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While hard data on corruption is difficult to collect, corruption in Indonesia is clearly seen through public opinion, collated through surveys as well as observation of how each system runs. Transparency International's 2017 Corruption Perception Index ranks the country 96th place out of 180 countries. The corruption culture in Indonesia magnified during Suharto's tenure.

There are two key areas in the public sector in which corruption in Indonesia can be found. These are the justice and civil service sectors. Corruption within the justice sector is seen by its ineffectiveness to enforce laws, failure to uphold justice, hence undermining the rule of law. The areas of corruption within this sector include the police and the courts. In the 2008 Public Sector Integrity Survey, the Supreme Court ranked the lowest in integrity in comparison to the other public services in Indonesia. The courts were viewed to make decisions unfairly and have high unofficial costs.

Evidence of corruption within the civil service comes from surveys conducted within the sector. Some surveys found out that almost half were found to have received bribes. Civil servants themselves admit to corruption.

In January 2012, it was reported that Indonesia has lost as much as Rp 2.13 trillion (US$238.6 million) to corruption in 2011. A study conducted by Indonesia Corruption Watch, a non-profit organization co-ordinated by Danang Widoyoko, said that embezzlement accounted for most of the money lost and that “government investment was the sector most prone to gratification.”

Companies are concerned about red tape and widespread extortion in the process of obtaining licences and permits, and they often faced demand for irregular fees or concessions based on personal relationships when obtaining government contracts. Companies have also reported regular demand for cash payments and expectations for gifts and special treatments by Indonesian officials.

Suharto and Corruption

The second president of Indonesia, Suharto, came to power with a promise of ending corruption. He left the office after 32 years as a result of massive protests over Korrupsi, Kollusi, Nepotisme (KKN), Corruption, Collusion, and Nepotism. His wife and children were also linked with KKK, which created resentment in the eyes of the public. In 1998, Transparency International ranked Indonesia as one of the most corrupt countries measured through Corruption Perception Index. A study by Centre for the Study of Development and Democracy in Jakarta found 78% of Indonesians think bribery is a required to get access to public services. Lack of accountability, trust, democratic institutions and free and independent media were the reasons for corruption culture in Suharto's tenure.

The growth under Suharto's tenure enriched the elites significantly while other classes were isolated from the economic gains. This resulted in massive protests which led to the overthrow of Suharto for good after three decades of reign in Indonesia. In 1970, a bunch of students protested against Suharto and his corrupt administration.. Suharto banned the student's protests and limited civil liberties, another factor leading to his overthrow. . To demand more civil liberties, on 5 May 1980, Petition of Fifty was signed, protesting against Suharto. The document was signed by influential politicians such as former prime ministers, Burhanuddin Harahap and Mohammad Natsir.

In his lifetime, Suharto created many organizations to provide education, healthcare and other services to the vulnerable. The funding of these organizations was through illegal means. In 1995, the organization, Dana Sejahtera Mandiri, was created and President passed a rule that everyone with income above 100 million rupiah must donate 2 percent of their income. It was suspected the money collected for this organization was distributed to Suharto family. The 1997 Asian Financial Crisis was the final nail in the coffin against Suharto and his position in the office.

He was investigated for corruption in his 32-year rule. A report by Transparency International in 2004 ranked, Suharto, the most corrupt leader in the world . After the fall of Suharto people wanted him to pay for his corrupt acts and wanted the former President to be arrested.

Economic and social costs

Corruption is an important development challenge that poses economic and social costs in Indonesia. Interference in public laws and policies for the sake of personal or private gain has weakened the competitiveness of Indonesia.

The economic costs of corruption include loss of productivity, which means workers have no incentives to work efficiently. This leads to misallocation of resources, and so is detrimental to the success of the economy. A report by the World Bank stated that 35 % potential investors decided not to operate in the country due to corruption. This reflects the loss of opportunities. Investment by foreign enterprises plays a huge role in increasing the growth rates of a country. With fewer investors coming in Indonesia, it translates into lower growth rates. Foreign investors decided not to invest in Indonesia as existing companies routinely have to pay bribes to public servants to get the work done. In other cases, public servants expect them to give gifts in exchange for doing their job. According to Transparency International, 2017 report, Indonesia has a score of 37. This means it is still under corrupt countries category. Most of the local people view the government as corrupt as per the Corruption Perception Index.

About one-quarter of ministries suffer from budgetary diversions in Indonesia. Households spent approximately 1% while enterprises spent at least 5% of monthly company revenue on unofficial payments. Social costs due to corruption in Indonesia include the weakening of government institutions and the rule of law. Increases in crime due to smuggling and extortion involve the institutions that are supposed to be protecting citizens. The people who suffer most are the poor as they are pressured to finance payments through their already tight budgets and the effectiveness of social services are less accessible indirectly. These concerns were voiced by the poor urban communities of Indonesia themselves in a joint World Bank-Partnership for Governance Reform research project, entitled “Corruption and the Poor”. A survey in 2013 by Ernst and Young and Asia Pacific Fraud Survey concluded that 36% respondents think bribe-giving is important to win contracts.

The impacts of corruption are not uniform. Poor people in Indonesia are the ones who get affected the most. They have to spend a significant amount of their income to pay bribes to get access to public services. A report by World Bank, titled, Corruption and the Poor, explored the effects of corruption on the poor in Indonesia. Poor urban class from Makassar, Yogyakarta, and Jakarta described the struggles of living in the culture of corruption. The respondents identified major costs of corruption, including, lack of trust and so eroding the social capital of Indonesia. Other impacts include negative impacts on the human capital of the country.

