Competition helps curb corruption: Scholar
A'an Suryana, The Jakarta Post, Jakarta
Liberalization and law enforcement constitute key factors in the elimination of widespread corruption in transitional countries, such as Indonesia and Russia, an international researcher said on Monday.
The two approaches would put an end to the state being beholden to economic actors, a major source of corruption in transitional countries, said Joel Hellman, lead specialist on governance issues in the World Bank's Europe and Central Asia Region.
This frequently manifested itself as the private 'purchase' of legislative votes, executive decrees, court decisions and illicit political party financing, said Joel.
He said the phenomenon contributed to the presence of massive corruption in transitional countries, a major stumbling block for reform and economic growth for those countries.
According to Joel, the transitional countries, which have been freed from dictatorial and corrupt regimes, still faced huge problems on how to combat corruption.
The new era of perestroika (openness) -- Russia after 1990 and Indonesia after 1998 -- has created new vested interests in both the business and public sectors, where rent-seeking activities are widespread.
In Russia, for example, large companies aggressively lobbied the state for privileges and opposed other reforms aimed at creating a more competitive environment, he said.
A recent survey showed that some 30 percent of Russian companies were involved in bribery, said Joel,
Meanwhile, in Indonesia, it has been widely known that political parties have struggled to get control of state enterprises to secure their financial position.
As in Indonesia, the Russian experience had also shown that politicians frequently turned to big firms, including state enterprises, to raise funds to finance their parties before elections, said Joel.
The phenomenon was an indication of how firms shaped the rules of the game to their advantage through the illicit, nontransparent provision of private benefits to public officials, he said.
Therefore, economic liberalization, including privatization, was essential to create greater transparency in the economic and political sphere, which would finally prevent such practices, which often led to corruption.
If politicians still controlled state enterprises and firms, backroom deals between state officials and the firms would remain widespread, he said.
"Privatization, for example, will create a more open and competitive environment in business, since the competitive drive will prevent politicians from engaging and interfering with decision-making in the firms," he told participants of a discussion held at the World Bank's Indonesia representative office here.
The discussion was titled, "Anti-Corruption in Transition: Lessons for Indonesia from the former Soviet Union."
Besides the liberalization, which increased transparency in the market and politics, strong law enforcement was also necessary in order to stifle corruption.
Law enforcement would be a deterrent so that people would avoid becoming involved in corrupt practices.