JOURNAL | INDONESIA 360 By: Marcus Mietzner
In recent years, an increasing number of high-profile Indonesian politicians have been arrested, indicted and sentenced for the corrupt misuse of public funds or receiving bribes in exchange for granting state projects to their political sponsors. Many of these legal proceedings have been carried out by the Corruption Eradication Commission (KPK), which in turn has been celebrated as a much-needed champion of reform. International transparency indexes have rewarded Indonesia for this trend by significantly boosting its ranking in their annual assessments. For example, Indonesia was ranked 88th out of 91 countries evaluated in Transparency International’s Corruption Perception Index (CPI) in 2001, with a score of 1.9. Ten years later, its score had risen to 3.0, placing it 100th among 182 countries.
Yet while the KPK’s fight against corrupt practices within Indonesia’s political institutions has been rightfully acknowledged, there are few indications that the intensity and quality of political corruption has declined. Last January, 280 senior local government leaders (provincial governors, district heads, mayors and their deputies) were under investigation for suspected crimes, 80 percent of them related to corruption. At the same time, two leaders of prominent national political parties were declared suspects in corruption cases, with one of them being immediately arrested and the other resigning. It appears that despite the increased risk of exposure and even imprisonment, many perpetrators still see the potential benefits of corruption outweighing its hazards. Indeed, access to large amounts of capital is often considered the most important (and essentially indispensable) asset in political competition, leading ambitious politicians to take huge risks in order to advance their careers.
It is clear, then, that the main source of political corruption in Indonesia is not primarily the absence or weakness of legal deterrents. Rather, political corruption is inherently linked to the way Indonesian politicians have to raise funds for their political campaigns and operations. More concretely, Indonesia’s dysfunctional party and campaign financing system has created an institutional environment in which political actors who seek public office must be independently rich, obtain funding from illicit sources or promise their sponsors favors in return for financial support. This essay traces the evolution of Indonesia’s problem with political finance and proposes a number of possible solutions.
It does so in six analytical steps: first, it illustrates the general problem of funding political parties in an era of exploding campaign costs and shrinking party memberships; second, it describes Indonesia’s answer to this challenge since the fall of Soeharto; third, it highlights the deficiencies of that answer, both in institutional design and enforcement; fourth, it illustrates how the deficits of the political financing regime have negatively impacted on the quality of policy-making in general and public service delivery in particular; fifth, it illustrates how Turkey (a country with a comparable demographic structure, political history and economic trajectory) has addressed the issue of political financing more effectively; and sixth, it makes recommendations on possible reforms to the party and campaign financing system that could mitigate the intensity of political corruption in Indonesia’s post-authoritarian policy.
Funding political parties and their campaigns
It is generally accepted that the ideal funding mechanism for political parties draws mainly from membership fees paid by a large and committed cadre base. The corresponding party type for this mechanism is the mass party, in which hundreds of thousands (sometimes millions) of members not only fund their party, but also volunteer for secretarial work and grassroots election campaigns. The problem with this type of a self-funded mass party, however, is that it no longer exists.
Two parallel and universal developments are responsible for this. First, membership numbers in political parties have dropped dramatically and rapidly since the 1960s and 1970s, turning former mass parties into elite-based electoralist parties. In the United Kingdom, for example, total party membership dropped from 1.7 million in 1980 to 530,000 in 2008, and the membership-toelectorate ratio declined from 4.1 to 1.2 percent. These statistics signify a worldwide (and intensifying) trend in advanced democracies. In most new democracies such as Indonesia, on the other hand, mass parties never took root in the first place — the parties that were established after the fall of Soeharto in 1998 immediately adopted the form of campaign-oriented, electoralist parties. Thus, while the funding base of parties in old democracies is crumbling, parties in new democracies did not go through a phase of mass-based funding and organization.
Second, the focus of electoral campaigning moved from grassroots mobilization through a network of volunteers, to mediabased operations run by campaign professionals. As a result, the costs of campaigns exploded. In short, the shift from the mass party type to an electoralist party paradigm brought a rapid decline in party income and a drastic rise in costs at the same time.
Both old and new democracies have responded to these challenges by introducing major innovations to their party-financing systems. First, in order to replace dwindling membership fees, countries introduced regular subsidies for political parties. Mostly calculated based on the number of votes parties receive in elections, state subsidies help parties to maintain strong and independent party apparatuses. This model has become increasingly popular since the 1980s, and today 75 percent of all democracies offer some form of public funding. The level varies widely, but many advanced democracies cover around 25 to 30 percent of party expenditures through state subsidies (this percentage is even higher if financial assistance for legislative caucuses is included).
