
anja
ng
Kab. Bojo
negoro
Kab
. Boyo
lali
Kota
Banja
r Kota
Blit
ar
Serg
ai
Kab.
Sum
edang
Kota
Pontianak
Ace
h B
esa
r Kab
. Cila
cap
Kota
Sem
ara
ng
Kab. Sem
ara
ng
Kab
. Sid
rap
Kab
. G
oro
nta
lo U
tara
Ace
h B
ara
t Kab. Situbondo
Kota
Pala
ngkara
ya
Dom
pu
Kota
Goro
nta
lo
Kab
. W
ajo
Ace
h U
tara
Bandar
Lam
pung
Lom
bok B
ara
t Lom
bok T
engah
Pekan B
aru
Kota
Pare
-Pare
Kota
Palu
Sum
baw
a B
ara
t Kab. G
aru
t Kab. Bondow
oso
Kab
. Kendal
Kota
Sura
baya
Kab. Bone
Kab
. Sle
man
Kab. Polm
an
Kab. Pekalo
ngan
Kota
Pekalo
ngan
Kab. M
ala
ng
Lom
bok T
imur
Kota
Pale
mbang
Kota
Sura
kart
a
Had PIKs Did not have PIKs
Research Report
Local Budget Management Performance (KIPAD) 2010
28
Graphic 3.4 Areas Providing Mechanisms for Participation by Budget Cycle Phase (%)
The enactment of local regulations on public participation in budget planning did not of itself
increase public participation levels in areas studied. After comparing areas with such regulations and
those without them, researchers concluded that neither group stood out as having more or less public
participation in budgetary processes. One reason for this situation might have been that local regulations
were replications of central government regulations on participation in musrenbang processes. They did
not, therefore, provide a good legal basis for developing public participation in budget management
processes. Indeed there were indications that in some areas public participation was trending downwards.
Local governments generally provided mechanisms for taking people’s complaints on board. Thirty
nine (39) governments had established one or more of the following mechanisms: conduct of a specific
complaints-related activity; a special complaints unit; or a database for community complaints. 16 areas had
conducted special activities and 15 had established special units. But only 8 governments had set up special
databases for registration of people‘s complaints. Generally speaking none of these mechanisms was
enshrined in local regulations, so their continuation could not be guaranteed. The kabupatens of Sleman, Bone
and Sumedang and the city of Surakarta were each using all three of the above mechanisms.
C. Index of Participation in Local Budget Management
On average, the performance of governments under study in terms of public participation in
budgetary processes was disappointing. All but two areas surveyed—the cities of Padang Panjang and
Padang—were categorized as having a poor level of public participation. This situation was very worrying
because it showed that both national and regional legislative frameworks were too weak to foster greater
public participation in budget management processes.
The cities of Padang and Padang Panjang were ranked most highly for their levels of public
participation in budget management processes. This ranking for Padang was justified by the high
level of commitment of the city‘s executive and legislative branches of governments to using creative
ways to involve people in budget management processes. In addition to mechanisms for participation
laid down in government regulation, Padang held public consultations (or public hearings within the
DPRD) to encourage people to provide inputs for preparation of budgetary documents. But Padang
had no mechanism in place to accommodate community complaints about public services.
Nonetheless, these two areas used almost all public consultation mechanisms currently in use. Both
Public
Foru
m o
n h
ealth
Public
Foru
m o
n E
duca
tion
% o
f A
reas P
rovid
ing M
echanis
ms
for P
ublic
Part
icip
ation ,„
8
6
100
. 4 0
0
0
0
0
100
76
45 45______________________________
31 34 33
14
67_____________________________
57 52
Planning Discussion and Adoption
Musr
enbang K
ab/
City
Pub W
ork
s Fo
rum
Public
Cons
on K
UA-
PPAS (
in D
PRD
)
Public
cons
on k
KUA-
PPAS
Public
Cons
on p
erd
a on
APBD
(in
DPRD
)
Public
cons
on d
raft A
PBD
Public
Cons
on P
TJ
APBD
Pro
vidin
g F
eedback
on L
KPD
Public
cons
on d
raft reg o
n
Phi A
PBD
(in
DPRD
)
Accountability
Research Report
Local Budget Management Performance (KIPAD) 2010
29
also had a local regulatory framework supportive of public participation and mechanisms for
accommodating complaints from the community (sic). In addition they both had indicative funding
figures (PIK) by sector and geographical area, thereby guaranteeing that community suggestions could be
accommodated in budgetary processes.
There were more cities than kabupatens among the five areas rated most highly on the public
participation index. But that did not mean that cities studied were best at including people in budget
management processes. After all, several city governments were ranked in the middle and towards the
bottom of the index. The key factor determining an area‘s level of public participation was the level of
commitment of its government—be it city or kabupaten.
