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Business interests hold sway over local budgets

Source
Jakarta Post - February 10, 2006

Ibrahim Zuhdhy Fahmy Badoh, Jakarta – Every year, from November to December, the budgeting process in local governments enters its final stages. Intensive negotiations take place in drafting the next year's budget between local executives and legislative councils. Both sides try to get the best possible outcome, supposedly in the interests of the people they represent.

Although their official position is to represent the interests of the people, local legislators, however, often act more in their political party's interests. Meanwhile, corrupt bureaucrats are always ready to accommodate the political parties' interests for their own benefit.

We know that the process of planning and budgeting is strongly influenced by business interests since the processes of local government involve very large expenditures, in areas like education, health, infrastructure and other basic services sectors.

Many businessmen are ready to bribe local officials and legislators in order to win project contracts. Corruption at this level is large scale, with the money being distributed to officials, political parties, or persons who could make trouble if they do not receive a portion of the embezzled money.

Then the project budget is marked up. The percentage of mark up is often up to 200 percent, and tragically the projects have no real benefit for local people.

The budget corruption then continues to the next step. At the level of discussion between the executive and local council, business interests try to influence the council budget committee, mostly through bribery or by promising commissions.

Bad budgetary processes are crucial issues in the discourse concerning decentralization and local governance in Indonesia. The ongoing process shows the power of oligarchy influencing the local development process. Oligarchy prevents people from participating in the budgetary process, and denies people the right to information. As the result, people suffer from bad public services and low quality public facilities.

The interests of party elites penetrate deeply and influence the policies of their representatives in the legislative council. Local legislators are forced to give benefits to cronies who gave money to the party during the last elections.

Such collaboration creates a political-business oligarchy. The power rotates only among a small number of elites. In the larger context, this collaboration is used to get economic concessions and to pay for political and legal protection.

Prior to the revision of the Law on Regional Government, people were enthusiastic. They had hoped that with the revision to the law that the budget planning process would allow greater public participation. But in fact, the process continues to be monopolized by local government officials and politicians.

The process of budget planning is very important. People must be allowed to be involved and informed so they can argue and protest whenever they find misallocation of resources or indications of corruption. Nowadays, local people often ask about the relationship between the people's forum (forum warga) and the local budget. Every year, local government facilitates the forum, but it is rare that its recommendations are accommodated in the budget.

Bad governance in local budgeting is worrying. The recent situation indicates that the level of systemic budgetary corruption is growing. The accumulated money is often used to buy political protection and to influence the judiciary.

The central government must pay attention to this situation by undertaking annual evaluations. The impact of local budgets on quality of services must be measured. On the other hand, the regulations on budgets must also must be revised.

There's no more effective way to monitor local government than direct monitoring by the community. Creating available space for people to participate in the budgeting process would be the best way to minimize budget corruption.

[The writer is coordinator of the political corruption department, Indonesia Corruption Watch.]

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