Halting corruption by promoting individual rights<\/p>\n
By Christopher Lingle<\/p>\n
UBUD, Bali (JP): Few are surprised when corruption is
\nuncovered in Indonesia. Prior to the economic crisis, illicit
\nactivities arising from corrupt, collusive and nepotistic (KKN)
\npractices were estimated to add between 15 percent and 30 percent
\nto the cost of doing business here.<\/p>\n
However, the amounts and extent recently revealed are truly
\nstaggering.<\/p>\n
In response to International Monetary Fund (IMF) urgings,
\nindependent audits by Price Waterhouse Coopers found that state
\noil company Pertamina lost US$6.1 billion from inefficiency and
\ncorruption in just the past two years.<\/p>\n
Meanwhile, the Ministry of Finance reported over 11,500 cases
\nof corruption worth nearly Rp 184 billion ($27.46 million) since
\n1997. Many of these cases stemmed from "special treatment" of
\nwell-connected crony capitalists, including Hutomo "Tommy"
\nMandala Putra, a son of retired president Soeharto.<\/p>\n
The Ministry of Home Affairs cited losses of Rp 2.6 trillion,
\nwhile the Ministry of Education and Culture had losses of Rp 3.3
\nbillion.<\/p>\n
Minister of Communications Giri Suseno initially made a
\nremarkable claim that his ministry lost not a single rupiah to
\ncorruption, but later admitted a decision to cancel projects
\nworth almost Rp 1.2 trillion.<\/p>\n
With the investigation of 12 ministries underway, the
\ngovernment has also taken steps toward greater enterprise
\ntransparency and corporate accountability. A new directive
\nrequires companies earning more than Rp 25 billion or with
\noutstanding bad debts to file annual financial reports.<\/p>\n
These steps may weaken the "culture of corruption" that makes
\nIndonesia arguably the most corrupt place in the world, outside
\nof Arkansas. (Note that a free and open media there contributed
\nto putting the most recently elected governor of Arkansas in
\nprison for corruption.)<\/p>\n
It would be helpful if international aid agencies and
\nfinancial institutions set stricter conditions for aid and
\nlending. A recent report from the Washington-based National
\nBureau of Economic Research indicates that the presence of
\ncorruption did not interfere with aid flows. In some cases, more
\ncorrupt governments tended to receive more aid.<\/p>\n
Indonesia's financial crisis can be widely attributed to a
\nreassessment of risk that led to a crisis of confidence causing
\nmassive outflows of capital from the region. Its government was
\nconsidered unable to provide an environment where asset values
\nwould be protected and financial institutions were viewed as non-
\nresponsive to market signals. Restoration of confidence in
\nIndonesia will require that successive leaders take decisive and
\nconvincing action to limit government regulations and
\ninterventions that invite KKN activities.<\/p>\n
Perhaps the best way to reduce opportunities for corruption is
\nto reduce government involvement in the marketplace. Whatever
\nruling coalition emerges should seek to reduce the politicization
\nof economic life.<\/p>\n
Along with selecting a president, any coalition must also
\nselect a model of governance to pursue. One of the most pressing
\naims of any government is to alleviate poverty while addressing
\nother social concerns.<\/p>\n
To this end, Indonesian leaders can look to their own past
\nwhile learning from the failures of the modern welfare states in
\nmuch of Western Europe.<\/p>\n
Post-colonial Indonesia has had disastrous experiences with
\nregimes that share essential features with social democracy or
\ndemocratic socialism.<\/p>\n
During Sukarno's regime and Soeharto's New Order government,
\nsocial cohesion and mobilization were pretenses for social
\ncontrol and the subjugation of individuals to collective goals.
\nWhile Sukarno's regime led to economic stagnation and political
\ndivisions, Soeharto's rule brought high economic growth that
\nmasked widespread abuses.<\/p>\n
Indonesians would be better served by democratic capitalism
\nwhere individuals are the key to communal growth. Global markets
\nencourage governments to have greater respect for the rights of
\nindividuals as market participants. Growth in the modern
\ninformation economy requires nimble responses from entrepreneurs
\nand workers to provide what others want.<\/p>\n
Globalization requires greater competition at the national and
\ninternational levels. In this sense, free and open economies can
\nform the basis of free and open societies. Placing the individual
\nat the heart of government policy promotes development of a
\nsociety of free individuals.<\/p>\n
Imbalances of power are most often perpetuated by government
\nactions that provide protections and privileges for some elite.<\/p>\n
Political freedoms ultimately depend upon extensive economic
\nfreedom of individuals within a competitive and open economy.<\/p>\n
Indeed, most of the worst abuses of governments in this
\ncentury occurred when individual rights and freedoms were
\nsacrificed in the name of collective goals. Political leaders
\noften repudiated individual rights in order to assign collective
\nrights that excluded certain other groups.<\/p>\n
For example, apartheid excluded blacks from political and
\neconomic participation by giving special rights to the white
\ncommunity in South Africa. German National Socialism led to the
\nelimination of Jews by claiming that Germans would be better off
\nif their communities were purified of "inferior" groups. The
\nKhmer Rogue murdered intellectuals and other communists purged
\nthe bourgeoisie who might interfere with their attempts to
\nconstruct new communities.<\/p>\n
These extreme abuses, along with the outrages arising from
\nattempts to consolidate claims for a greater Serbia, could not
\nhave occurred if the rights of all individuals were protected.<\/p>\n
Indonesia's rich mixture of religions, ethnic and language
\ngroups suggests that placement of individual rights ought to be
\nthe centerpiece of its democratic future. Movements toward
\ndemocracy go beyond halting KKN abuses.<\/p>\n
Yet such excesses will disappear when rich and poor, weak and
\npowerful are treated as individuals with the same rights and
\nfreedoms before the law.<\/p>\n
The writer is an independent corporate consultant and adjunct
\nscholar of the Center for Independent Studies in Sydney, who
\nauthored The Rise and Decline of the Asian Century.<\/p>",
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