Research Report
Local Budget Management Performance (KIPAD) 2010
30
Graphic 3.5 Index of Performance in Public Participation in Local Budget Management
Category Score
Very good level of
participation
100-77.0
Good level of participation 76.99-66.33
Sufficient level of
participation
66.32-52.33
Poor level of participation 52.32-0
ka b
/cit
ies
Kab. Gorontalo Utara
Kota Palangkaraya
Bandar Lampung
Kab. Bondowoso
Kota Pekalongan
Kab. Bojonegoro
Kab. Pekalongan
Kota Palembang
Padang Panjang
Lombok Tengah
Sumbawa Barat
Kab. Sumedang
Kota Gorontalo
Kab. Situbondo
Kota Pontianak
Kota Semarang
Kab. Semarang
Kota Pare-‐‐Pare
Kota Surakarta
Lombok Timur
Kota Surabaya
Lombok Barat
Kab. Boyolali
Kab. Malang
Kab. Polman
Kab. Sleman
Kab. Cilacap
Kab. Kendal
Kota Banjar
Aceh Besar
Aceh Utara
Pekan Baru
Kab. Sidrap
Aceh Barat
Kab. Garut
Kota Blitar
Kab. Bone
Kab. Wajo
Kota Palu
Padang
Dompu
Sergai
0.00 10. 00 20. 00 30. 00 40.00 50. 00 60. 00 70.00 80. 00 90. 00 100.00
7.0
7.3
10.3
11.0
11.7
12.7
12.7
13.0
13.0
13.7
14.3
15.3
16.3
16.3
18.0
18.0
7.0
19.3
21.3
22.7
23.0
23.
26.7
26.7
29.7
30.3
31.3
31.7
33.7
34.3
36.0
37.7
39.0
39.0
39.7
42.0
44.3
mark
45.3
47.7
49.3
62.0
62.7
Research Report
Local Budget Management Performance (KIPAD) 2010
31
Chapter IV
Performance in Accountability of Local Budget Management
The principle of public accountability requires that local governments should be held to public
account for every policy they implement (including budget management policies). After all,
ordinary people are the rightful beneficiaries of government policies. This principle requires that
those responsible for implementing government policies and programs should be transparently accountable
to those affected by what they do. It is, after all, the latter group that is entitled by right to know how
government policies and programs have been carried out. Accountability also demands that a government
agency be prepared to receive a critique of both its successes and failures in fulfilling its mission to achieve
goals and targets set for it from time to time. Thus every government agency has the responsibility to
render an account of its management of resources at every stage of the process (from planning, through
implementation, to evaluation).2 Following are details of provisions in Indonesian law on public
accountability:
1. Article 23 of the 1945 Constitution: ―The State budget, as the basis of the management of State
funds, shall be determined annually by law and shall be implemented in an open and accountable
manner in order to best attain the prosperity of the people
2. Article 3 paragraph (1) of Law 17/2003 concerning State Finances: ―The State‘s finances shall
be managed in an orderly way, in accordance with the provisions of law, efficiently, economically,
effectively, transparently and accountably, keeping justice and propriety front and centre.‖
3. Article 23 paragraph (2) of Law No. 32/2004 concerning Regional Governance: ―The
management of regional finances referred to paragraph (1) shall be conducted efficiently,
effectively, transparently, accountably, correctly, justly, appropriately and in conformity with law.
4. Article 4 of PP No. 58/2005 concerning Management of Regional Finances: ―Regional
finances shall be managed correctly, in accordance with law, efficiently, effectively, transparently
and accountably, keeping in mind principles of justice, propriety and being of benefit to the
people.
Three indicators were used to measure the performance of local governments in the area of
2 See Max H Pohan‘s, Mewujudkan Tata Pemerintahan Lokal yang Baik (Good Governance) dalam Era Otonomi Daerah, a paper presented to
the third round of “large-scale consultations” on development in the area of Musi Banyuasin, Sekayu, 29 September–1 October 2000.
Research Report
Local Budget Management Performance (KIPAD) 2010
32
accountability. Firstly, the study assessed the timeliness of both production of local budget documents
and of decisions on them. Such timeliness was regarded as being a crucial part of budget management:
Not only did it affect program implementation and provision of public services; it also had a potentially
significant impact locally and could result in imposition of central government sanctions. Second, the study
looked at local government mechanisms for the supply of goods and services. This involved a close
examination of local government public tendering processes and the extent to which black-lists of
companies banned from tendering existed. Third, researchers reviewed national Audit Board reports on the
budgetary performance of governments surveyed.
