The struggle to regain effective government under democracy in Indonesia
1 Dec
Author: Ross H. Mcleod
With Soeharto’s demise, Indonesia gained democracy but lost effective government. A return to sustained, rapid economic growth will require an overhaul of Indonesia’s bureaucracy and judiciary which, along with the legislatures, the military and the state-owned enterprises, had been co-opted by the former president into his economy-wide ‘franchise’—a system of government designed to redistribute income and wealth from the weak to the strong while maintaining rapid growth. This franchise has disintegrated, its various component parts now working at cross-purposes rather than in mutually reinforcing fashion. The result has been a significant decline in the security of property rights and, in turn, the continued postponement of a sustained economic rebound. To reform the civil service it will be necessary to undertake a radical overhaul of its personnel management practices and salary structures, so as to provide strong incentives for officials to work in the public interest.
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Ross McLeod argues that the late President Soeharto built his New Order regime on an imaginative use of corruption as a means of recruiting wide elite support. Instead of enriching only himself and a small group of cronies, Soeharto constructed a system in which the opportunity to use public office for private gain was spread very widely. He did this by simultaneously keeping the salaries of senior officials low in comparison with what they might have earned in business (so that there was strong incentive to seek private gain from office) and soft-pedalling on anti-corruption measures (so that there was little risk of being brought to account for corruption, unless other factors came into play). In this way, Soeharto compromised most of the elite, implicating them in the corrupt system and making it difficult for them to criticize him without losing their access to corrupt income and giving them an incentive to close ranks against anyone seeking real change.
He suggests that this system worked in the Soeharto era because it was in everyone’s interests to promote economic growth which would deliver still greater opportunity for corruption and because Soeharto had the political authority to place distinct limits on the scale of corruption. Because of this controlling structure, McLeod refers to the arrangement as a ‘franchise’. After Soeharto’s fall, however, there was no political force with the will to limit corruption, and there was insufficient cohesion within the elites of the new democratic system to deliver the economic policies that would underpin a return to the high growth of the New Order era. The result is that corruption, and the perception of rampant corruption, got worse, not better, after Soeharto’s departure. McLeod suggests that this situation will only be remedied by introducing a proper system of incentives within the public service. Specifically, he wishes to see the salaries of senior officials increased to a level much closer to what they might obtain in the private sector and to introduce much tougher performance-based criteria for promotion and dismissal.
The article leaves unaddressed the question of how the franchise was put in place. We know that corruption was rife in the Indonesia in the 1950s and the first half of the 1960s (and it is likely that political disunity fed corrupt competition as it did after the fall of Soeharto). But how did Soeharto turn corrupt chaos onto a franchise? Was it a by-product of political control (which arose from military power, from the abundance of oil and other natural resource revenues and from the inspired political control mechanisms derives by Ali Murtopo and other backroom planners)? Or was it a deliberate strategy (and if so who devised it)? Is it possible to sketch a history of the development of the franchise (such a history is possible in the case of better known franchises like KFC), so that we can get a better idea of its scope and functioning?
Robert Cribb’s comment is correct when he implies that we have to look at the wider historical context of Soeharto’s corruption. The Indonesian nationalist response is to blame the Dutch, pointing to institutionalised corruption under the VOC, and certainly corruption was a focus of public debate in the 1950s (including a novel by Pramoedya with the name Korupsi).
Ross McLeod allows us to go beyond generalised discussions of corruption by pointing out how Soeharto systematised certain forms of corruption and used it to as a device for political power. The scale and level of corruption reached unimaginable depths under Soeharto, if the US$80billion attributed to his family accumulation is even partly true.
How was the franchise put in place? Here we need more studies of the military, their experience in smuggling and their alliances with certain business front-men in the 1950s and 1960s. David Jenkins and Hamish McDonald have already described aspects of Soeharto’s involvement in this military corruption, and it seems that just as Soeharto extended the power of the military, so he extended its modus operandi. The definitive study of military business in Indonesia still awaits a brave scholar.
Ultimately the system didn’t necessarily work, in that it has destroyed the institutional basis of the Indonesian state, and was a key contributor to the Krismon. The amazing part of the system was that it was able to hold things together for so long—it had already been described by observers in the early 1970s, and made clear to the world in 1974, but Western countries turned a blind eye in the interests of the Cold War (Heinz Arndt said as much in one of his articles written in the 1970s).
The problem for Indonesia is that the Soeharto culture continues and has been democratised through regional autonomy and other measures, so now every Bupati and DPR member can follow the lead of the great dalang. Corruption itself may not be ‘worse’ now in its scale, but it can at least be discussed, and action is being taken to address it (a comparison can be made with incidents of domestic violence in Western societies, which in recent decades seemed to be statistically on the increase because there was more reporting).