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Corruption, Good Governance and Economic Development: Contemporary Analysis and Case Studies
Budi Setiyono
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Another business consultant institution, Political Risk Services (PRS), which analyses climate for investment in hundreds of countries, also notes that widespread corruption, bureaucratic obstacles, and inadequate legal protection are the main sources of deterrence for foreign investment and economic growth in Indonesia. PRS further consistently describes that investment climate in Indonesia is undermined by the heavy practice of un-official payments. In 2007, for example, the PRS pointed out that the climate in Indonesia is generally unfriendly for foreign investors, since ‘inefficient and corrupt administrative procedures, as well as an arbitrary legal system, frequently hamper international business, adding at least 10% to the cost of doing business’ (PRS, 2007: 9). Similar evidence is also shown by Transparency International’s Corruption Perception Index (CPI) survey (see Table 11.1). With the fluctuation of CPI scores ranging between 1.7 at the lowest and 2.6 at the highest on a 10 point scale (with higher numbers indicating lower corruption), Indonesian records show no significant improvement over the last decade. Apart from the conventional types of corruption that took place during Suharto’s era, the TI reports that political corruption has become a new trend in Indonesia’s democratic governance. According to TI, ‘one reason for this trend is the fact that political parties are not allowed to solicit their own funds to the required amount. Ministers and other holders of political office are expected to solicit funds, usually corruptly, to feed their political party’s demands’ (TI, 2008: 195). Although the corruption indices reported in these surveys are generally based on subjective rankings by foreign business persons, domestic Table 11.1
Corruption remains a problem: Indonesia’s CPI records
Authoritarian period
Democratic period
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Score 2.6
2.7
2.0
1.7
Rank
46/ 52
80/ 85
96/ 85/ 88/ 99 90 91
45/ 54
1.7
1.9
1.9
1.9
2.0
2.2
2.4
2.3
2.6
2.8
2.8
96/ 122/ 133/ 150/ 130/ 143/ 126/ 111/ 110/ 102 133 146 156 163 179 180 180 176
Note: “CPI (Corruption Perception Index) score indicates the degree of public sector corruption as perceived by business people and country analysts, and ranges between 10 (highly clean) and 0 (highly corrupt)”. Source: Annual corruption perceptions surveys of Transparency International (www.transparency.org).
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