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33
A. Timeliness
In assessing the timeliness of both production of local budget documents and decisions on them,
researchers were guided by existing legal provisions. Table 4.1 outlines deadlines set by current
central government regulations for both preparation and adoption of various budgetary documents.
Table 4.1 Regulatory Framework for Deadlines for Final Approval of Budget Documents
Document
Deadline for Final Approval
Basis in Law
RKPD
End of May
PP No. 58 / 2005 Art. 33 para (2)
Hm Affairs Min Reg. 13/ 2006 Art. 82
Para 2
APBD
The beginning of December immediately
preceding the start of the fiscal year
PP No. 58 / 2005 Art. 45 para (1)
Home Affairs Min Reg. 13/ 2006 Art. 104 Para
(2) APBD-P
3 months before the end of the fiscal year
Home Affairs Min Reg. 13/ 2006 Art. 172 Para
(5)
The timing of discussion of planning and budgetary documents is governed by the following
regulations:
Table 4.2 Regulatory Framework for Timeframes for Discussion of Budget Documents
Document
Submission Date
Basis in Law
KUA-PPAS
Start of June
Hm Affairs Min Reg. 13/
2006
RAPBD
First week of October
Home Affairs Min Reg. 13/ 2006
RAPBD-P
Second week of September
Home Affairs Min Reg. 13/2006 Art. 172 para (2)
The study showed that many budget documents were in fact finalized and submitted to local
legislative assemblies (DPRDs) in accordance with these prescribed timeframes. This situation
differed from the findings of KIPAD 2009, which found that many areas were slow to finalize their planning and
budgetary documents and that late presentation of documents meant that DPRDs did not have enough time
to discuss them properly. Thus KIPAD 2010 indicates that regional government efforts to implement
accountable fiscal management procedures have paid dividends.
Table 4.3 Proportion of Governments Meeting Deadlines for Final Approval of Budget
Documents
Document
Final approval date prescribed in law
Performance of governments studied
RKPD
End of May
50% of governments did not met this deadline:
approval and adoption occurred after May
APBD
The beginning of December before
start of current fiscal year
70% of governments met this deadline
APBDP
3 months before end of current fiscal
yearr (beginning of October)
Almost 80% of governments met this
deadline
LKPJ
To be submitted to DPRDs by the
month of June immediately after end of
fiscal year
More than 50% of governments did not meet
this deadline
The document outlining regional government work plans (RKPD) was the only budget document
which was, in most cases, not approved and adopted on time by local governments. This situation not
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34
only violated existing government regulations but also affected subsequent budget policy formulation
processes by holding up discussion and approval of other budget documents. In particular, given that
RKPDs are essential inputs in KUA-PPASs (basic policy documents on budget policies and spending levels),
their late appearance meant that KUA-PPASs were submitted late to DPRDs. And that impacted on
preparation and approval of subsequent budget documentation, including draft APBDs themselves. Despite
all that, only 17 of the governments surveyed observed legal deadlines for final adoption of RKPDs and
submission of the KUA-PPASs to DPRDs.
Even though in most cases draft APBDs were submitted late to local DPRDs, they were generally
submitted during October and thus were adopted and ratified as approved budgets (APBD murni) by
the December deadline. This same applied to revised budgets (APBD-Ps).
B. Mechanisms for Supply of Goods and Services
Local governments did not use a uniform system for the supply of goods and services. Most had
established procurement models as bases for provision of such goods and services. Only 13 of the
areas studied were found not to have such models in place. Although this was a small number, the lack
of procurement models warranted serious attention because their absence provided greater opportunity
for corrupt practices. Inadequate procurement
models could also open doors for corruption.
In general , local governments used
open public tenders . Tenders were
mostly advertised in the media, though
some governments used websites. Six
governments—the kabupatens of
Boyolali, Cilicap, Sleman and East
Lombok, and the cities of Pekalongan and
Surabaya—completed tender processes
online. That meant that those tendering
could obtain information and submit
tenders irrespective of their location. This
online approach was rated highly, given
that it provided very little, if any,
opportunity for corruption. It also meant
that direct contact between tender board
members and those tendering was very
limited.
Most governments had a price structure for
goods and services which was revised every
year. Such a structure, which was generally
enshrined in local head of government regulations,
was a basic reference point for supply of goods
and services. It placed a ceiling on the amount of
funding that would be used in supplying goods
and services in an effective, efficient and
accountable way. A fixed price structure also
limited the scope for malpractices like price mark-ups for a particular
good or service.
