Governance, Development And Democracy

A comprehensive strategic assessment of Indonesia’s prospects for growth, equity and democratic governance, presented to selected constituents by a group of foreign scholars has become the talk of the town. The sobering diagnosis is welcome, although their standard prescriptions fall short of what is actually required. Recent events provide additional proof that although most of civil society is moving forward, the politicians, businessmen and bureaucrats are still deeply rooted in the past. Improper sequencing, poor governance and weak commitment have all contributed to the flagrant injustice, both in the case of institutionalized corruption and gross violation of human rights. The Asian crisis evidently did not produce any ‘catastrophic learning experience’, as the elite in fact received twin bonusses: high interest rates for the rupiah and sharp appreciation of their US $ hoards. Decentralization designed to enhance the quality of public services by bringing the locus of policy making closer to the constituents, turned into an over-reaction against decades of Jakarta centralization.

In fact, reformasi was short-lived: impunity in the personae of Soeharto stalwarts and cronies finding refuge in either the old or newly-established political parties, brought state-recapture on its heels. Thanks to IMF-World Bank ill-advice, the rent-seeking crony capitalists walked away unscathed, leaving the poor holding the bag. Hence, it does not come as a surprise that all the subsequently founded ‘democratic’ institutions actually had the same old authoritarian underlying values.  The hue and cry raised by the enactment of ACFTA is one of the glaring evidences that there has been no meaningful transformation towards a more competitive Indonesia. Thus, ridding the country of the identified insitutional legacy will require a quality of commitment, across the board, which has yet to appear on the horizon

The framework for further research being proposed should preferably take on board the uncomfortable truth that impoverishment continues apace even while the global elite keeps propounding sustainable development. The sense of deprivation, as distress-push propels millions of semi-illiterates toward servitude in both urban centres and abroad, presents a fertile ground for the rise of a well-orchestrated campaign advocating fundamental pan-territorial religious beliefs. Now that the freedom of information and technological innovation bring images of the glamorous lifestyles of the elite to the hovels of the millions of poor, one can hardly expect citizenship to still have much relevance. The huge concentration of wealth amassed under the authoritarian regime had already become a source of major concern for  President Soeharto himself, hence his convening of all crony conglomerates in his Tapos rural retreat.  Seeing the Indonesian strongman being thwarted in his bid to effect a more sustainable distribution of wealth and income by the very rentiers he had created, was a traumatic experience for the government.  It is an attestation to the formidable strength of the rent-seekers that all coming after him have shied away from squarely addressing both threats, leaving the Republic in a much more fragile state than one might like to believe

Thus, instead of  the touted re-formasi, what we are witnessing instead is more of a prolonged de-formasi, with roving-bandits in control of deformed institutions. The political parties, which have actually been performing more as fan-clubs than champions of substantive democracy, would appear to be major impediments to a more egalitarian and democratic Indonesia.  A decade of muddling-on has shown that entrenched interests at the heart of the state have managed to further strengthen their hold.  The July 2010 op-ed ‘Ekspor Primitif’ in the leading daily KOMPAS by, Chatib Basri PhD, one of Indonesia’s foremost economists, shows that the majority of businesses masquerading as ‘entrepreneurs’ are still ensconsed in their comfortable old business models. No, Indonesia is not suffering from the Dutch disease, it is being plagued by the ‘Parasitic Crony Malady’ with ‘easy rents driving innovation out’. When you can thunder down Sudirman in a Hummer by trading commodities, why industrialize? Abandon hope, all ye dreaming of dislodging such powerful rent-seekers through moral suasion alone.

The triple-disaster of rapid energy and food price escalations, global warming and financial melt-down has refuted the thesis that the unfettered market is self-correcting, or that it serves the long-run interests of society. If anything, it exposed the ugly fact that most of the cherished neo-liberal institutions are bereft of any moral values. Even in the States, runaway globalisation — with odious gains being rung up on Wall Street while Main Street languishes, is producing ‘a shrinking middle’, casting doubt on the future of American democracy itself. In terms of their public and corporate governance, it is apt to paraphase Krugman’s recent observations: “So here’s what Summers – and, to be fair, just about everyone in a policy-making position at the time – believed in 1999: America has honest corporate accounting; this lets investors make good decisions, and also forces management to behave responsibly; and the result is a stable, well-functioning financial system. What percentage of all this turned out to be true? Zero”

Others have described the current crisis as resulting from a massive collision between the neo-liberal’s relentless need for growth and the world’s limits, both ecological and social, in capacity to sustain that growth. It is high time, therefore, to  realize that we are fellow-travelers on the spaceship Earth and rethink our development path. If we desire a more equitable and thriving civilization, we need to adopt a more sustainable development paradigm, with strategies and policies implemented in proper sequence. Through equal discourse with the people, we could plan our population properly, provide adequate food and nutrition, prepare health services which reach out and are affordable, propagate education which addresses local needs, and design  institutions and infrastructure to actuate seamless economies.  In short, growth through equity, wherein assets provided alongwith the World Bank prescribed access and income, could bestow such a strong voice upon the marginalized that governance – through constant rebalancing of the market, state, and society – would become sustainable.

The envisaged “Institutional Transformation” entails battling in the trenches. To succeed, ownership of such a transformation needs to be well-received by all components of contemporary Indonesian society. With parliament engrossed in securing creature comforts, it no longer is a question of political will on the part of  President Susilo Bambang Yudhoyono. The single major constraint is making the hodge-podge cabinet and motley crew of both national and regional politicians actually respond to the needs of the people. It has become more a matter of strengthening the President’s political capacity to convince our countrymen that the democratic path taken will deliver widespread prosperity to them and their future generations.

HS Dillon, Executive Director, the Partnership
for Governnce Reform in Indonesia, 2004-2006


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