Worrying about rampant corruption in Indonesia

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.