Public tenders not publicized
Public tender notices posted on a notice board
Public tenders advertised in the media
Public tenders advertised on a website, but tender process not
completed online
Public tenders advertised on a website and tender process
completed online
2
2
30
2
6
0 10 20 30
Number of Kabupatens/Cities
0 2 4 6 8 1 0 1 2 1 4 1 6
No information held on black listed companies
perusahaan
Did not supply or publish information
Yes, supplied information, but did not publish it.
Yes, supplied information and published it online or in media
10
15
14
No of Kabupatens/Cities
Graphic 4.1 Ways Used to Advertise Public Tenders in 42 Kabupatens/Cities Studied
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35
The study also showed that in general local governments either had no information on companies
black listed from supplying goods and services or did not publish information they held. In fact, 15
governments had not even heard of the black listing procedure, even though it has been part
of Indonesian law since the appearance of Presidential Regulation No. 54/2010 concerning the
Provision of Goods and Services. That regulation spelt out clearly that companies which performed
badly in supplying goods and services should be placed on a black list; that, once black-listed, companies
could not take any part in supplying goods and services for two years; and that black lists should be made
public.
C. Opinion of National Audit Board
An examination of national Audit Board (BPK) opinions on the financial management of local
governments studied revealed quite a change since KIPAD 2009. That report recorded that five
governments in East Java had received ―disclaimer opinions‖ (no opinion offered). In 2010 most
governments studied received ―qualified opinions‖; four received ―disclaimer opinions‖; and one an
―adverse opinion‖. All areas in East Java included in KIPAD 2010 received ―qualified opinions‖.
Although most governments studied received quite favorable BKP opinions, an important body of
work remains to be done by DPRDs in overseeing follow up on BPK findings. Researchers suspected
that many local governments took no follow up action at all on BPK findings, which were non-binding.
Thus, in their role as institutions charged with oversight of local government, DPRDs should exercise control
over governments‘ follow-up on audit reports. One way of doing that would be to encourage local
governments to accept that such follow-up should be obligatory. What Semarang has done in this area is a
good case study for all concerned (see Box
4.1). Graphic 4.2 Availability of Black Lists of Companies in 42 Kabupatens/Cities Studied
3
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36
Box 4.1 Semarang follows up on Findings in National Audit Board (BPK) Opinions
On the initiative of the City of Semarang‘s DPRD, the local government regulation (perda) on Accounting for the
Implementation of the 2009 APBD, as finally adopted, contained a provision on the need for the government to
take follow up action on the BPK‘s audit report on the 2009 budget. This measure represented a formal move by
the legislature to get the executive to genuinely follow up on BPK reports, bearing in mind that previous BPK
findings had vanished into thin air without any follow-up at all. By incorporating a requirement for such follow-up
into a perda, the DPRD will be able to verify whether or not government has taken the BPK‘s findings on board.
Some of those findings were referred to specifically in the perda concerned:
Provision of land for a water retention pond potentially costing Rp 2.7 billion more than the price
determined in the appraisal process.
Inclusion, without supporting evidence, of an amount of Rp 17 billion as tax owing for advertising.
Source : Ari Purbono, Presentation on Monitoring the Audits of Local Budgets, 2011
D. Index of Accountability of Budget Management
On average local governments studied were found to have an adequate level of accountability in
their financial management. Just two areas (the kabupaten of Sleman and the city of Pekalongan) were
assessed to have displayed a very good level of accountability, six others a poor level and the remainder
either adequate or good levels.
Sleman came in at the top of the list for the level of accountability in its budget management.
Factors supporting that ranking were its timely processing of six of its nine key budget documents and
its use of an online process for advertising and processing public tenders, supported by a black list of
companies ineligible to tender and a goods and services price structure revised annually. That said,
Sleman was still not using a ―one stop shop‖ approach to the provision of goods and services.
The city of Pekalongan was ranked second highest for its accountability performance in budget
management. Factors supporting that ranking were its timely processing of seven of its nine key
budget documents and its use of an online process for advertising and processing public tenders,
supported by a black list of companies ineligible to tender and a goods and services price structure
revised annually. That said, Pekalongan was still not using a ―one stop shop‖ approach to the provision
of goods and services and it received a qualified opinion from the national Audit Board.
City governments dominated the top half of the index of accountability in local government financial
management, while kabupaten governments dominated the bottom half of the list. However, one
cannot draw the conclusion from this that city governments were more accountable than kabupaten
governments, but it indicates that relatively more assistance in the area of accountability should be
provided to kabupaten governments. The same consideration emerges in a comparison of governments
on Java and those outside Java, with the former dominating the top half of the list and the latter the
bottom half.