Public Service Corruption in Indonesia

In 1997, the country came into limelight when an internal report by the World Bank suggested the officials have siphoned 20% of the funds for World Bank projects in Indonesia. The report states, "our projects are being implemented in an administrative culture which is not just tolerant of collusion and diversion of funds, but which blatantly expects civil servants to supplement their incomes by such means', as published in the Wall Street Journal. The ruling political party of President Suharto, Golkar was mostly involved in the corrupt activities as per the report. . The officials denied the claims of involvement in corrupt activities.

In 2005, Village Corruption in Indonesia, by the World Bank stated that the $273 million World Bank-funded project, The Kecamatan Development Program (KDP) was exploited by corruption. The project was initiated to bring infrastructural development in Indonesian Villages, with involvements of local people though decentralized decision-making. The KDP was the first project with anti-corruption as an element to the entire framework. KDP tried to combat corruption by breaking monopolies and giving incentives to the people in the villages The project was successful in eliminating corruption through more accountability by releasing and simplifying information for the villagers. Still, corruption existed as villagers know the punishment for corruption is rarely enforced. Budget mark-ups was a frequent corruption technique employed by the villagers, where cheap materials were used instead of the specified material and the difference was embezzled.

The judiciary is seen as corrupt in Indonesia. Former Chief Justice Soerjona claimed 50% of the judges and lawyers are corrupt. Bribery is a norm in the justice system of Indonesia. Following the Indonesia Corruption Watch carried out a series of interview and found out that bribery is a major practice in the local courts. There is very little accountability in the judiciary of Indonesia as vast majority of the court decisions are not published on websites or anywhere else. The reasons cited for high corruption include low operational budget and inferior salaries of public servants in comparison to private sectors. In 2004, the government increased the salaries in the hopes of ending the corrupt culture in the local courts.. However, it did not prove to be successful in ending corruption.

The high degree of corruption in public services has resulted in weak rule of law system and has constrained Indonesia's infrastructure to develop properly .

Efforts to curb corruption

The most salient anti-corruption efforts spearheaded by Indonesian civil society is the Indonesia Corruption Watch (ICW), formulated in 1998 after the overthrow of Suharto. The goal was to reduce corruption in post-Suharto Indonesia. The United Nations Office on Drugs and Crime considers ICW as ‘the leading NGO’ in ending corruption in Indonesia. .

Anti-corruption efforts began in Indonesia in the 1950s. There have been some efforts to battle corruption with the creation of the ombudsman and the Assets Auditing Commission (KPKPN). It has been an important agenda and part of Indonesia's official reform program since May 1998. However, the efforts made are questionable as there has been limited success to reduce corruption. Some obstacles that impeded the improvement of corruption included political and economic constraints, and the complex nature of the corruption itself. Following strong criticism of corruption at the beginning of the New Order regime in the late 1960s a Commission of Four was appointed by president Suharto in 1970. The report of the commission noted that corruption was "rampant" but none of the cases it said were in need of urgent action were followed up. Laws were passed in 1999 giving the Police and prosecution service the authority to investigate corruption cases.

These efforts have taken the shape of ordering corruption convicts to pay back all the money they have stolen. On 6 March 2012, the Jakarta Corruption Court sentenced Ridwan Sanjaya, an official from the Ministry of Energy and Mineral Resources, to six years in prison for rigging a tender bid for a home solar energy system project in 2009 worth IDR526 billion (US$57.86 million). This is an abnormal number in equation to other southeastern-Asian countries. The government isn't doing much for this case and the Indonesians are left to handle this on their own.

Ridwan was found guilty of accepting IDR 14.6 billion in kickbacks, resulting in IDR131 billion in state losses. The Corruption Eradication Commission (KPK) stated that it will use Ridwan’s verdict as material to develop the investigation on the graft scandal involving the Solar Home System project.

The Corruption Eradication Commission (Komisi Pemberantasan Korupsi, KPK) is the most prominent anti-corruption program in Indonesia. The KPK prosecutes high-level officials involved in corrupt activities in Indonesia. . KPK released information that from 2004 to 2011 the loss associated with corruption were equal Rp 39.3 trillion. The Anti Corruption Clearing House released data from 2003 to 2013, KPK was successful in exposing 595 cases of corruption. In five years, KPK was able to reach a 100% conviction rate against top officials in the country . KPK is so successful because the investigators and prosecutors work closely together to collect sufficient evidence for the case. The KPK has been given the autonomy to prosecute anyone except people in the Indonesian Army. It can conduct wiretaps, look at bank accounts and can freeze assets and make orders for arrest.. KPK prosecuted Upstream Oil and Gas Regulatory Special Task Force head in Indonesia from accepting bribes from Singapore-based oil company, Kernel Oil Private Limited.

The United Nations and the World bank-led Sustainable Development Goals focus on ending corruption in many countries, including Indonesia. . The World Bank recommends Indonesia to emulate successful anti-corruption initiatives such as the establishment of Extractive Industries Transparency Initiative (EITI) in Nigeria, which played a positive role in raising awareness and reducing corruption

See also

• Corruption Eradication Commission
• Corruption charges against Suharto

External links

• Indonesia Corruption Profile from the Business Anti-Corruption Portal