Second, countries have tried to compensate for the decrease in membership contributions by creating incentives for the public to donate to parties. These often come in the form of tax deductions for donors. This model is particularly prominent in the United States, where state subsidies for candidates and parties are rare. One major element of this mechanism is a cap on donations, designed to encourage contributions by ordinary citizens instead of businesspeople and their companies.
In most cases, there are also strict transparency requirements, with candidates and parties obliged to disclose all of their donations and their sources. In combination, state subsidies and the encouragement of small-scale donations pursued the goal of insulating parties from oligarchic interests and other lobby groups. This, it was hoped, would allow parties to act autonomously in the same way they did in the era of mass parties. While scholarly assessments of the various funding mechanisms are highly diverse, the available evidence suggests that countries with high levels of public party financing have generally been more successful in this enterprise than those countries in which state subsidies are absent or negligible.
Indonesia’s party and campaign financing regulations
The designers of Indonesia’s party financing system in 1998 and 1999 decided that parties should be funded through three main mechanisms. The first source of income was supposed to be membership fees. The three parties that had emerged from Soeharto’s New Order regime claimed tens of millions of members, and some of the new parties — such as the National Awakening Party (PAN) and National Mandate Party (PKB) — also boasted that they could rely on large mass bases.
These claims led to expectations on the part of lawmakers that Indonesian parties could raise much of their income from membership fees just as European mass parties did during the first half of the 20th century. Indeed, although this prediction turned out to be inaccurate, membership fees were maintained as one of the three pillars of Indonesia’s party financing system throughout the revisions of the political party law in 2002, 2008 and 2011.
Second, parties were allowed to accept donations. These donations were capped, but the threshold was constantly raised throughout the years. Based on the 2011 party law, parties can receive Rp 1 billion rupiah ($91,000) from individuals and up to Rp 7.5 billion from corporations per year. Additional donations are possible to the accounts of legislative, presidential and local executive campaigns, with comparable thresholds in place.
Thus, Indonesia opted to implement an income-oriented cap instead of an expenditure cap, which is often considered the more effective instrument in controlling party and campaign finances. In terms of transparency, parties were required (under the 2011 law) to have their finances audited once a year and publish the report “periodically.” Similarly, campaign accounts are to be submitted to the National Election Commission (KPU) and are subsequently audited by public accountants appointed by the KPU. The party and electoral laws contain a long catalogue of sanctions for parties and candidates violating these regulations, with punishments ranging from fines to prison terms and disqualification as an electoral contestant.
The third element of the party and campaign financing system consists of state subsidies. Based on the result of each party in the last elections, parties receive annual subventions from the national, provincial and district governments. Between 1999 and 2001, these subventions were given on an ad-hoc basis, with parties paying themselves funds through the KPU (which at that time consisted of representatives of all 48 parties participating in the 1999 elections). In 2001, the payments were regularized through a presidential decree, with each party obtaining Rp 1,000 per vote. This introduced state subsidies as a substantial component of party financing: for instance, the Indonesian Democratic Party of Struggle (PDIP) received Rp 35.7 billion each year at the national level and similar payments at the local level. Thus, from the payments it received in 2001, PDIP could cover more than 50 percent of its 1999 electoral expenses, which were reported as being Rp 69.1 billion.
However, this regulation did not last long. In 2005, a new presidential decree reduced the payments to Rp 21 million per seat, or around Rp 108 per vote. This reduction of almost 90 percent was further institutionalized by presidential decrees in 2009 and 2012, and decrees by the Ministry of Home Affairs in 2009 and 2013. Ironically, the reduction occurred at a time when campaign costs for parties increased exponentially.
The introduction of direct presidential elections in 2004 and direct local executive elections in 2005 increased the number of elections in a five-year cycle from one to around 550. In concert with this, the professionalization of campaigns led to more costs for consultants, opinion polls and media advertisements. PDIP’s campaign costs, for example, shot up to an officially reported Rp 376.3 billion in 2009, while it only received around Rp 1.5 billion in state subsidies at the national level in that year.
And although the subsidies-toexpenditure ratio shrank continuously, new regulations tightened the accountability mechanisms for the use of the money. The 2011 party law requires parties to spend portions of the money on political education rather than operational expenses, and the financial reports are audited by the State Audit Agency (BPK). It should be added, however, that party branches at the local level have received additional money from provincial, district and municipal governments.
