Halting corruption by promoting individual rights
Halting corruption by promoting individual rights
By Christopher Lingle
UBUD, Bali (JP): Few are surprised when corruption is
uncovered in Indonesia. Prior to the economic crisis, illicit
activities arising from corrupt, collusive and nepotistic (KKN)
practices were estimated to add between 15 percent and 30 percent
to the cost of doing business here.
However, the amounts and extent recently revealed are truly
staggering.
In response to International Monetary Fund (IMF) urgings,
independent audits by Price Waterhouse Coopers found that state
oil company Pertamina lost US$6.1 billion from inefficiency and
corruption in just the past two years.
Meanwhile, the Ministry of Finance reported over 11,500 cases
of corruption worth nearly Rp 184 billion ($27.46 million) since
1997. Many of these cases stemmed from "special treatment" of
well-connected crony capitalists, including Hutomo "Tommy"
Mandala Putra, a son of retired president Soeharto.
The Ministry of Home Affairs cited losses of Rp 2.6 trillion,
while the Ministry of Education and Culture had losses of Rp 3.3
billion.
Minister of Communications Giri Suseno initially made a
remarkable claim that his ministry lost not a single rupiah to
corruption, but later admitted a decision to cancel projects
worth almost Rp 1.2 trillion.
With the investigation of 12 ministries underway, the
government has also taken steps toward greater enterprise
transparency and corporate accountability. A new directive
requires companies earning more than Rp 25 billion or with
outstanding bad debts to file annual financial reports.
These steps may weaken the "culture of corruption" that makes
Indonesia arguably the most corrupt place in the world, outside
of Arkansas. (Note that a free and open media there contributed
to putting the most recently elected governor of Arkansas in
prison for corruption.)
It would be helpful if international aid agencies and
financial institutions set stricter conditions for aid and
lending. A recent report from the Washington-based National
Bureau of Economic Research indicates that the presence of
corruption did not interfere with aid flows. In some cases, more
corrupt governments tended to receive more aid.
Indonesia's financial crisis can be widely attributed to a
reassessment of risk that led to a crisis of confidence causing
massive outflows of capital from the region. Its government was
considered unable to provide an environment where asset values
would be protected and financial institutions were viewed as non-
responsive to market signals. Restoration of confidence in
Indonesia will require that successive leaders take decisive and
convincing action to limit government regulations and
interventions that invite KKN activities.
Perhaps the best way to reduce opportunities for corruption is
to reduce government involvement in the marketplace. Whatever
ruling coalition emerges should seek to reduce the politicization
of economic life.
Along with selecting a president, any coalition must also
select a model of governance to pursue. One of the most pressing
aims of any government is to alleviate poverty while addressing
other social concerns.
To this end, Indonesian leaders can look to their own past
while learning from the failures of the modern welfare states in
much of Western Europe.
Post-colonial Indonesia has had disastrous experiences with
regimes that share essential features with social democracy or
democratic socialism.
During Sukarno's regime and Soeharto's New Order government,
social cohesion and mobilization were pretenses for social
control and the subjugation of individuals to collective goals.
While Sukarno's regime led to economic stagnation and political
divisions, Soeharto's rule brought high economic growth that
masked widespread abuses.
Indonesians would be better served by democratic capitalism
where individuals are the key to communal growth. Global markets
encourage governments to have greater respect for the rights of
individuals as market participants. Growth in the modern
information economy requires nimble responses from entrepreneurs
and workers to provide what others want.
Globalization requires greater competition at the national and
international levels. In this sense, free and open economies can
form the basis of free and open societies. Placing the individual
at the heart of government policy promotes development of a
society of free individuals.
Imbalances of power are most often perpetuated by government
actions that provide protections and privileges for some elite.
Political freedoms ultimately depend upon extensive economic
freedom of individuals within a competitive and open economy.
Indeed, most of the worst abuses of governments in this
century occurred when individual rights and freedoms were
sacrificed in the name of collective goals. Political leaders
often repudiated individual rights in order to assign collective
rights that excluded certain other groups.
For example, apartheid excluded blacks from political and
economic participation by giving special rights to the white
community in South Africa. German National Socialism led to the
elimination of Jews by claiming that Germans would be better off
if their communities were purified of "inferior" groups. The
Khmer Rogue murdered intellectuals and other communists purged
the bourgeoisie who might interfere with their attempts to
construct new communities.
These extreme abuses, along with the outrages arising from
attempts to consolidate claims for a greater Serbia, could not
have occurred if the rights of all individuals were protected.
Indonesia's rich mixture of religions, ethnic and language
groups suggests that placement of individual rights ought to be
the centerpiece of its democratic future. Movements toward
democracy go beyond halting KKN abuses.
Yet such excesses will disappear when rich and poor, weak and
powerful are treated as individuals with the same rights and
freedoms before the law.
The writer is an independent corporate consultant and adjunct
scholar of the Center for Independent Studies in Sydney, who
authored The Rise and Decline of the Asian Century.