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Graphic 4.3 Index of Performance in Accountability of Local Budget Managemen
Category Score
Very good level of
accountability
100-85.98
Good level of
accountability
85.97-69.85
Adequate level of
accountability
69.84-52.42
Poor level of
accountability
52.41-0
0 10 20 30 40 50 60 70 80 90 100
kab/ c
ity
Bandar Lampung
Kab. Bondowoso
Kota Pekalongan
Kab. Pekalongan
Kota Palembang
Padang Panjang
Lombok Tengah
Sumbawa Barat
Kota Gorontalo
Kota Semarang
Kota Pare-‐‐Pare
Kota Surakarta
Kota Surabaya
Lombok Barat
Kab. Cilacap
Aceh Besar
Aceh Barat
Kab. Garut
Kab. Bone
Kab. Wajo
Dompu 30.3
42.0
43.7
47.3
51.7
51.7
52.7
53.3
53.3
55.3
56.7
60.0
60.0
60.0
62.0
62.7
64.7
66.0
66.3
66.7
66.7
67.7
68.3
69.0
69.0
69.3
70.3
70.3
70.7
72.7
72.7
73.0
73.7
75.0
75.0
78.3
78.7
79.3
82.0
83.0
86.0
87.0
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38
Chapter V
Performance in Promoting Equality in Local Budget Management
Indonesia’s regulatory framework stipulates that gender mainstreaming (GM) should occur in all
aspects of national development including budgetary policies. Presidential Instruction (Inpres) No.
9/2002 provided the legal basis for GM in Indonesian law. Several other legal instruments enacted since then
have reinforced that presidential decision, as follows:
1. Regulation of the Minister for Home Affairs No. 15/2008 on General Guidelines for the Implementation
of Gender Mainstreaming in Regions.
2. Joint Circular Letter of the Ministers for Finance, Home Affairs and National Development
Planning on representation of womens groups in the implementation of development planning
at the village, sub-district (kecamatan) and kabupaten/city level.
Two indicators were used to measure performance on gender equality in budget management.
Firstly, the study looked at the extent to which institutional mechanisms for womens participation had been
put in place by local governments. Second, it considered the degree to which GM had become part and parcel
of local governments‘ budget management processes.
A. Special Mechanisms for Womens Participation
Many local governments had still not set up special institutional mechanisms to encourage
womens participation in government. Participation by women in development planning conferences
(musrenbang) was dominated by womens groups involved in promoting family welfare (PKK) rather than
individual health sector female workers (for example from integrated health service posts (posyandu)).
More than 60% of governments studied included PKK groups and NGOs focusing on womens issues in
musrenbang processes. By contrast fewer than 30% included representatives of posyandu staff and
informal female groups. Only 40% involved female representatives of tertiary education institutions
(which are important agents of gender mainstreaming)—perhaps not surprisingly, given that not all
areas have local centers of higher learning that include a womens affairs unit. The city of Semarang and
the kabupaten of Bone had established mechanisms for womens participation and had enshrined them
in local government regulations.
B. Institutionalization of Gender Mainstreaming
Most governments had not established institutional mechanisms required by law to
implement gender mainstreaming (GM). Minister of Home Affairs Regulation No. 15/2008 on
General Guidelines for Implementation of Gender Mainstreaming in Regions stipulates that , in order to
hasten GM, regional governments should establish GM working groups (abbreviated to pokja PUG),
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39
which includes the heads of all
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40
local government departments. One task of these
GM working groups is to form a network of GM
focal points which must be appointed in each local
government department. Local governments are
also required to form a Gender Responsive Budget
team to integrate gender considerations into
budget processes. But these regulations were
observed in the breach by most governments
studied.
Although some areas had put in place required
gender mainstreaming (GM) mechanisms,
more than 60% had nonetheless failed to
disaggregate data on education and more than
75% had not done so in regard to health.
Researchers also found that, even
where disaggregated data was available, it
was not very often used in drafting
education or health work plans. In fact,
fewer than five governments made use of
disaggregated data. The ill effects of not
using disaggregated data were evident in
both the health and education sectors. In
the latter case, it affected policies on 9
years-of-obligatory-schooling and abolition
of illiteracy (Graphic 5.2).
Gender analyses were not used in
formulating local government work
programs most notably in the education
and health sectors. Only around 10% of
governments studied used gender analyses for
health sector programs and, even more sadly,
fewer than 5% did so for education programs.
In more than 70% of governments studied, the gender mainstreaming (GM) working groups that had
been established did not formulate annual action plans and had
insufficient money to fund their operations. This indicated
that governments were not supportive of a high level of
performance by GM working groups.