In some cases, these subsidies have been significantly higher than the Rp 108 per vote paid at the national level. But there is no systematically collected data on the amounts paid out to party branches in Indonesia’s 34 provinces and approximately 500 districts and municipalities, so it is difficult to know the total figure. Furthermore, whatever is paid to local party branches is likely to be used to offset the high costs of parties contesting the hundreds of local elections that take place each year; it is therefore not used to build stable, coherent and institutionally healthy parties.
Deficiencies in the party financing system
As we have seen above, both old and new democracies have developed institutional responses to the parallel developments of declining party memberships and rising campaign costs. Indonesia’s response, however, must be viewed as highly deficient. None of the three elements of Indonesia’s post- Soeharto party financing system provides a solid foundation for funding political operations.
First, the idea that parties can (and therefore should) fund themselves primarily through membership fees has long been shown to be unviable — yet it is perpetuated in all party laws and regulations. What’s more, the membership fee model is most frequently cited by Indonesian nongovernmental organizations when asked about their solution to the problem of political financing. Not a single political party in Indonesia draws significant funds from membership fees, and this is unlikely to change. Second, the mechanism for donations is ineffective.
There is no incentive for donors to hand their contribution to a party treasury — Indonesia offers neither tax deductions nor matching funds to parties for officially registering donations. Thus, most donors give directly to individual politicians rather than to the party as an institution. As such payments are not regulated by law (the legislation only recognizes donations to parties), both donors and recipients feel that they are acting within existing legal boundaries and can, at the same time, avoid the income thresholds set for parties.
But even the small amounts of official donations to party treasuries are not effectively monitored. Audit reports on party and campaign accounts are purely formalistic: auditors only check whether the forms were filled in correctly. No investigative audit takes place. As a result, Indonesia is wasting significant funds on unsubstantial audits, none of which has ever led to legal investigations. Moreover, there are no stipulations that would require parties, candidates or the KPU to publish account statements or audit reports, effectively excluding the population from efforts to enforce transparency.
Transparency and accountability are also obscured by institutional confusion over who is responsible for overseeing party and campaign financing. There are four bodies involved: the KPU, the Election Supervisory Board, the National Police and the BPK. However, none of these bodies has ultimate responsibility for investigations and imposing sanctions. This arrangement runs counter to best practices in other democracies, where a single agency receives complaints, conducts investigations and issues decisions on violations (the Federal Election Commission in the United States, for example).
In Indonesia, the four oversight bodies have deep institutional rivalries; they withhold crucial information from each other that prevents their counterparts from initiating credible legal proceedings on their own. These institutional weaknesses and loopholes have led to a situation in which even the most blatant violations are not investigated. In both the 2004 and 2009 elections, organizations such as Indonesia Corruption Watch delivered detailed reports on fictitious donations, vast discrepancies between official and real expenditures and campaign accounts that included ridiculously low amounts.
For example, PDIP reported campaign expenses of only Rp 38.9 billion for the 2009 legislative elections, but a quick look at AC Nielsen’s report on television advertisements during the campaign period revealed that the party had spent over Rp 100 billion on television ads alone. No action was taken. It seems there is collective agreement among Indonesian parties, law enforcement agencies and the public that existing transparency regulations won’t be enforced because doing so would cause major disruptions in the political process and arguably land every single Indonesian party politician in prison.
With the first two pillars of Indonesia’s party financing failing, the third (state subsidies) is of particular importance. But as demonstrated above, the extent of state subventions has been systematically reduced since 2005, shrinking them to a size that can only be described as miniscule. Today, Indonesian parties can cover far less than 1 percent of their real expenditures through state subsidies — well below the standard in comparable new democracies such as those in Eastern Europe or Turkey.
As Indonesia prepares to join the exclusive club of trilliondollar economies, the traditional argument that it can’t afford a solidly funded party financing system is rapidly losing credibility. Indeed, while some politicians — reportedly even President Susilo Bambang Yudhoyono — acknowledge that cutting the subsidies was a mistake and are therefore prepared to increase them, they are afraid of a public backlash. There is a widespread view within Indonesian society that parties do not deserve state subsidies, and that they not only should fund themselves but also provide expensive services to the people (disaster relief, health services or distribution of food items, for example).
