Winarno Zain, Jakarta
The anticorruption drive being conducted by several law enforcement bodies is creating anxiety in the boardrooms of state-owned enterprises (SOEs) and the offices of many government ministries. Approvals for capital expenditure by the government, as well as by some SOEs, have been slow in coming lately. This is because officials responsible for authorizing expenditures have to assure themselves that their decisions will not create problems with the authorities in the future.
Addressing the Jakarta Foreign Correspondents Club recently, Finance Minister Sri Mulyani expressed concern that the current anticorruption drive was seen as rather excessive, discouraging government officials from making decisions, thus jeopardizing the economy. Fuel price and interest rate hikes slowed the country's GDP growth in the fourth quarter of 2005. But the slowdown in GDP could have been reduced had the government been able to spend in a timely manner the money allocated for job creation. Some Rp 17 trillion in development expenditure funds allocated for 2005 was reportedly never spent, instead being carried forward to 2006.
In an effort to eradicate corruption the government has tightened bidding and procurement procedures, as stipulated in a 2003 presidential decree, resulting in much lengthier tenders. Many government contractors have complained about the lengthy process of bidding.
Moreover, some contractors say that when they completed their projects, they did not receive their payments on time, as government officials authorizing disbursements had to take precautionary steps to ensure their signatures authorizing payments did not create problems for them with the law in the future.
For medium and small-scale contractors, the long wait for payments puts the survival of their businesses at risk. As these contractors employ hundreds of thousands of workers, the effect of delayed payments on their welfare and purchasing power could be severe.
State Minister for State Enterprises Soegiharto acknowledged recently slow downs in capital expenditures had occurred at PT Telkom and state power firm PT PLN due to the reluctance of their directors to take decisions, for fear of stepping foul of the corruption fight.
Tanri Abeng, PT Telkom president commissioner, said the company had to postpone capital expenditures of US$1-2 billion slated for this year because of rising concern among its directors of the current graft fight. If such an attitude becomes more widespread among SOE directors, then the problem could become more serious, since it would dampen investment growth and could adversely affect the quality of public services.
A reluctance of PLN directors, for instance, to take prompt action in replacing old generators could disrupt the electricity supply. The public would face a situation whereby SOE directors would rather sacrifice public interests than sacrifice their personal safety. It would be ironic if a deterioration in public services occurred, not because of a lack of funds, but because of the war against corruption.
So, what should the government do to address these problems?
First, the government should strengthen the internal audit units both in the ministries and in the SOEs. Everybody knows that the audit units within the ministries, or the inspectorate generals, have been weakened over the years by corrupt political authorities, so that they are practically powerless to prevent corruption.
One of the reasons why external audit bodies like the Supreme Audit Agency (BPK) have to be more meticulous and thorough in carrying out their audit is because the inspectorate generals have lost their credibility and trust. If the credibility of these inspectorate generals could be restored, then they could serve as working partners for the BPK. The external auditors then would not have to probe so deeply into department accounts. By being less intrusive, these external auditors would be less intimidating to officials.
The skill of law enforcers should also be improved. Currently there is a wide gap in the interpretation of what is legal and what constitutes a violation of the law between government officials and law enforcers. Law enforcers could interpret what is seen as a normal business practice by the directors of the SOEs as a legal violation. Some SOE directors, for example, were at a loss to understand why a decision to purchase a highly specific piece of equipment in an emergency situation at a price higher than the benchmark set by the BPK could trigger an investigation and result in indictments.
The directors of state banks have to be prepared for questioning by the police or by the Attorney General's Office if a loan extended to a particular company turns into a non-performing loan. If a non-performing loan can trigger an investigation by the authorities, do not blame the banks if the economy suffers a slowdown because the banks are not lending more.
Efforts have to be made by the government and the anticorruption bodies to provide clear guidance to both the government as well as SOE employees of what constitutes corruption in legal terms, so that they have more confidence in carrying out their duties.
Anticorruption bodies like the KPK, the police and the Attorney General's Office have been under enormous political pressure to speed up the filing of corruption cases. Reports on corruption cases have been piling up in their offices, coming from their own investigations, audit findings as well as reports from the public.
These anticorruption bodies, given their limited resources, should concentrate only on big corruption cases with strong evidence. And more importantly, they should be able to pick up cases where the evidence of corruption can be proven beyond a reasonable doubt in a court trial.
This means they should not carry out unnecessary investigations of cases with sketchy evidence and avoid their intimidating presence in government offices. After all, the main objective of combating corruption is to accelerate economic growth, since corruption is one of the culprits that hampers economic growth.
The writer is an economic analyst.
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