In most governments studied, fewer than 20% of local
government departmental heads were women. The data
available for this study indicated that in 18 governments fewer
than 10% of local government departments were under the
charge of women; in 15 others between 10 and 19.9% were led
by women; and in very few did the percentage of female
departmental heads exceed 20% of all local departments
(Graphic 5.3). Indeed two areas had not one single female
Graphic 5.1 Establishment of GM Mechanisms
42
36
30
24
18
12
6
0
Not yet set up
Already set up
GM Bud.Team/GM Focal Pt/ GM Work Grp
Num
ber
of kab/ci
ties
Graphic 5.2 Use of Disaggregated Data for Certain Programs
9 years at school
illiteracy
Infectious diseases
0 10 20 30 40
Number of Kab/Cities
Kabupaten/Kota Government included and used disaggregated data
Government included but did not use disaggregated data Government neither included nor used disaggregated data
Government did not possess disaggregated data
No. of K
abupate
ns/
Citie
s
Graphic 5.3: Departments Headed by Women (%)
20
16
12
4
8
0
% of Female Dept. Heads
2
Depts.
6
14
18
2
> 30% 20-30% 10-19.9% <10%
None
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Local Budget Management Performance (KIPAD) 2010
41
departmental head between them. The city of Pontianak was one area that had women heading up more
than 30% of its local government departments (see Box 5.1)
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42
Box 5.1 The City of Pontianak Promotes Gender Equality in Government
In an effort to promote gender equality within its government, the city of Pontianak made gender equality part
of its Medium Term Local Development Plan‘s vision and mission. It planned in particular to increase the
number of female heads of department. In 2010 30% of Pontianak‘s local departments were headed up by
females. By 2011, 6 of its 13 departments had women departmental heads: the Department of the
Empowerment of Females & Children and Family Planning, the Department of Cleanliness, the Department of
Tourism, the Department of Cooperatives and Small & Medium Size Enterprises, the Department of Social
Affairs and Manpower and the Local Civil Service Board.. Of Pontianak‘s total civil service workforce of 7 242,
females number 4 477.
C. Index of Performance in Promoting Gender Mainstreaming
The kabupaten of Serdang Bedagai topped the list of governments studied for performance in
promotion of gender equality in budget management. That ranking was supported by (i) its having
established all three of the legally mandated mechanisms for gender mainstreaming (GM) (a Gender
Responsive Budget Team, a GM Working Group and GM Focal Points), (ii) its having government
regulations and local legislative assembly (DPRD) standing orders in place on female participation in
budgetary discussions and (iii) its provision of a special mechanism for accommodation of complaints by
females.
Overall, the average performance of the 42 governments studied in promoting gender equality in
economic management was assessed as poor. Only four—the kabupatens of Serdang Bedagai, Kendal
and Malang and the city of Padang—were categorized as ―adequate‖, while the other 38 were graded as
―poor‖. Under this heading, researchers detected no difference of performance between cities and
kabupatens or between governments on Java and those outside Java.
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Graphic 5.4 Index of Performance in Gender Equality in Local Budget Management
Category Score
A very high level
of responsiveness
100-85.98
A good level of
responsiveness
85.97-69.85
A sufficient level of
responsiveness
69.84-52.42
A poor level of
responsiveness
52.41-0
Kab. Gorontalo Utara
Kota Palangkaraya
Bandar Lampung
Kab. Bondowoso
Kota Pekalongan
Kab. Bojonegoro
Kab. Pekalongan
Kota Palembang
Padang Panjang
Sumbawa Barat
Lombok Tengah
Kab. Sumedang
Kota Gorontalo
Kota Pontianak
Kota Semarang
Kab. Situbondo
Kab. Semarang
Kota Pare-‐‐Pare
Kota Surakarta
Lombok Timur
Kota Surabaya
Lombok Barat
Kab. Boyolali
Kab. Polman
Kab. Malang
Kab. Sleman
Kab. Cilacap
Kab.Kendal
Kota Banjar
Pekan Baru
Aceh Utara
Aceh Besar
Kab. Sidrap
Aceh Barat
Kab. Garut
Kota Blitar
Kab. Wajo
Kab. Bone
Kota Palu
Padang
Dompu
Sergai
0 10 20 30 40 50 60 70 80 90 100
13.2
14.6
15.6
17.6
17.6
17.8
19.2
20.8
21.4
22.2
22.2
22.6
22.6
22.8
25.4
26
26.8
29
29.2
30.6
31
33.2
35.8
36.4
38
38.8
39.4
40.4
40.8
41.4
42.2
43.2
43.2
43.2
skor
48.8
49.2
50
52.2
55.2
55.2
55.6
62.2
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Chapter VI
Performance in Local Budget Management
Overall principles of good governance were not
an integral part of budget management
performance of governments studied. Of the
scores included in the index for each good
governance principle included in the study, scores
for public participation and gender equality were
lower than those for public accountability and
transparency. These results showed no change since
KIPAD 2009. Binding legislation on transparency and
accountability and central government incentives
encouraging transparency and accountability
contributed to governments scoring more highly in
these two areas, even though scores were still below
expectations. As for public participation, it was only
in evidence at the planning stage (musrenbang) and
not at later stages of the budgetary process.
