Corruption is never easy to measure and Transparency International’s (TI) Corruption Perception Index (CPI) has its fair share of critics, but since its launch in 1995, it has become the benchmark for countries around the world to assess their progress in tackling corruption. Whenever a drop occurs in their scores and ranking, governments will take issue, questioning the methodology and emphasizing that it only measures perception, not actual corruption. The reality, however, is never too far from the perception.
Indonesia’s 3-point drop in the latest CPI score is no surprise but disappointing all the same. This is the first time the score has fallen since 2007, when it consistently improved, reaching a peak in 2019 and Indonesia scored 40 and ranked 85th among the 180 countries surveyed. In 2020, our score fell to 37, on a par with Gambia, slipping to 102nd place, back to where we were in 2016 and 2017.
Why the fall? TI uses data from nine different surveys to come up with a composite index for Indonesia’s CPI score. In all but one survey, namely the World Justice Project’s Rule of Law Index, Indonesia’s performance has either worsened or remained stagnant. Where we have performed badly are mostly in the surveys related to business and investments, such as the PRS International Country Risk Guide, the IMD World Competitiveness Yearbook, Global Insight Country Risk Rating, and the PERC Asia Risk Guide. This is particularly ironic when the Jokowi government has been doing its utmost to improve the business environment. Private sector actors, as the main respondents in these surveys, perceive bribery, extortion and other corrupt practices to have worsened in 2020.
Although the government has made an impressive leap according to the World Bank’s Doing Business reports, jumping from 120th place in 2014 to 73rd within five years, corruption remains unresolved. It continues to skew the playing field, creates uncertainty, and drives up costs. Wherein lies the crux of this massive problem? De-bureaucratization would be the minimum requirement to improve public governance. The government needs to make a steadfast commitment to and implement a strong anti-corruption agenda that has the courage to break the chains of the oligarchy, including revising the laws governing political parties, to instill integrity in their management.
As pointed out by former KPK (Indonesian Anti-Corruption Commission) Commissioner, Laode M Syarif, Ph.D, 252 out of the 575 members of Parliament (44%) have business interests. Not surprisingly therefore, the widely controversial revisions to the Laws on the KPK, on Mining as well as on Job Creation, were passed in record time, displaying the power of the oligarchs.
There is a new caveat. One day before the CPI was launched, the government announced the appointment of the five supervisory board members – as approved by Parliament – to oversee the new sovereign wealth fund, otherwise known as the Indonesian Investment Authority (LPI). The success of this fund, which the government has initially targeted at US$5.3 billion, hinges on the government’s ability to attract foreign capital. Reportedly, it has so far received pledges from the US International Development Finance Corporation, the Japan Bank for International Cooperation and the Canadian Pension Fund CDPQ. Indonesia itself has already allocated US$1 billion from its state budget to set the ball rolling.
Not only should this LPI be managed by competent professionals with integrity and governed by accountable and transparent processes, the political environment in which it operates must also be conducive to its functioning free of political intervention. A tall order perhaps but necessary if we want to attract reputable investors and avoid the shame of Malaysia’s experience with its 1MDB fund.
Corruption has even reared its ugly head during this devastating Covid-19 pandemic, as evident in the questionable government aid procurement and disbursement practices. It is imperative, therefore, that political corruption, managing conflicts of interest and controlling political financing be seriously tackled, so as not to jeopardize our dream of becoming the world’s fourth biggest economy in 2045.
NATALIA SOEBAGJO
Bali resident & writer
