Cost Effective Institution Practices in Indonesia: Case Study of Badung Regency Government

Abstract

This study tries to explore the practices of cost effective institutions (CEI) in the Badung district government through two approaches, namely the cost-reduction approach and the cost-control approach. This research is a descriptive research with qualitative method. The selection of research loci in Badung Regency was carried out through the Regional Fiscal Capacity Map (KFD) and the Regional Fiscal Independence Index (IKF) Map which showed very developed and good conditions so that they could serve as examples for other local governments in Indonesia. The data collection was carried out by in-depth interviews in two groups, namely the government group and the public group. The results of this study conclude that in principle the Badung Regency Government has implemented a Cost Reduction and Cost Control mechanism with a fairly good implementation strategy and method. However, not all components can be fulfilled according to the ideal concept of Cost Effective Institutions that has been mentioned in Hickel (1993). In general, at least three main stages of CEI implementation practices were found, starting from the planning stage, implementation stage, and monitoring and evaluation stage. There is not much difference between theory and practice, only the model created from the findings of this study reflects the detailed characteristics of budget management in the Badung Regency Government. This study recommends the application of CEI as an approach that is able to encourage the creation of local government functions with a spending control mechanism in order to achieve optimal performance.