Of the 42 kabupatens and cities surveyed only 15 were categorized as observing principles of
good governance to an adequate level. Not one single government studied was able to be
categorized as observing such principles to a very good or good level. Governments classified as being
poor at observing principles of good governance outnumbered those judged to be observing such
principles to an adequate level.
The city of Padang Panjang was ranked highest among the 42 areas for its overall budget
management performance. That ranking was supported by its top ranking for ―transparency‖ and ―public
participation‖ and relatively high ranking under the other two headings as well. The same could be said of the
kabupaten of Serdang Bedagai, ranked second after Padang Panjang. It was ranked first for gender equality
and also ranked highly in the other three areas.
The kabupatens of Wajo and Dompu occupied the lowest two positions on the index for overall
budget management performance. The difficulty experienced in gaining access to information from
these two governments led to their poor scores for budget transparency. Their scores under other headings
were also poor.
A quite significant gap separated governments at the top of the index from those at the bottom. The
difference between Padang Panjang‘s score (68,3) and that of Wajo (26,8) was 41.5, which showed that
Graphic 6.1 Performance in Local Budget Management Based on Good
Governance Principles Transparency
100
56.0
80
60
40
20
Equality
33.6
0 26.8
65.5
Accountability
P’cipation
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local governments studied varied widely in their application of good governance principles in budgetary
processes. One reason for this situation might have been that governments were observing the
principles, but inconsistently and sporadically. Thus an area may have performed well in transparency,
but not so well in accountability, participation and gender equality or some other variation of the same.
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Graphic 6.2 Index of Performance in Local Budget Management
Category Score
V. good level of
observance
100-85.98
Good level of observance 85.97-69.85
Adequate level of
observance
observanceobservanceficie
ntly observing
69.84-52.42
Poor level of observance 52.41-0
Kab. Gorontalo Utara
Kota Palangkaraya
Bandar Lampung
Kab. Bondowoso
Kota Pekalongan
Kab. Bojonegoro
Kab. Pekalongan
Kota Palembang
Lombok Tengah
Padang Panjang
Sumbawa Barat
Kab. Sumedang
Kota Gorontalo
Kab. Situbondo
Kota Pontianak
Kota Semarang
Kab. Semarang
Kota Pare-‐‐Pare
Kota Surakarta
Lombok Timur
Kota Surabaya
Lombok Barat
Kab. Boyolali
Kab. Polman
Kab. Malang
Kab. Sleman
Kab. Cilacap
Kab. Kendal
Kota Banjar
Aceh Besar
Aceh Utara
Pekan Baru
Kab. Sidrap
Aceh Barat
Kab. Garut
Kota Blitar
Kab. Wajo
Kab. Bone
Kota Palu
Padang
Dompu
Sergai
0 20 40 60 80 100
Index for Budget Management Performance
26.8
30.4
31.0
31.3
33.6
33.9
35.3
36.0
36.5
38.2
38.9
41.2
41.8
42.6
42.6
43.0
43.7
43.9
43.9
44.2
44.7
44.8
45.2
46.1
46.4
50.1
50.5
52.8
52.8
53.5
54.8
56.3
58.4
58.6
59.3
59.7
59.9
63.7
63.8
64.7
67.8
68.3
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There was no significant difference between the performance of cities and kabupatens, as
budget management practices of both groups reflected a poor level of respect for principles of
good governance. 57.7% of the 26 kabupatens studied failed to observe such principles, while the
remaining 42.3% were categorized as observing them adequately. In the case of the 16 cities studied,
68.8% fell short of observing those principles, while 31.2% observed them to an adequate level.
Table 6.1 Proportion of Kabupatens and Cities Adequately Observing or Poorly Observing
Good Governance Principles
Area
Points of Comparison
Total Observing good governance
principles adequately
Poor level of observance of good
governance principles
kabupaten 11 (42.31%) 15 (57.69%) 26 (100%)
city 4 (31.25%) 12 (68.75%) 16 (100%)
There was also no significant difference in the performance of governments located on Java and
those outside Java. In both cases governments tended to be poor observers of good governance
principles: 61% of the governments on Java fell into that category, as did 62.5% of those located outside
Java.
