Corruption is wrong. But do we need it in the development of today’s Indonesia? With public investment in infrastructure reaching an all-time high and the administration relying on the successful delivery of several mega projects for support, this question begs an honest answer.
After two decades of neglect, the government has finally moved infrastructure development to the top of its priority list. This year’s public investment in infrastructure totals Rp 290.3 trillion (US$22.65 billion), a 41 percent increase on the previous year.
For the next five years, a huge infrastructure budget is to be spent on several mega projects, such as 24 new ports, or the modernization of old ones, as part of the maritime highway program; 49 new dams; the Trans Sumatra toll road and railway; and power plants with a total capacity of 35,000 Megawatts.
This much-awaited commitment is crucial for the country to sustain its economic growth. Poor quality and insufficient roads, bridges and ports have resulted in not only skyrocketing logistics and transportation costs but also significant disparity among regions. Damaged dams and irrigation systems pose a threat to the country’s food security.
The inadequate capacity of existing power plants has already caused power shortages in many parts of Indonesia. Without taking drastic measures, Java and Bali, home to more than half the country’s economic activities, will soon experience power crises.
However, whether the government can translate this commitment into successful implementation is another issue. At the heart of the question is corruption, which has long plagued the construction sector. A report from the Organization for Economic Cooperation and Development (OECD) examining bribery cases from 41 nations points out that construction, along with mining and transportation, is among the sectors “most prone to corruption”.
The study further states that the most common form of corruption (57 percent) is paying bribes to win public procurement contracts.
This finding is consistent with a study by the Indonesian Chamber of Commerce and Industry (Kadin), which indicated that 87 percent of contract winners for construction projects in Indonesia were decided before the tender process was even completed.
Public works projects in Indonesia are known to be fertile ground for corruption, where old-school bureaucrats and politicians advance their vested interests.
The new administration is therefore faced with a difficult dilemma: badly needing to build the country’s infrastructure using a corruption-ridden public works sector.
Reflecting on the two contesting theories on the relationship between corruption and development, the government has two choices to solve the problem. The most prominent viewpoint regards corruption as an absolute evil that impedes development. It instills distortion in the economy by adding costs to transactions and redirecting resources from productive activities to rent-seeking. Corrupt practices reduce government capacity and legitimacy.
On the other side of the spectrum is the viewpoint that recognizes corruption as necessary grease to turn the wheels. Harmful as it may be, corruption could be the only way for a system that harbors ill-functioning institutions to run.
Thus, instead of aiming to eradicate corruption - which would compete with other development priorities – the government should instead try to control it.
If the government is to adopt the stance of zero-tolerance on corruption, as it is now, it needs not only to further support and strengthen the Corruption Eradication Commission (KPK), implement more transparent systems and invite civil society to take part, most importantly, it must completely reform the political party financing system to limit political corruption.
The current system creates an institutional environment that makes it nearly impossible for political parties to finance their campaigns in the archipelago and maintain their operations in all 34 provinces if they rely solely on legal sources of revenue.
Transactional politics are rampant, as politicians have to raise funds or return sponsor favors.
Implementing an iron-handed policy to combat corruption under such conditions would only result in infrastructure project delays, either because of the arrest of those connected to corrupt practices, or because bureaucrats at the executing ministries would avoid carrying out projects for fear of being arrested.
It is unrealistic to expect old-school politicians to stop preying on state resources without a major revision of the system.
Increasing the state subsidy for political parties could be a path to reform, yet it is an impossible option in the midst of competing development priorities. The government could also initiate an expenditure cap for political parties and put in place a strong oversight mechanism.
However such a task may be too difficult for a president whose coalition, over which he has limited control, is in a minority in the House of Representatives.
Should it fail to carry out these fundamental reforms, an alternative for the government would be to officially accept corruption as a necessary evil and decide what kind of corruption would grease the wheels and what would stop the wheels completely.
Politically incorrect as this may be, this option would help the KPK to carry out its duties, while letting infrastructure be developed with necessary speed.
It, however, would also attract fierce political opposition, as the promise to eradicate corruption was one of the cornerstones of Joko “Jokowi” Widodo’s presidential campaign.
Both options is politically challenging. Reform the system would attract fierce opposition from the parliament, while tolerating corruption to certain degree would also draw public opposition. To do business as usual is perhaps the only politically safe action. Nonetheless, opting to abstain from this difficult decision could come at the expense of letting the two systems cannibalize each other.
On the one side, a corrupt system on which the successful delivery of the infrastructure development plans is dependent, and on the other side, an enforced zero-tolerance stance on corruption that may impede immediate implementation of infrastructure development plans, if they can happen at all.
Having both systems on the table may result in not only the delayed, or even failed, delivery of badly needed infrastructure projects, but also possible systematic pushback to weaken those who are tasked with eradicating corruption in the name of Indonesia’s development.
And the latter may have already been happening.
This article was published by The Jakarta Post.