Even those Indonesians who are in principle open to the idea of state subsidies generally demand that parties should cleanse themselves of corruption before requesting an increase in subventions. But as the next section illustrates, it is Indonesia’s dysfunctional party financing system that is the main source of political corruption. Against this background, it should become increasingly obvious that the latter cannot be addressed without substantially redesigning the former.
Party financing, corruption and public services
The systemic failure of Indonesia’s party financing regime has had a number of serious consequences for the country’s democratic quality. First, given that the three officially sanctioned income-generating mechanisms are ineffectual, parties have been forced to mobilize other — much more problematic — financing channels. For instance, they have squeezed their lawmakers for funds, sold nominations for legislative and executive office to cashed-up nonparty outsiders or turned to oligarchs to fund the entire operations of the party.
All of these trends have intensified already-endemic political corruption: lawmakers who have to surrender much of their legal income to party treasuries have resorted to corrupt practices to compensate for their losses; successful candidates for political office who paid parties for their nominations (and subsequently had to self-fund their campaigns) assume their new posts either with significant private debt or feel an obligation to serve the interests of their sponsors; and oligarchs have taken control of some political parties (five out of the 10 main Indonesian parties are currently controlled by tycoons), using them as vehicles for their economic and political interests.
In other words, the reluctance of the Indonesian state and society to provide parties with legal and regular public subsidies has justified and aggravated the predatory behavior of politicians on the one hand, and opened up opportunities for oligarchic intervention on the other. Second, the political corruption associated with informal party financing has not only led to the siphoning off of public funds, it has also produced biased policy-making and low-quality public services. In the House of Representatives, for example, legislators often have to defend the agenda of their sponsors rather than those of their constituency or the broader public.
Thus, legislative drafting processes are frequently dominated by the interests and suggestions of political donors that are communicated through their proxies in committees. The same applies to budgets: the process tends to be driven by the commercial interests of sponsors, rather than by considerations of appropriateness, transparency and efficiency. Most importantly, the quality of public service delivery has also been affected by the intrusion of oligarchic donor interests in policy-making. With legislators and executive incumbents (particularly in the regions) beholden to their sponsors, public resources are often directed into areas of specific interest for contractors and other capital-intensive investors, such as large government buildings and other infrastructure that is of little value to the public.
This pattern is reflected in the unusually high percentage of government infrastructure and “administration” spending in local budgets: in Indonesia, this percentage stands at around 30 percent, while the World Banks views 5 percent as acceptable. Even in cases in which roads, hospitals or schools are built for the public good, the inevitable markup (through which political donors compensate for their “investment” in the politicians who granted them the project) often leads to poor quality results.
It is important to note, however, that this trend has been counterbalanced in recent years by the necessity for politicians to increase social spending prior to elections. Thus, many provinces and districts (and in 2009, the nation as a whole) have seen education, health and social service spending skyrocket in the two years prior to an election, as incumbents try to use state funds to mobilize voters. Incumbents, then, face the increasing challenge of balancing their allegiance to financial donors with their commitment to the wider electorate.
Turkey: An alternative model
While it is clear that Indonesia’s party financing system is unworkable, it is rather unrealistic to expect that the country can easily adopt the models practiced in advanced democracies. It is appropriate and useful, however, to compare Indonesia’s system to the party financing regimes of countries with similar demographics, political histories and levels of democratic development. Turkey is one such country; like Indonesia, it is one of the few stable Muslim democracies in the world, has a similar history of military involvement in politics, and is widely seen as a regional leader. Importantly it has taken a completely different path for the financing of political parties.
While Indonesia has radically reduced state funding, Turkey very early decided to provide generous public funding for parties. Today, Turkish parties receive 90 percent of their income through state subventions. In 2011, the three parties in the Turkish parliament received a total of 327.3 million lira (around $162 million). In the same year, all Indonesian parties received the rupiah equivalent of around $1.1 million from the state. In short, Turkish parties received 158 times more in state subsidies than their Indonesian counterparts, despite Turkey having only one-third of the population of Indonesia.
Turkish parties receive funds as a clearly defined proportion of the state’s annual budget revenues: currently, parties are entitled to 2/5000 (0.0004 percent) of these revenues, to be divided based on the vote share of all parties that passed the parliamentary threshold of 10 percent. Parties that won more than 7 percent of the votes but did not make it into the parliament also received an allocation, albeit smaller. Significantly, the amounts are increased threefold in a national election year and doubled in a local election year.
