“I think that in the Indonesian situation right now, you have a very, very good situation: the guarantor of whether corruption comes down on the more the distributive rather than the extractive side is the local electorate.”
By Peggy McInerny, Director of Communications
UCLA International Institute, June 9, 2015 — Instead of categorically condemning corruption in Indonesia, writer-epidemiologist Elizabeth Pisani argued for a more nuanced analysis of its function in Indonesian society. Only by understanding its functions and mechanisms is it possible to replace corruption with more legitimate processes, she said. The author of Indonesia etc.:Exploring the Improbable Nation (W.W. Norton, 2014), Pisani spoke at a recent event hosted by the UCLA Center for Southeast Asia Studies.
From a centralized to decentralized political system
After World War II, Indonesia fought a four-year (1945–49) guerrilla war to establish its independence. During that time, said Pisani, the guerrilla army was permitted to do whatever it needed to raise money to support itself and fight for independence. Suharto, Indonesia’s second president (1967–2008), was a product of this system. He awarded monopolies and special economic access — primarily in logging, mining and oil and gas — to the military and ethnic Chinese–owned businesses in return for specific services.
Toleration of Swiss bank accounts and personal enrichment aside, said Pisani, the military was expected to protect the country, deliver stability and do good works for the nation, an arrangement that saw the Indonesian army lead large-scale literacy campaigns. Ethnic Chinese entrepreneurs, on the other hand, were expected to deliver capital investment, technology and job growth.
“So instead of collecting taxes and then funding the military [or economic development],” said Pisani, “[Suharto] gave them a monopoly and said, ‘You do it.’” Under this system, family networks — whether blood families or the “families” associated with large ministries and the army — distributed economic resources among its members in a culturally accepted practice.
The system worked well for about 10–15 years, said the speaker, but was eventually compromised by Suharto’s children, who insisted on cutting themselves into monopoly deals without delivering anything of value in return. As a result, corruption ceased to be redistributive in nature, causing dissatisfaction among both the Indonesian people and the military.
After Suharto’s death in 2008, Indonesia significantly decentralized its political system. Power devolved all the way to the districts through local elections, bypassing the provinces — a process that also decentralized corruption. Multiple actors at different levels of government now seek to reap benefits from public goods (e.g., business licenses, import licenses), said the speaker, making it more difficult for foreign companies to do business. Local politicians, meanwhile, reward campaign backers with lucrative contracts after being elected.
Indonesia’s over 500 elected local governments are “micro-democracies” built on networks of patronage, explained the speaker. Reform has not only promoted the hiring of the “sons and daughters of the region” (i.e., the ethnic group that dominates a given area) into newly created local civil service positions, it has brought a cash economy to the hinterlands. Migrants and/or non-dominant ethnic populations are benefiting from this cash economy by building local businesses. The speaker pointed out that these parallel developments have bifurcated the country and created potential flash points for conflict. An economic shock like that of 1997, for example, would adversely affect government budgets and thus local patronage networks, while commerce in local villages would remain dominated by migrants from other islands.
Western view of corruption misses its contributions to social cohesion
The rhetoric of the West on corruption emphasizes its corrosive effect on social values and often points to poor governance and human rights abuses as contributing factors. In Pisani’s view, however, corruption at the local level in Indonesia helps maintain the social equilibrium, dampen incentives for “extractive” corruption at the cost of village harmony, and prevents conflict.
The speaker told the story of a local leader pressured by the World Bank because only 20 percent of rice from a particular project was being distributed to the very poor segment of its population. “If something comes free from the government,” he told Pisani,”then everyone deserves to get some of it. If I don’t distribute it equally, everyone is upset.” According to her, this practice helps solidify culturally embedded networks, allowing them to work as social protection networks as well. In the same village, for example, better-off villagers paid to transport the child of a poor family to the hospital after he had an epileptic attack.
A lively discussion followed Pisani’s remarks. UCLA historian Geoffrey Robinson argued that the redistributive effects of patronage networks might be inherently limited, especially if a village was divided between two different ethnic groups and thus, two irreconcilable patronage networks. When such networks are divided along religious lines, they have even greater potential to exacerbate potential conflict, he said.
Pisani noted that some regions have resolved ethnic disputes by carving up the territory into respective zones of influence and each group maintaining their respective patronage network. Other regions have come to a compromise arrangement in which they appoint a village head and vice head, one from each ethnic group, or alternate the top local executive office among such groups.
In one prominent case, the Aceh region, she argued that the distribution of resources among different ethnic groups helped resolve conflict. A low-grade civil war between local militants and the Indonesian government had been ongoing in the region for about 25 years (primarily over the distribution of economic resources and the migration of Javanese to the region). After the tsunami of 2004, a peace deal was concluded and a “tsunami of cash” for rebuilding the region followed. Some $365 million was distributed directly to former combatants and $7 billion in reconstruction funds was channeled through companies owned by them. In this case, corruption siphoned off funds “for the arguably useful purpose of shutting down a longstanding rebellion,” she observed.
“I don’t want to give the impression that . . . Indonesians are tolerant of corruption,” remarked Pisani. “I find the Indonesian electorate incredibly sophisticated at the village level. They make very, very clear distinction[s]. If you steal from the hospital budget and go whoring in Singapore or go to Jakarta and have a crystal meth party — which happens quite a lot — you get kicked out of power.” In this sense, she claimed that local elections were exerting a clear check on those in power, far surpassing local legislatures in this respect. She conceded, however, that entrenched interests in certain regions, such as West Java, continued to outweigh the power of the electorate.
“There is no tolerance for the extractive, ‘get-rich, ‘be indulgent’ type of corruption, but the patronage [phenomenon] people don't even see as corruption,” said the speaker. “[So] there's a real distinction made between extractive corruption and what I call distributive corruption.
“I think that in the Indonesian situation right now, you have a very, very good situation: the guarantor of whether corruption comes down on the more the distributive rather than the extractive side is the local electorate,” continued Pisani. “This is not the ideal, I’m just saying it works not so badly for now.” Noting that the country now had a window to build up its institutions, she identified an independent judiciary as a crucial priority. “Until you start tackling [corruption in the judiciary], there is no point in tackling anything else,” she asserted.