Indonesia grapples with graft

Ongoing investigations of several politicians are raising questions about how best to finance campaigns in Southeast Asia's most robust democracy.

from the November 20, 2007 edition

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Mr. Lie, who paid for his own parliamentary election campaign, wants to see stricter oversight of parliament and other branches of government to restore public faith in democratic institutions. "Eradication of corruption should start at the top and work downward. Not start at the bottom and work up, otherwise it will never end," he says.

Positive developments remain

Despite the whiff of corruption, Indonesian democracy is probably the most robust in Southeast Asia, says Mr. Gross. Since 2005, voters have begun to directly elect city mayors and district chiefs, as well as local councils and provincial assemblies. In local races, a reputation for honesty and efficiency counts much more than party affiliation. As a result, around 40 percent of executive incumbents lost their jobs.

Money-grubbing politicians are also starting to feel the heat. Marcus Mietzner, a German academic based in Jakarta, estimates that 10 percent of provincial lawmakers across Indonesia are under investigation for corruption, though efforts to investigate disgraced former President Suharto and his family have so far fallen flat.

Parliament is drafting a new law on party funding ahead of national elections in 2009. Among the proposals is raising the limit on private donations – currently $22,000 a year – says Ganjar Pranowo, an opposition lawmaker who chairs a subcommittee on party funding. Another, more controversial, suggestion is that parties should run private companies to raise campaign financing, something that the Indonesian military has done for decades to supplement its state-allocated budget.

Mr. Pranowo admits that the company model is problematic, given the potential conflicts of interest. He advocates greater transparency in party financing. "I think what we can do is publish the sources of our money and the names of the donor. They should have tax registration so you can trace that person," he says.

Until 2005, political parties received around $10 million annually in public subsidies, says Mr. Mietzner. That was cut by 90 percent after the 2004 elections. But the rising cost of election campaigns and other party activities means that most national lawmakers are either independently rich or in the pocket of business lobbyists, who have mushroomed in recent years in Jakarta.

"If you start from a system where political parties don't have access to public funding, you force them to go out and raise money however they can," Mr. Mietzner says.

But in a multiparty system, funding parties based on their strength in parliament might entrench the dominant players at the expense of dynamic newcomers, say analysts. Too-generous allowances for all parties could also backfire, warns Lie. "Unless you make it difficult for parties to form, our past experience tells us that people form parties just to get money," he says.

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