Finance Ministry pay rises a step forward for reform

The Jakarta Post ,  Jakarta   |  Thu, 08/30/2007 1:52 PM  |  Opinion

Pandaya, The Jakarta Post, Jakarta

Finance Minister Sri Mulyani Indrawati's move to champion bureaucratic reforms herald new hope in the fight against corruption in this country.

To push the crusade, the government has proposed Rp 5.46 trillion in the draft 2008 budget to raise civil servants' salaries by 20 percent -- a generous hike that most private companies employees can only envy -- as part of bureaucratic reform efforts.

Sri Mulyani, who was named Asia's best finance minister by the Emerging Market Forum in 2006, says the Yudhoyono administration is determined to improve governance through more effective law enforcement, corruption eradication and bureaucratic reforms.

The government has designated five institutions as pilot projects for bureaucratic reform: the Finance Ministry, the State Ministry of Administrative Reforms, the Supreme Court, the Attorney General's Office and the State Audit Agency.

The Finance Ministry, which employs 62,000 people and which collects 75 percent of the country's revenue, mainly from taxes and excise, has been selected to lead the reform campaign on the grounds that it is the most strategic state institution, with policies that affect all economic aspects of the nation.

Of the five state institutions, only the Finance Ministry has begun bureaucratic reform, with a proposed Rp 1.3 trillion remuneration package. There has been no word on why the other four have yet to make a start.

Started by the then minister Boediono, now the coordinating minister for the economy, reform within the Finance Ministry has snowballed under Sri Mulyani.

""The underlying principle is regularity and openness,"" Sri Mulyani said in a recent meeting with senior journalists in Jakarta. ""As you all know, public institutions - including the Finance Ministry -- have a poor image. So (by bureaucratic reform) we mean to regain public trust.""

She has courageously overhauled four directorate generals that were perceived as being corrupt to the core. The four offices oversee taxes, customs and excise, state treasury and state assets. She has reassigned thousands of employees, including those of the Tanjung Priok Port.

The credit to clean up Tanjung Priok, Indonesia's frontline in international trade and which is infamously corrupt, also goes to Anwar Supriyadi, the new director general for customs and excise. A recent investigation by the Corruption Eradication Commission (KPK) revealed that illegal levies at the port cost taxpayers Rp 890 million a month. The state also loses an estimated Rp 12.8 billion a month in unpaid taxes resulting from collusion between importers and corrupt officials.

While the bureaucratic reform at the Finance Ministry has been showered with praise from the public, a confusing signal has come from the House of Representatives, another institution constantly in the spotlight for corruption. House legislators have voiced objections to the Rp 1.3 trillion request to increase Finance Ministry tax and customs employee salaries on the grounds that it will greatly widen pay disparities among ministries.

Obviously, the legislators are unduly starting an egg-and-chicken situation instead of giving Sri Mulyani a chance with the condition that the minister apply a high performance standard and strictly enforce the law to deter officials from bending the laws for personal gain. Besides, there is no such thing as a free lunch, as the lawmakers know only too well. If you demand that civil servants improve service and stay clean, it's only fair that their welfare be improved. The substantial funds spent on the employees will hopefully be recouped through the resulting efficient and incorruptible bureaucracy.

The reform campaign will very likely meet resistance from other bureaucrats, politicians and interest groups who enjoy privileges from the current chaotic state of governance.

As a government bureaucrat who is not affiliated to any political party, Sri Mulyani has a freer hand to reshape her ministry without the political burden that most of her fellow Cabinet ministers ""representing"" various parties have to shoulder.

Since Indonesia began its development programs in the 1960s, it has not reformed its bureaucracy. The process should have begun soon after the 1998 fall of the despotic Soeharto regime, when bureaucracy was made to serve the interests of Golkar, his political machine. In fact, his successors from different political parties also did the same to a lesser degree and in a more subtle way. A cliche example is the never-ending tussle among rival political parties to control state-owned enterprises for use as cash cows.

It's high time Indonesia's reformed its bureaucracy as the government machine. No government policies can be put into practice and no law can be properly enforced unless every office is manned by competent people of high integrity.

Indonesia should look at South Korea, which also began development in the 1960s but has leaped way ahead in terms of prosperity thanks to an effective bureaucracy. And Indonesia should also be ashamed of tiny neighbor Singapore, which has become one of the world's richest countries for the same reasons.

The bureaucratic reform drive puts to test the credibility of the Yudhoyono administration, which has only one year left to translate its anti-corruption jargon into action. Although many anti-corruption laws have been put in place, anti-graft bodies established and more crooks put in jail, corruption will never stop unless the bureaucracy is reformed.

Bureaucratic reform was part of the 1998 reform agenda but none of Soeharto's successors have seemed to regard it as important enough to give it top priority, not even Yudhoyono, who cleverly played up the issue of clean governance to win the 2004 election.

Although bureaucratic reform has been on Yudhoyono's table, it has remained an empty slogan and only as recently as last year did people began to hear officials speak in public about it.

Is Yudhoyono living up to his ""doubtful man"" tag? A sincere and rigorous job to reform the corrupt bureaucracy would polish his image ahead of his 2009 re-election bid.

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