Worrying about rampant corruption in Indonesia

Satish Mishra, Head, United Nations Support Facility for Indonesian Recovery (UNSFIR), Jakarta, satish.mishra@undp.org

The combination of the growing aid fatigue in OECD countries and the outbreak of the Asian Financial Crisis have brought the issue of corruption into the limelight of contemporary development policy. True, concern with corruption was always a part of the analytical armory of development economics. Witness the literature surrounding protection and the economic impact of licensing and tariff barriers, on rent seeking and on the notions of the predatory state. Witness also the hostility to foreign aid noted in the celebrated writings of a Peter Bauer or the speeches of a Jesse Helmes. But for all this, the subject of corruption, until very recently, remained one of the perennial chestnuts of development policy, something we all know about but prefer not to have to confront.

The reason is not difficult to understand. First, corruption was seen by many to be part of the human condition, present in all societies at all times. It took different forms in different polities, from the institutionalized nepotism of a social order built on birth and class in monarchies and empires to the special privileges granted to party members in modern totalitarian societies. Corruption, according to this logic, seemed to be part of the backdrop against which all government policy needed to function. It was a parameter not a variable, a statistical constant rooted in human nature itself. If that was not obvious enough, says the skeptic, you only have to look at a Barings Bank or an Enron to find the iron in the soul of global capitalism.

Second, there are some formidable difficulties in defining corruption. Should the term apply only to the activities of public servants who use public resources for their private ends or to all officials, both public and private? If Enron officials deserve to be jailed for falsifying company accounts and hiding the true nature of the company's liabilities, why should finance ministers not be treated the same way for putting an optimistic gloss on national income projections and underplaying national risk to potential investors? If corruption is nothing more than theft, why not just let the criminal law do its job. Why, to use Paolo Mauro's phrase, worry about corruption?

Mauro, a staff member of the IMF writing in 1997, was interested in quantifying the extent of corruption and putting "a dollar sign" on its economic effects. One of the results of the renewed attention to corruption was the construction of a "corruption index", based on business survey data, along which the relative performance of countries could be measured. Much old territory was also revisited. Trade restrictions, subsidies and price controls, foreign exchange allocation schemes and low wages of civil servants were all brought under renewed economic scrutiny. Mauro concluded that corruption leads to large declines in the quality of public investment and therefore in economic growth.

The economic arithmetic approach to corruption has found many adherents in Indonesia. Many prominent figures have argued in some detail, and with much sophistication, that a more determined stance on corruption, based on a clearly articulated carrot and stick policy, would result in enough domestic savings as to make all foreign aid unnecessary. The newspapers and business magazines of Jakarta are littered with speculations regarding the extraordinary amounts of money involved in corruption scams: Outrageously expensive roads and fountains, the magnificent homes of lowly paid public servants and removal of major debtors from the IBRA blacklist.

The mathematics and geography of corruption in Indonesia makes fascinating reading. They certainly provide one reason for worrying about corruption. But very large numbers have a way of fading into the background, of becoming unreal, like the size of the known universe or the counting the number of stars in the sky.

For over half the Indonesian population living on less than US$2 a day, the billions lost in corruption mean little except to demonstrate the one central reality of their life, helplessness. For them, corruption is a curse for the poor, but has little effect on the well off. The police do not bother the rich, even when they are convicted of major crimes. The gangs prey on the poor, yet provide services for the rich. The latter do not ride buses or queue for kerosene. They do not have to wait for hours to get official permits and licenses, to pay for "free" medical treatment. They do not fall into potholes in sidewalks.

You can see their point of view. Why worry about what always has been and what always will be. Why go through the ritual of adding zeros to already heady numbers? Against such desperation and disbelief, all of Paolo Mauro's numbers, seemingly so firm and real, melt into nothingness. The problem, say the poor, is not the numbers but the want. Take small steps. Show us you mean business. Show us what this new democracy can do? Don't talk about the numbers, deal with the injustice.

This is all getting complicated. Dollars and rupiah lost to corruption matter for economic recovery. They also matter in the provision of essential public goods to win the confidence of the very poor that refuse to be convinced by pious sermons on the goodness of free speech and democracy. But focus on numbers alone will not do the trick. Thirty years of kleptocracy have taken corruption to highly refined levels in Indonesia.

Boundaries between public duty and private interest are difficult to define let alone detect. It is difficult to change mind sets. The roots of the New Order were in no small way nurtured by a well oiled machinery of organized corruption. That was only yesterday. Today, eradicating that culture of corruption and impunity has become just as critical to the establishment of the new Indonesian democracy. The change is sudden. What do we do?

To begin with, we must guard against the obsession with numbers. Besides paying realistic wages to civil servants and imposing harsher penalties for corrupt practices, action is needed on many other fronts. The majority have to be given a direct stake in the savings resulting from curbing corruption. This requires not only establishing targets and benchmarks on additional resources generated through the anti-corruption policy, but also the end uses to which these savings are to be put.

Moreover, ways must be found to involve every citizen into the anti-corruption drive. A national anti-corruption campaign in which the public can play a direct role in documenting their individual experience with corruption is one way to bring corruption home in a real sense to the public. Pervasive corruption is no less of a national threat than narcotics or the spread of aids. As with these other examples, overcoming denial is the first step in the recovery process. Much can also be done to raise the stigmata surrounding a conviction for corruption. An automatic disqualification from standing for public office and in senior management position of publicly listed private companies is not a bad first step.

The worst of all situations however is to be so overawed by the financial scale of corruption in Indonesia such as either to become defensive, (it is "only human nature" argument) or despairing ( this is a "problem for the rich" argument). Sometimes, small numbers and collective protests are a more effective deterrent to entrenched corruption than a public left wondering at the astronomical scale of corruption without the means to do anything about it. If we worry about corruption we must not only de-motivate the corrupt but motivate the non- corrupt.

The views expressed in this article are strictly personal.