Table 6.2 Proportion of Governments by Area Adequately Observing or Poorly Observing
Good Governance Principles
Location of Area
Points of Comparison
Total Observing good governance
principles to an adequate level
Poor level of observance of good
governance principles
on Java 7 (38.89%) 11 (61.11%) 18 (100%)
outside Java 8(37.50%) 16 (62.50%) 24 (100%)
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Chapter VII
Recommendations
Drawing on the findings of this study, we make the following recommendations:
1. For the Central Government and Provincial Governments:
This study can serve as a resource document for central and provincial government
monitoring and evaluation of budget management performance in kabupatens and cities.
Central and provincial governments could use the report‘s findings to draw up action plans for
improving kabupaten and city budget policy formulation and bolstering their capacity to manage
budgets more effectively. For example, a particular emphasis could be on enhancing public
participation and gender mainstreaming during more substantive parts of the budget cycle.
As follow-up on Central Information Commission (KIP) circular letter No.1 of 2011, making it
clear that regional governments‘ budget and work plans (RKAs) and budget implementation
checklists (DIPAs) are public documents, the central government and KIP should similarly
declare that RKAs and DIPAs of regional government departments (SKPDs) are also public
documents.
The central government should ensure that regional governments establish FOI offices (offices for the
management of information and documentation (PPID)) and standard operating procedures (SOP) for
servicing FOI requests. This should be done in anticipation of increasing numbers of FOI requests and
as an sign of good faith that people can expect to be have their FOI request met.
Central government budget-related incentives have worked well as catalysts for improved
budget management by regional governments. Incentives should, therefore, be broadened
beyond current incentive earners: timeliness of budget approval and good quality budget audit
reports. Other incentives could be developed to reward innovative approaches to enhance
budget transparency, public participation and gender mainstreaming in regional budgetary
processes.
The central government should encourage regional governments to go beyond merely involving
the general public in development planning via musrenbang. Regional governments should be
encouraged to develop additional ways to enhance popular participation in budgetary processes,
for example by providing indicative spending figures (PIKs) during sub-district musrenbang
meetings.
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The central and provincial governments should encourage and help kabupatens and cities to learn
from each other. This would mean that regional governments with below par budget management
records could learn from colleagues who are doing better. Learning from other regional
governments with first-hand experience of regional budgetary processes would be more effective
than being told what to do by the central government, provincial governments or institutions of
higher learning—none of whom has hands-on experience of implementing kabupaten or city
budgets.
2. For Kabupaten and City Governments:
It is hoped that kabupaten and city governments surveyed in this report will take from it an
understanding of their respective strengths and weaknesses and will be motivated to implement
reforms to improve their budget management practices. Regional governments not directly
studied in this survey could also use it to assess their own budget management processes against
the criteria used in this study.
This study was based on a comparison of kabupaten and city governments and not one of them can
claim that it cannot lift the level of its budget management performance. It is hoped that regional
governments studied will learn from each other but especially from those who scored most highly in
the survey. A government could do that either by way of direct contact with another regional
government or (preferably) with help from central/provincial governments.
Local governments should immediately put in place mechanisms for the management of FOI
requests, including FOI offices (offices for the management of information and documentation
(PPID)) and standard FOI procedures. These steps are needed to meet increased numbers of FOI
requests and as a sign of good faith that FOI requests will be granted.
Provision of indicative funding levels (PIK) at sub-district development planning forums
(musrenbang) and holding other forms of public budgetary consultations would enhance public
participation in budgetary processes. Thus regional governments should undertake to provide PIKs
at musrenbang sessions and should develop new mechanisms for public consultations on budgets in
accord with local conditions and culture.
To speed up the process of gender mainstreaming (GM) in budget policies regional governments
need to have disaggregated data available. They should also be committed to strengthening GM
institutional support (GM working groups, GM focal points and gender responsive budget teams).
Such mechanisms would underpin regional government efforts to integrate GM into formulation of
budget policies.
Regional governments should all immediately put in place an online system for public tendering for
supply of goods and services, thereby minimizing the risk of fraud in that area of government
activity.
3. For Civil Society Groups
Civil society groups should lodge greater numbers of FOI requests on behalf of ordinary people—
especially for budgetary information directly impinging on their needs. Such action would help to
sure up the general public‘s FOI rights.
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Civil society groups‘ budget advocacy should no longer focus on participation in development
planning (musrenbang) but should be broadened to include public participation in other segments
of budget cycles such as budget discussion, implementation and accountability.
Civil society budget advocacy groups should move quickly to cooperate with gender
equality advocacy groups so that together they can hasten the process of making
budget appropriations more gender sensitive.