Indonesian Corruption: Can Slow and Steady Win the Race?

Indonesia is currently preparing for critical parliamentary and presidential elections in 2009. A central issue will be corruption, often termed “the bane of Indonesia’s political transition” in the post-Suharto years. President Susilo Bambang Yudhoyono was elected in 2004 based in part on his promises to tackle corruption, and as he seeks a second term he has vowed to keep up the fight. Indonesia has made significant improvements in addressing the problem, and perceptions about the country are improving. Nonetheless, Indonesia remains a very corrupt place, with a populace accustomed to system-wide graft. Corruption has checked economic growth, scared off foreign investors, and made life difficult for the average citizen. As noted in the Countries at the Crossroads country report, Yudhoyono’s administration has made progress in Indonesia’s anticorruption fight, but “the magnitude of the challenge is enormous, because corruption is woven into the very fabric of political and economic life.”

Indonesia’s decentralization in the post-Suharto years of reform has somewhat changed the nature of corruption. Under Suharto, power and corruption were centralized; today, power is diffused among officials of all levels – local, regional, and national – and there are thus more people in a position to solicit bribes. Cash payments are regularly handed over by households in dealings with government officials at all levels. Corruption is thus, in the words of the Crossroads report, “deeply entrenched in politics and the bureaucracy,” and the civil service requires serious reform.

The serious, sustained institutional reforms necessary to choke off graft at the roots have not yet been undertaken. One of Indonesia’s most venal, and generally weakest, institutions is the judicial system. Expatriate business executives have rated it the worst in Asia, with judges that often accept bribes from officials to leave them alone or do their bidding. Problems with finding good judges lie in poor professional training by law schools and low salaries for the judiciary. As in so many developing countries, a weak judiciary is among the most difficult institutions to fix, in part because of the tension between maintaining an independent judiciary while ensuring that rotten apples cannot block attempts at reform.

Overall, through the efforts of Yudhoyono and other reform-minded officials, there have been improvements in the last couple of years. The United Nations Development Programme Indonesia and World Bank have been enlisted to assist with anticorruption efforts. Transparency International (TI) this year moved Indonesia up to 126th from 143rd place on its corruption perceptions index, a move that TI’s Indonesia office attributed to foreign analysts and businesspersons starting to notice the country’s attempts to fight corruption.

The most potent force for change has been the Corruption Eradication Commission (KPK). In 2003, Indonesia’s parliament created the KPK as an independent body with wide investigative and prosecutorial powers. Among the KPK’s powers are tapping phones, blocking bank accounts, banning travel, suspending officials from office, and taking over investigations from the police and prosecutor’s office. The commission has carried out a series of high-profile investigations and arrests, targeting members of parliament, central bank officials, among other functionaries, and recovered funds in the process. The public has supported the KPK, which is seen as having more integrity than the Attorney General’s office and other agencies charged with fighting graft. The KPK has, however, also been criticized for harsh methods, including its proposed use of garish prison uniforms to shame the guilty.

Though the KPK pre-dates the Yudhoyono administration, his government has also focused on corruption. Finance Minister Sri Mulyani Indrawati is respected for pushing reform, including addressing corruption in her ministry and other offices. At the customs department, she replaced staff with new officers who were paid more than the old ones, reducing the incentives for corruption. Unfortunately, the KPK later raided the office and found evidence of continued corruption. Mulyani acknowledges that raising salaries is not enough to stop corruption, and recommends intense internal monitoring and enforcement of ethics and discipline.

Another example of the limitations of the anticorruption fight is the fact that most convictions have been of mid- and low-level bureaucrats, politicians, and businessmen. Regional and local officials have been targeted more than national officials. Though a few high-profile cases have brought attention to the issue, many people associated with Yudhoyono or former dictator Suharto have avoided investigation or prosecution. It may be that the government has attempted to increase its anticorruption credentials by going after easier targets. Moreover, anticorruption forces are limited by cultural and political influences and have avoided tacking too close to the national elite.

However, some prominent national level figures have recently been arrested and face corruption cases.  Former central bank governor Burhanuddin Abdullah, who served until May, is one of the more senior officials charged. Prosecutors are seeking an eight year sentence for his role in a case involving $10 million in payments to members of parliament and other officials. Another upper-level bureaucrat, Competition Commission member Mohammad Iqbal, was also arrested after taking money from a television network director.

The real difficulty is in changing the culture of corruption while constructing solid institutions. The corruption fighters might find that including the public in the process could help break the unchecked strength of government and business interests. An interesting idea undertaken by the KPK to instill ethics in citizens from an early age is the preparation of anticorruption schoolbooks for kindergarten and primary school students. Meanwhile, democratization has meant that voters at least have a say by choosing to elect candidates with a clean record and to punish those guilty of graft. However, as observers of the developing world across the globe have seen, corrupt officials are often precisely the ones with money to burn during election campaigns, and Indonesia’s record in this area is not strong. Any democracy emerging out of a regime as kleptocratic as Suharto’s would be bound to have a long fight against corruption on its hands. Now that some incremental gains have occurred, structural improvements and the breaking of taboos – such as the arrests of “big fish” – should be noted and encouraged by the international community.

Photo Credit: Flickr user Mayu ;P

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