How to Improve Transparency and Accountability in the Budget Process in Indonesia?

IAP Assessment Task: Research Project

Improving Transparency and Accountability in The Budget Process in Indonesia

Student Name                : Brima Ferry Ferdianto

Student ID Number        : 28061012

Class                        : A

Course        : Monash University IAP Program

Teachers        : Angus Giles and Hai Nguyen

Research Question:

How to improve transparency and accountability in the budget process in Indonesia?

Corruption has many faces, from fraud and budget misuse to bribery. According to the report from nongovernmental organisation Indonesia Corruption Watch (2015), the number of corruption cases rose 12% in 2014. There are 629 cases of corruption and more than 1,300 people were named suspects. As a comparison, there are 560 cases of corruption involving 1,271 suspects in 2013. These corruption cases cost Indonesian citizens as taxpayers an estimated 5.3 trillion rupiah (roughly AUD $530 million) in 2014, decreased from 7.3 trillion rupiah (roughly AUD $730 million) in 2013. Corruption remains as the crucial problem in Indonesia despite reforms and the transition to democracy in 1998 (e.g. decentralisation, the establishment of an anti-corruption agency, etc.). One of the main causes for corruption is that Indonesia rich in resources and corruption is likely to occur when government officials and politicians have discretion in allocating the resources. A budget is an important tool of a government which helps allocate the resources to the priorities of a nation. Through the budget, the government plans how to raise revenues and spend money to meet the various needs of its people which are sometimes conflicting objectives. Effective parliament role and public participation in the budget process establishes checks and balances that are crucial in a transparent and accountable government. Indonesia can improve transparency and accountability in the budget process by opening access to budget information and the budget process, empowering citizens to participate and improving the capacity of Indonesian Parliament to scrutinise the budget.

First of all, the Indonesian government needs to promote the open access to information in the budget formulation process. Carlitz (2013) suggests that there are factors which need to be considered to enhance transparency and accountability in the budgeting process. Firstly, forming coalitions between civil society or forming partnerships with the government body. Secondly, increase the demand for information related to the budgeting process. Thirdly, formal or legal empowerment to access the information. Lastly, international supports to increase the public initiatives. It is also important to legalise the public’s participation and guarantee their access to relevant information. The Ministry of Home Affairs Regulation (2006) was the legal base for public participation and the bottom-up budgeting process as it requires the government officials to publish and disseminate the budget draught before it is given to the parliament. However, the information about the budgeting process cycle is still limited to the public. Budget documents have been and still are considered confidential documents. Government officials are reluctant to share information with the public, particularly about the expenses budget. Even not all members of the parliament may have a full information of the budget. According to the Open Budget Survey conducted by The International Budget Partnership (2015) the Indonesia’s score of Transparency in the Open Budget Index was 59 out of 100. Therefore, Indonesia should improve transparency in the budget process by publishing a pre-budget statement, and increase the comprehensiveness of the budget proposal and the year-end report.