The Regulation on Village Governance in Indonesia: Efficient Contracting in Agency Theory

The application of efficient contracting concept in Village Fund management is an interesting idea and formula in the public governance perspective. The concept provides a potential solution so that the Village Government obey the Law No. 6 of 2014 and brings impact to public-oriented service. The philosophical concept of “Gotong Royong” or mutual assistance reinforces the efficient contracting essence. The aim of this research is to build a framework of public governance on Village Fund by implementing the efficient contracting, and to identify, illustrate and describe the variables in efficient contracting concept to Village Fund Management. The research used qualitative method, designed in narrative strategy and grounded theory approach, and formulated using constructivism paradigm. Results of the study have demonstrated that (1) Efficient contracting concept encompasses economic constitution, government policy, public finance management and governance, and the functional relationship in the government body (Central, Regional and Village); (2) the essence of Efficient Contracting is the community active participation, legal aspect, government attention, balance consensus, effectiveness and efficiency, justice and equality, transparency, responsibility and accountability. The descriptive findings were interpreted in textual and structural method to expand the Efficient Contracting concept and to bring implication in development administration and public management.