Indonesia’s incoming president Joko Widodo will need to move bureaucracy online across the world’s largest archipelago to better tackle corruption, the country’s financial crime agency said.
“What needs to be improved is that all transactions in the spending of local government budgets must be performed without cash,” Agus Santoso, deputy chairman of the Indonesian Financial Transaction Reports and Analysis Center, or PPATK, said in an interview. “All procurement of goods and services should be done as much as possible using e-procurement, so that the potential for price markups can be minimized.”
Santoso’s push for increased scrutiny of government services was given impetus with news yesterday the country’s anti-graft agency is investigating Mining and Energy Minister Jero Wacik, the most-senior figure to face a probe this year.
Widodo, known as Jokowi, moved budget procurement and tax collection online as governor of Jakarta, and has vowed to make national government services electronic. The challenge would be to bring greater transparency to processes outside the national sphere -- licenses for mines, plantations and infrastructure are often given out at provincial levels while the cost of local government contracts can be inflated as much as 500 percent, according to Santoso.
Indonesia’s move to decentralize government in 2001 has allowed politicians like Jokowi to rise from the local arena to national prominence, while creating scope for corruption that can deter foreign investment and siphon money as the government cuts spending on concerns about the budget deficit, targeted at a proposed 2.32 percent of gross domestic product next year. There were 141 local bureaucrats tried last year on graft charges, according to non-government group Indonesia Corruption Watch.
Some local leaders may look to accumulate money to fund re-election campaigns, Santoso said. There will be over 200 elections next year for local leaders, who sometimes run offices without computers, said Andrew Thornley, Jakarta-based program director of elections at The Asia Foundation.
“There’s no standard system for provision of information,” said Thornley, who added local bureaucracies needed to become more transparent.
The number of Indonesians using the Internet grew 13 percent last year, yet Internet penetration has only reached about 28 percent of the world’s fourth-largest population, the Jakarta Post reported in January, citing data from the Association of Indonesian Internet Providers.
“There should be safeguards for the villages,” Santoso said. A plan to give central government funds directly to villages to let local leaders better-control spending in Southeast Asia’s biggest economy could create “small kings”. Indonesia ranked 114th among 177 countries and territories in a 2013 Transparency International corruption perceptions report.
The Corruption Eradication Agency, or KPK, yesterday announced Wacik is a suspect in an alleged extortion case related to the energy ministry’s operational budget.
Wacik, a member of outgoing President Susilo Bambang Yudhoyono’s Democrat party, allegedly extorted as much as 9.9 billion rupiah ($840,700) in 2011 and 2012, Bambang Widjojanto, one of the chairmen at the KPK, said at a briefing in Jakarta yesterday. The KPK will submit a travel ban request for Wacik in the “near future,” he said.
“The ministry’s work will go on as usual,” said Saleh Adburrahman, a spokesman at the energy and mineral resources ministry.
“I will stay in Indonesia to follow the legal process,” Wacik, who has served as energy and mining minister since October 2011, told reporters yesterday. “About my position as minister, I signed a pact of integrity. Because the president is still out of country, when the president is back, I will meet him.”
The KPK in January named the ministry’s then-secretary general, Waryono Karno, a graft suspect. He was named in May in a separate case related to the energy ministry.
“This is a lesson, not only for the Democrats but also for other parties,” said Arie Sujito, a political analyst at Gadjah Mada University in Yogyakarta. “The case of Jero Wacik will be big because the size of the alleged corruption is huge. It will add to the decline of the Democratic Party.”
Indonesia’s corruption court in April sentenced Rudi Rubiandini, the head of the country’s energy regulator, to seven years in jail for accepting more than $1.5 million in bribes. Rubiandini, detained by the agency in August last year, received gifts of $1.4 million and S$200,000 ($159,000) to influence crude oil tenders and a gas price formula for a company, according to court papers.
The court this week sentenced Ratu Atut Chosiyah, the governor of Banten province in Java, to four years in jail for bribing the previous chief justice at the Constitutional Court, Akil Mochtar, in a case involving a local election. Mochtar is serving a life sentence after being found guilty in June of graft and money laundering.
Jokowi sparred with his presidential opponent, former General Prabowo Subianto, during the election campaign over graft and the role of business mafias. Suspicious money transfers in Indonesia could more than double this year, Santoso warned in February, ahead of the July election.
The president-elect has pledged to form a cabinet of professionals, rather than party appointees, in an effort to weaken the nexus between political and business corruption. Jokowi is expected to name his cabinet next month before taking office on Oct. 20.
“This will negate conflicts of interest between parties and government,” said Santoso. “All of the cases related to local officials or state officials and the private sector tend to involve political affiliations.”
Building a new bureaucratic system could cut corruption by 70 percent, Jokowi said in an interview on July 21. The remaining 30 percent would need to be tackled through law enforcement, with plans to expand staffing at the KPK, he said.
The PPATK doesn’t have the legal ability to penalize those doing illicit transfers, forwarding its analysis to agencies such as the police and the KPK. The KPK prosecuted 72 members of parliament, eight government ministers, six central bankers and dozens of CEOs, with a 100 percent conviction rate, in the decade since it was formed in 2003.
“The KPK is good at putting out fires, but you’ve got to think of a way of stopping the fires in the first place, and that’s where the bureaucratic reform comes in,” Hal Hill, a professor of Southeast Asian economies at the Australian National University in Canberra, said by phone yesterday.