Participatory Planning and Budgeting in Decentralised Indonesia: Understanding Participation, Responsiveness and Accountability

Abstract

Decentralisation has been implemented in Indonesia for almost two decades. However, recent studies suggest that service delivery has remained stagnant and unsatisfactory. Studies on the effects of democratic decentralisation, particularly elections, on service delivery have shown mixed results. Literature suggests that elections alone often fail to improve government responsiveness and accountability. Participatory institutions are needed to channel citizens' demands to local governments and to monitor government activities in between periodic elections. Citizen participation is mandatory in setting development priorities for local government budgets in Indonesia. This participatory process is called Musyawarah Perencanaan Pembangunan (Musrenbang) or development planning consultation. Musrenbang is a set of participatory processes implemented from the village to the district level.

Local governments in Indonesia can decide on the institutional design of participatory planning processes based on their own contexts. In general, there are three main types of participatory planning in Indonesia. The first type only involves citizens in setting development priorities. The second type integrates participatory planning with the budgeting processes through the implementation of Subdistrict Indicative Funding Ceiling (PIK), the project allocation of which is decided through participatory mechanisms at the village and subdistrict level. The third type not only implements PIK but also establishes Musrenbang Delegates Forum (FDM) whose members are selected from ordinary citizens to be involved in formulating government work plans and budgets, as well as in monitoring budget implementations.

This thesis examines these institutional designs. It focuses on the following questions: How do different institutional designs of participatory planning and budgeting affect local government decisions on budgets? How do institutional designs affect citizen participation? How do accountability mechanisms work in each design? Does the devolution of funding to the subdistrict level through participatory budgeting improve service delivery?

This thesis employs both qualitative and quantitative methods: a comparative case study based on the fieldwork in four districts; and synthetic control methods to assess the effects of participatory budgeting on local government's service delivery performance. This thesis argues that districts that integrate participatory planning with the budgeting processes have improved their responsiveness. In contrast, Musrenbang that were not integrated with the budgeting processes often served merely as a consultative arena. However, the characteristics of the participants in the four districts remained stagnant, and Musrenbang merely consolidated existing networks of authority and privilege.

The synthetic control methods found that there is some evidence that participatory budgeting in Sumedang, one of the districts studied, improved the net junior high school enrolment rate for the overall population. There is also some tentative evidence of improvement on household access to safe sanitation and the percentage of births assisted by skilled health staff for the third quintile of per capita expenditure; as well as on the net junior high school enrolment rate for the fifth quintile compared to the counterfactual.

This thesis, firstly, fills a gap in the study of decentralisation in Indonesia by analysing participatory institutions that have previously been overlooked. Secondly, it develops a resource distribution typology based on how the interactions between participatory, technocratic, and political processes shape resource distributions. Thirdly, it fills a gap in social accountability literature by examining long-term social accountability mechanisms under participatory planning and budgeting. Fourthly, it contributes to the few studies that investigate the effects of participatory budgeting on service delivery.