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Challenges for 2024 Presidential Candidates in Eradicating Corruption

Brussels, Frankfurt (15/7 – 56)

Bad habits die badly. Three hundred fifty years of Dutch colonial rule, where expatriate European masters professing noble, selfless public service for the Kingdom of the Netherlands were notoriously corrupt; apart from loading up with as much as they could swindle, shake down or steal, why on Earth would any sane Dutchman be adventurous or foolhardy enough to go out to the Indies? The trip out by sailing ship was long and dangerous.

Even sailors were in on the game: their coveralls never had pockets, making it difficult to smuggle spices, in an era when cloves, nutmeg and mace were worth more than their weight in gold, back in Europe. How could this be? Remember: no refrigeration meant that fresh meat quickly went bad, so spices were worked into it to cover the pong of decaying flesh.

Corruption is an ancient curse in Indonesia, one handed down from the time of the sultans, who lived off the hard labor of the farmers but only got a portion of what was due, as their crooked middlemen and money-lenders took their cut.

The United East India Company, “Verenigde Oostindische Compagnie”, or V.O.C., went bankrupt several times, until a disgusted Netherlands government took it over and ran it directly from Amsterdam.

Once Indonesia won its independence, in 1949, officials of the new nation found it impossible to shake off the curse of official theft. Worse, once fiery President Sukarno kicked out all foreigners who refused to take Indonesian citizenship and nationalized their enterprises, the economy of this fabulously wealthy archipelago slipped into a death spiral. Foreign investors looked longingly but stayed away.

In 1960, enraged by reports that ethnic Chinese rice wholesalers were hoarding grain to drive up prices, while many Indonesians went hungry, Sukarno raged “Show me some proof and some names and I’ll have them shot.” But this was all bluster, as government only survived by taxing the long-suffering businessman. Ordinary people never bothered to pay taxes.

Once the bloodshed of 1965 abated, and a new military regime took over the country – the quiet, lethal, proverb-quoting President Suharto, destined to rule for some 32 years – corruption became rationalized. If you wished to win a court case, you would appoint a retired admiral or general onto your Board of Commissioners. If there was a problem with importing machinery for your factory, a colonel in military intelligence (on your payroll) would phone up Customs Clearance at the port. Cynical foreign observers referred to the Indonesian legal system as “an auction”: the highest bidder wins a favorable verdict.

The hapless Indonesians were subject to the [mostly-benign] rule of the smiling General, and his smiling wife. Suharto had suffered a rough childhood, so he was determined that his own family would be large, close and loving. The public did not see Soeharto’s six children as a blessing (as he did) but a curse, along with the predations of a galaxy of relatives and cronies, all with their own banks, factories, supermarket chains and plantations. It was never wise to try to compete with orde baru (“New Order” – you can guess where that came from) businesses. They also qualified for favorable government loans from state banks, and other perks.

The carefree Tommy Suharto, later sent to prison for ordering the murder of a judge, was known to travel about with a large sack of currencies – dollars, Yen, Pounds Sterling, Euros – and would ladle them out for anything or anyone that caught his fancy. His company “won” a 30-year no-bid contract to export LNG to Japan.

In such an environment, how could a civil servant, whose official salary would barely pay for a rice allotment, resist the temptation to link up with an ethnic Chinese entrepreneur, and open a few businesses on their own? Or pad procurement contracts?

Corruption practices have cost the Indonesian economy massively. A number of studies convey how countries with high levels of corruption tend to have low tax ratios. Public spending is large but not optimal, and foreign investment is minimal.

This is one of the challenges that 2024 presidential candidates have to face. Approaching the end of his two-term tenure, incumbent President Jokowi is faced with a 4 point decline in the Corruption Perceptions Index (CPI), from 38 to 34.

Indonesia Corruption Watch reported several sectors causing the most state losses due to corruption practices, consisting of the trade sector (IDR 20.9 trillion), transportation (IDR 8.82 trillion), natural resources (IDR 6.7 trillion), land (IDR 2.66 trillion),  utilities (IDR 982 billion), banking (IDR 516 billion), defense and security (IDR 453 billion), villages (IDR 381 billion), government (IDR 238 billion) and education (IDR 130 billion).

No matter who wins the Presidency, it will be an uphill battle.