Corruption in Indonesia

The issue of political corruption in Indonesia continues to make daily headlines in the Indonesian media and generates much heated debate and fierce discussion. In academic circles scholars have continuously searched for answers to the question whether corruption in Indonesia has its roots in the traditional precolonial societies, the Dutch colonial era, the relatively short Japanese occupation (1942-1945) or the subsequent independent Indonesian governments. However, an unequivocal answer is yet to be found. For the foreseeable future it just needs to be accepted that corruption in Indonesia's political, judicial and corporate domains exists and is widespread (although there are some signs - which are discussed below - that point towards an improvement).

Historical Framework of Corruption in Indonesia

Although there are great examples of corruption in Indonesia's earlier history, we take as our starting point president Suharto's authoritarian New Order regime (1965-1998) that was characterized by impressive rapid and sustained economic growth (with Gross National Product averaging +6.7 percent annually between the years 1965 and 1996) but also well-known for its corrupt nature. Suharto utilized a system of patronage to ensure loyalty of his subordinates, leading members of the national elite and critics. In exchange for business opportunities or political positions Suharto could count on their support. With the Armed Forces (including its intelligence apparatus) and huge resources (stemming from the oil booms in the 1970s) at his disposal, he became the apex of the national political and economic system, resembling the patrimonial power of traditional rulers in the pre-colonial past.

Regarding economic policy-making Suharto relied on the advice and support from a narrow group of confidants around him. This group consisted of three categories: (1) USA-trained technocrats, (2) economic nationalist (who supported the idea of a large role for the government in the economy) and (3) capitalist cronies (consisting of his family members and some rich ethnic Chinese conglomerates). At times all these categories were accused of being corrupt but most emphasis went to the small circle of capitalist cronies (particularly Suharto's children) who were - much to the dislike of national businesses and society at large - the major beneficiaries of state privatization schemes and often ran large business monopolies that operated with little oversight or monitoring.

One important characteristic of corruption during Suharto's New Order was that is was rather centralized and predictable. Investors and businessmen could more-or-less predict the amount of money they had to put aside for these 'extra' costs and knew which people they were expected to bribe. But there was also the tactic of including a Suharto crony in business activities in order to reduce uncertainties caused by bureaucratic red tape. This same pattern existed on a local level where governors and local army commanders enjoyed the same privileges as the key figures in Jakarta but were always aware of possible repercussions from higher up in case they would push it too far. With the new era of Reformasi, which started after the fall of Suharto in 1998, this situation was about to change drastically.

Decentralization of Indonesian Corruption

The situation changed drastically when - after the fall of president Suharto in 1998 - an ambitious regional decentralization program was started in 2001 which foresaw the transfer of administrative autonomy away from Jakarta to the districts (not to the provinces). This new course was in line with demand of the people but had negative side effects on the distributional pattern of corruption. Bribe-taking was no longer 'coordinated' as it had been in the past but became fragmented and unclear. Decentralization meant that local governments started to produce new local regulations (often not tightly designed) which made it possible for more officials from multiple levels of the government and other agencies to mingle and request for financial extras.

Realizing the urgent need to tackle corruption (as it undermines the investment and business climate and - generally - fosters the existence of continued injustice in society), a new government agency was established in 2003. This government agency, the Corruption Eradication Commission (Komisi Pemberantasan Korupsi, abbreviated KPK), is envisaged to free Indonesia from corruption by investigating and prosecuting cases of corruption as well as monitoring the governance of the state (for which it received extensive powers).

However, opinions regarding its achievements are divided. Critics point out that the KPK is more focused on tackling lower profile figures, although in recent years there has been a series of high profile cases, particularly towards the end of former president Susilo Bambang Yudhoyono's government, involving ministers, high-ranked police officials, judges and the party treasurer of Yudhoyono's Democratic Party. This partial success and courage of the KPK have triggered counteracts - mostly from persons that have been prosecuted or interrogated - claiming that the KPK itself is a corrupt agency. In recent years a number of scandals have emerged in which members of the KPK were - reputedly - framed by senior police officers and arrested in order to undermine the KPK's authority.

KPK Chief Abraham Samad (2011-2015) had to step down from his post after he was named a suspect in a legal document forgery case in early 2015. Indonesian police claimed Samad had falsified documents (including a passport) for a woman called Feriyani Lim. Allegedly, Samad had an extramarital affair with this woman. A picture showing the pair in bed also leaked (whether this picture is authentic is unknown). Earlier, several pictures leaked showing Samad being intimate with Miss Indonesia 2014 Elvira Devinamira (both denied the authenticity of the scandalous photos and the extramarital affair). Perhaps it was no coincidence that these pictures leaked about one day after Samad announced a high-profile corruption case involving Police Commissioner General Budi Gunawan.

Corruption during the Susilo Bambang Yudhoyono Administration

During the elections of 2004 and 2009 Yudhoyono presented himself as being devoted and determined to tackle corruption in Indonesia, in particular regarding corruption within government circles. This made him particularly popular around the time of the elections of 2009. However, the ongoing persistence of political corruption and several high-profile graft cases within the government caused his approval ratings to free fall after 2010 and few people shed tears when his second - and final - presidential term was completed in late 2014.