The 2011 amounts reflect the income that parties received in an election year; in 2010, a “normal” year, parties received the equivalent of $46 million from the state. While a system so strongly based on state subsidies has its own problems (as the recent political unrest in Turkey has demonstrated), it has turned Turkish parties into institutionally solid and financially healthy organizations. It would be unthinkable in Turkey, for example, for the governing Justice and Development Party (AKP) to sell nominations for elective office to party outsiders; instead, it selects party cadres as candidates and helps fund their campaigns.
In this sense, the different trajectories between the AKP and Indonesia’s Prosperous Justice Party (PKS), which views the AKP as its model, can be seen as a result of the differences between Turkey and Indonesia’s party financing regimes. While the AKP could concentrate on political campaigns and use its autonomous financial basis to maintain a relatively clean image, the PKS became engulfed in a series of corruption scandals while trying desperately to build a solid financial base. Its reputation has become irreparably tainted and its political development has stagnated.
Aside from substantial subsidies for parties, Indonesia should also consider adopting Turkey’s system of having a single institution oversee political parties’ financial reporting. This single body is Turkey’s Constitutional Court, which has extensive powers to investigate violations and impose sanctions. Between 2007 and 2009, the court issued 44 decisions on violations found in party reports submitted during the 1998-2006 period. Party property was confiscated through 37 decisions, while in other cases the court notified the public prosecution service that criminal offenses had occurred. Of course, should Indonesia wish to implement some elements of Turkey’s party financing regime, it should consider the concerns some Turkish observers have raised about this system.
For instance, the state subventions have made the existing parties so strong that newcomers find it difficult to compete. Demonstrations earlier this year against the AKP in Istanbul, Ankara and other Turkish cities showed that overly confident parties can become hegemonic and even autocratic forces. Similarly, the provision of state monies to party headquarters has led to a significant centralization of Turkish party organization. Finally, it is crucial to note that high levels of state funding can “only” mitigate but not completely stamp out political corruption. Turkey continues to experience significant corruption; importantly, however, it is placed 54th in the 2012 Corruption Perception Index — 64 places higher than Indonesia.
Serious subsidies as a path to reform
Party financing in Indonesia faces both a design and an enforcement problem. It is unrealistic to expect that existing regulations can be enforced without major revisions to the overall design of the system, and institutional reform is unlikely to work if transparency rules remain unenforced. However, it is obvious that any reform of the party financing system will have to start with an increase in state subsidies for political parties.
Without it, there is no incentive for politicians to change their informal fundraising practices and predatory acquisition of state resources. While not an ideal solution, state subsidies can effectively reduce the political influence of oligarchs and other sponsors, and they can erode the justification that politicians often use for political corruption. There is little empirical doubt that countries with high levels of state financing for parties are more successful in keeping oligarchs at bay and political corruption relatively low than those who do not offer such subventions.
Internationally, then, the percentage of democracies that have adopted state financing regimes has constantly increased, and the amounts provided through these systems have grown as party membership numbers continue to decline. Uniquely, however, Indonesia chose to dismantle an existing state financing system and cut subsidies to almost zero, despite the fact that political costs are continuously rising. For Indonesia to establish a workable party financing system, it will have to increase the subsidies-to-expenditure ratio from less than 1 percent at present to around 25 to 30 percent. In concrete numbers, this would mean an increase in the rupiah-pervote amount from 108 to — eventually — around 5,000. Alternatively, Indonesia could adopt the Turkish model of tying the amount of state subsidies to the country’s revenues.
This has two advantages: first, it creates an incentive structure for politicians to increase state revenue and rewards them for good economic management. Second, it resolves the issue of regular increases to subsidies in a long-term and systematic manner, preventing the problem from becoming a public controversy every time a new increase is scheduled. Technically, an increase in state subsidies to political parties is easy to implement as it does not require a change in existing legislation. Instead, the amount is regulated through a government decree, or Peraturan Pemerintah. In its last manifestation, the decree on party subsidies (PP 83/2012) left the existing levels of funding in place, indicating that President Yudhoyono was reluctant to take on the issue. Based on current legislation, however, Yudhoyono could set a rupiah-per-vote amount as high or low as he wishes. Importantly, there is already a relatively effective system in place to audit the funds that parties receive from the state.
