Examining Indonesian Local Government Financial Reports through the Lens of New Public Financial Management

United Kingdom – The Indonesian Association of Islamic Economists in the United Kingdom (IAEI-UK) continued its series of academic forums by hosting an online discussion on Monday, 15 December 2025, titled “Examining Indonesian Local Government Financial Reports in the Context of New Public Financial Management.” The session was held virtually and featured Sarimin, a Postgraduate Researcher at Cardiff University and Head of the Internal Affairs of IAEI UK, as the main speaker. Drawing on both academic literature and empirical observation, the session aimed to critically examine how financial reports of Indonesian local governments reflect (or fail to reflect) the principles of New Public Financial Management (NPFM).

Sarimin began by outlining the background and motivation of the study. He referred to recent public debates and media criticism surrounding local government financial management, particularly in regions such as Tangerang Selatan and Depok, which have exposed persistent issues of accountability and transparency. These concerns, he argued, are not merely technical or administrative, but indicative of deeper institutional problems in how public financial information is generated, measured, and communicated to society. He also highlighted broader critiques of reform models driven by technocratic compliance and consultancy-led approaches, which often prioritise form over substance.

The presentation emphasised the central importance of accountability in public financial management. Transparent and accessible financial reporting is essential for ensuring responsible use of public resources and for maintaining public trust. In Indonesia, the Indonesian Financial Management Index (IPKD) has been developed as a key instrument to assess and encourage transparency in local government financial practices. While IPKD has contributed to greater standardisation, Sarimin noted that it remains limited in capturing the actual quality, clarity, and usability of information made available to the public.

In presenting his key findings, Sarimin explained that IPKD scores show a modest upward trend across regions, suggesting incremental improvements in formal transparency. However, this apparent progress conceals significant disparities in information quality. Many local government websites still provide fragmented, minimal, or highly technical disclosures that are difficult for citizens to understand. This raises serious questions about whether transparency initiatives genuinely serve public interests or merely fulfil regulatory obligations.

The discussion then moved to a critical reflection on measurement frameworks within NPFM. Sarimin argued that an overreliance on quantitative indices risks creating a misleading sense of progress, as numerical scores may obscure gaps between reported compliance and real-world transparency. Such misalignment undermines key principles of New Public Management, particularly performance accountability and citizen-oriented governance.

The session became particularly dynamic during the question-and-answer segment, which unfolded as a lively and, at times, intense exchange of ideas. Participants including Nita Wakan (University of Cambridge), Muhamad Rizky Rizaldy (University of Sheffield), Astrid Harningtyas (Durham University), Muhammad Akbar Annahl (University of Sheffield), and Muhammad Fariz (University of Leeds) raised critical reflections and probing questions. A central issue repeatedly highlighted was the persistently low awareness among public officials that citizens are the primary stakeholders in government financial information. Participants stressed that the public’s right to access and understand financial data has not been fully realised, as many local governments remain insufficiently committed to providing clear, meaningful, and accessible disclosures.

In his concluding remarks, Sarimin reaffirmed that IPKD alone is insufficient as a comprehensive measure of transparency. He called for the development of more holistic evaluation systems that combine quantitative indicators with qualitative assessments, including stakeholder perspectives and usability analysis. Strengthening institutional capacity, revising measurement frameworks, and fostering a culture of openness were identified as crucial steps toward improving accountability and rebuilding public trust.

Through this forum, IAEI-UK once again demonstrated its commitment to facilitating critical dialogue on public sector reform. For IAEI-UK, public finance constitutes an important area of concern within the broader perspective of Islamic economics, which recognises the significance of effective governance in supporting sustainable, holistic, and equitable development. In this context, research and discussions such as this are considered essential, as they help deepen understanding of public financial management, strengthen accountability, and encourage more inclusive and transparent governance practices. By fostering critical engagement on these issues, IAEI-UK seeks to contribute thoughtfully to ongoing conversations on governance, transparency, and democratic accountability in Indonesia.