Another blow to Yudhoyono's prestige was the departure of Sri Mulyani Indrawati, Indonesia's Finance Minister from 2005 to 2010. Sri Mulyani, who enjoys a reputation of integrity (although slightly sullied by the Bank Century scandal), was tasked to reform Indonesia's corrupt tax and customs office. She had considerable success and could count on the support of many Indonesians. But her performance also created enemies. In May 2010 she left Indonesian politics to become a managing director at the World Bank Group. Widespread speculation, however, was that her resignation was due to political pressure from businesses with high political connections. In particular, the Bakrie Group was often mentioned in Indonesian media in connection herewith (Aburizal Bakrie being then-chairman of the Golkar party; a coalition member of Yudhoyono's government). Critics say that Yudhoyono should have supported her.

Moreover, various corruption cases - involving members of Yudhoyono's party and ministers in his cabinet - emerged toward the end of his presidency and have seriously damaged the allure of both his Democratic Party and Yudhoyono himself (who became regarded by some as a weak leader because of the emergence of these corruption scandals in his party and cabinet). In the last two years of his presidency, the Minister of Youth & Sport Affairs (Andi Mallarangeng) and Minister of Religious Affairs (Suryadharma Ali) stepped down after being named suspects in corruption cases. Meanwhile, in 2013 Constitutional Court Chief Justice Akil Mochtar was charged with accepting a USD $260,000 bribe in exchange for fixing a court ruling. This means that - after a promising start - the emergence of many high profile corruption cases near the end of his second term, Yudhoyono will not be remembered as the big corruption fighter he seemed at the beginning.

Corruption during the Joko Widodo Administration

Since 2014 Joko Widodo leads the nation. Similar to previous presidents and presidential candidates he has called for a battle against the widespread corruption in the country, urging the need for a 'mental revolution' that includes a stop to greediness and corruption in society. It is a daunting task but Widodo has undertaken several important efforts, for example by moving many government services online (implying bribe-hungry bureaucrats have fewer chances to obtain some extra money).

So far, President Widodo can enjoy a clean, graft-free image (although he was criticized for supporting police chief nominee Budi Gunawan who was suspect in a graft case). Also within his cabinet there have not occurred any scandals. However, Widodo will need to remain careful not to suffer the same fate as his predecessor.

Positive Developments in Indonesia's Fight against Corruption

Despite this mostly negative overview, there are some positive signs. First of all, it needs to be mentioned that there is a big urge from the Indonesian people to eradicate corruption in Indonesia and the free media provide ample room to deliver their voices on a national scale, while zooming in on various corruption scandals (although some media institutions - owned by politicians or businessmen - have their own agenda for doing this). But the popular urge to tackle corruption means that being anti-corrupt is actually an important vote-gainer for aspiring politicians. Being involved or mentioned in a graft case can seriously damage a career as popular support declines. A negative side effect (for the country's economy) of this public scrutiny is that government officials are currently very prudent and hesitant to disburse their government budget allocation, being afraid to become a victim in a graft scandal. This careful behavior can be called the success of the influence of the KPK that is watching the money flow, but also causes slower government spending.

Poll Indonesia Investments:

The Berlin based politically non-partisan Transparency International publishes an annual Corruption Perceptions Index (based on polls) which assesses "the degree to which corruption is perceived to exist among public officials and politicians" in countries around the world. It uses a scale from one up to ten. The higher the outcome, the less (perceived) corruption there is. In their latest edition (2016) Indonesia occupied the 90th place (out of a total of 176 countries). However, it needs to be stressed that there is not a 100 percent accurate method to measure corruption because of the nature of corruption (often hidden to the public). The numbers below, therefore, only show the perceived degree of corruption by the participating voters in the poll of that particular country. But because a population usually has a good sense of what is "going on" in the country, these numbers do indicate something interesting and meaningful.

Corruption Perceptions Index 2016:

1.	Denmark	9.0
1.	New Zealand	9.0
3.	Finland	8.9
4.	Sweden	8.8
5.	Switzerland	8.6
90.	Indonesia	3.7

^{Source: Transparency International}

These numbers indicate that - in accordance with the text above - there is a rather negative public view of the degree of political corruption in Indonesia. However, when we take previous results into consideration the index shows a more positive trend:

Corruption Perceptions Index 2005-2015:

	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015
Indonesia	2.2	2.4	2.3	2.6	2.8	2.8	3.0	3.2	3.2	3.4	3.6

^{Source: Transparency International}

Indonesia is actually one of the few countries in the Corruption Perceptions Index that shows a steady and marked improvement, coinciding with the Yudhoyono administration (2004-2014) and continued by the Widodo administration. But it needs to be emphasized that - although representing an actual development - these figures should be handled carefully as the methodology used in the polls changes from year to year.

Regarding corruption there is still a long reform road ahead for Indonesia. Both on the local and central level business and politics still go hand-in-hand to a high degree, hence forming a sort of oligarchic society in which conflicts of interests occur. For example, illegal logging is widespread on Sumatra and Kalimantan as many illegal logging permits have been issued by public bodies (thus threatening the existence of Indonesia's rain-forests). Similarly, in Indonesia's procurement sector lucrative contracts are often awarded to companies associated with Indonesian state officials.

Corruption hinders the country from fully tapping its economic potential and causes significant injustice in Indonesia's society as some people are disproportionally benefiting from a corrupt society. But credit has to be given to Indonesia's free media and the KPK as both play a vital role in the reduction of corruption.

Last update: 23 June 2017