This audit is not done by public accountants, as is the case with campaign accounts or annual party reports, but by the BPK, the State Audit Bureau. BPK audits are generally very thorough, and many party treasurers have complained about the difficulties they have in fulfilling the agency’s strict requirements. At the moment, however, BPK audits of party subsidies focus on tiny amounts, and they cost the institution more money than the funds contained in the audited accounts. The BPK could easily handle a much larger audit of party subsidies should the state decide to increase them. Therefore, arguments against an increase in state subsidies cannot credibly be based on technical or capacity considerations. Instead, opposition against such reform is highly political — and has seen strangely heterogeneous coalitions forming. On one hand, party oligarchs oppose an increase in state subsidies because it would destroy their power base. Parties turned to oligarchs in the post-2004 period after they could no longer afford to cover their costs through existing subsidies and donations.
In essence, it is the financial weakness of parties that makes oligarchic takeovers possible; conversely, a party financially strengthened through more state subsidies is unlikely to surrender its leadership to tycoons. Ironically, the oligarchs are joined in their opposition to state subsidies by many nongovernmental organizations and the general public. A majority of Indonesia’s nongovernmental groups believes that parties are undeserving of an increase in state subsidies, arguing that they must reduce their corrupt behavior in order to qualify. However, this logic overlooks the inherent and causal relationship between low subsidies and higher levels of corruption.
Of course, the skepticism of civil society groups is not unfounded. No doubt, some politicians will just pocket state subsidies and continue their predatory and corrupt attacks on state resources — but not all of them will. There are a significant number of party officials who would happily suspend their current illicit and high-risk fundraising methods if the state were to provide legal and regular payments. Clearly, NGOs need to be convinced of this, and a gradual introduction of higher state subsidies could help in this regard.
If, for instance, the Indonesian state increased national subsidies to Rp 2,500 per vote per year in a first step, NGOs could then evaluate the results before backing further increases. Important indicators of the effectiveness of state subsidies would be: a) the number of political party chairmanships held by oligarchs, b) the frequency and intensity of political corruption scandals associated with party fundraising, and c) the number of nonparty actors who run for public office by purchasing nominations from parties. There are already solid databases on these issues, so it would be possible to identify trends over time.
Should there be positive trends in all of these areas — fewer oligarchs leading parties, fewer political corruption scandals and fewer nonparty figures buying nominations — in a timeframe of two to three years, this could help convince NGOs that increased state subsidies to parties are a useful instrument in the fight against political corruption and tycoon control of parties. However, given current levels of opposition in civil society circles to state subsidies for parties (and given that many NGOs oppose such subventions even in consolidated democracies where the former have clearly helped to keep the degree of corruption and oligarchization low), it remains to be seen whether NGOs would support public party financing in case the experimental increase to Rp 2,500 per vote per year should prove successful.
As far as oversight and transparency of party donations is concerned, institutional change is even more difficult to accomplish. The current laws do not include legally binding requirements on a) the publication of income and expenditure reports; b) the inclusion of donations received by individual cadres into the overall report of a party’s finances; c) the registration of contributions by party members (for example, by oligarchic chairpersons who finance the entire operation); or d) the launch of investigative audits whenever indications of violations emerge.
This year, the KPU issued campaign financing rules that go beyond the vague legislative regulations, but political parties have in the past ignored KPU guidelines that are not anchored in existing laws. Thus, unlike the issue of state subsidies, developing more effective transparency mechanisms would require substantive revisions to the laws on legislative, presidential and local elections. The first of these three laws was passed in 2012, with no significant changes in the area of campaign financing.
The last two were still being debated in the House as Strategic Review went to press, but they are likely to follow the campaign financing regulations set out in the legislative election law. Consequently, efforts for wide-ranging reform will have to focus on legislative changes in the post-2014 period.
These efforts should push for five major changes: first, replacing income caps with expenditure caps as the main instrument of overseeing party finances, as the latter make violations much easier to detect and also have the effect of reducing the costs of electoral campaigns; second, the creation of a single body in charge of investigating violations and imposing sanctions (modeled along the role of the Turkish Constitutional Court); third, regulations that require the online publication of party financial reports, inviting the public to scrutinize them and report possible inaccuracies; fourth, replacing the current formalistic audits with a system under which investigative audits are initiated when violations are strongly suspected; and fifth, integrating the party and campaign donation regime with the tax system, with deductions for contributions creating incentives for making formal instead of under the table payments.
All of these changes require significant effort and political will from both lawmakers and law enforcers, but they need to be put forward to stop endemic political corruption from undermining Indonesia’s chances of consolidating its dynamic but still volatile democratic system.
Marcus Mietzner is a senior lecturer at Australian National University and author of the new book “Money, Power and Ideology: Political Parties in Post-Authoritarian Indonesia”.