The Central Statistics Agency (BPS) recently revealed that the Indonesian Democracy Index (IDI) has declined, and it laid the blame squarely at the feet of the country’s political parties. Indonesia’s dysfunctional party funding system has long been blamed for promoting rampant political corruption and the domination of oligarchs.
Ideally, party financing should come from three sources: the state, internal party finances, and the public. This is reflected in Indonesia’s political party regulations, which state that political parties can be funded by state subsidies, membership fees and officially registered donations. Faced with the dual challenges of dwindling income and mounting political costs, however, many parties have turned to illicit fund-raising activities.
As Indonesia heads toward simultaneous legislative and presidential elections in 2019, the government has responded by taking a crucial step to improve the quality of its party politics. From 2018, state subsidies for political parties will increase 10-fold, from Rp 108 to Rp 1,000 per valid vote per year. This decision was based on a recommendation of the Corruption Eradication Commission (KPK) that parties receive Rp 1,071 per valid vote.
This 10-fold increase will make state subsidies a far more significant component of party financing. For example, the Indonesian Democratic Party of Struggle (PDI-P) will receive Rp 23.7 billion (about A$2.31 million) each year, compared with the Rp 2.5 billion it collected as the party with the greatest share of votes in the 2014 Legislative Election. For the lowest ranking party in the last election – the Indonesian Justice and Unity Party (PKPI) – state assistance will rocket, soaring from Rp 123.4 million to Rp 1.1 billion each year.
Not surprisingly, this massive jump in public funding has provoked a variety of criticisms from civil society. The Indonesian Forum for Budget Transparency (Fitra) has said, for example, that given the projected 2018 state budget (RAPBN) deficit of Rp 326 trillion, a 10-fold increase in state subsidies to parties will place an undue burden on the state budget.
Likewise, given the longstanding failure of political parties to fulfil their vital role in democracy, there is widespread scepticism that the increased subsidies will not end “money politics”. Many fear political parties will simply take the money and continue their corrupt practices. This is why civil society organisations were strong supporters of a 2005 decree that cut state subsidies for party headquarters by up to 89 per cent.
Despite these fears, the government has made the right move.
First, increasing state assistance is crucial to mitigate the chronic problem of oligarchic domination in Indonesian parties, which has increased significantly since the passage of the 2005 regulation. It has been exacerbated by a substantial rise in the cost of campaigns, because of an increasing reliance on consultants and expensive media advertisements. In the absence of state financing, significant membership fees or legal donations, parties have little choice but to become dependent on wealthy patrons. Consider Surya Paloh, who looms large over Nasdem Party, or Hashim Djojohadikusumo, brother of Prabowo Subianto and a major funder of the Gerindra Party.
In addition to an overreliance on oligarchs, political parties often prey on state projects to fill the party coffers. A recent example is the electronic identity card (e-KTP) graft case that has implicated scores of politicians, including the beleaguered House of Representatives (DPR) speaker and Golkar Party chairman Setya Novanto. This follows previous high-profile cases such as the Hambalang sports complex scandal involving Democratic Party lawmakers such as Muhammad Nazaruddin and the beef import scandal that sent former Prosperous Justice Party (PKS) head Luthfi Hasan Ishaq to prison.
Earlier this year, Golkar lawmaker Agun Gunandjar Sudarsa and a group of other lawmakers launched an inquiry into the KPK, just one of many recent attacks on the body. The vigour with which lawmakers have pursued the KPK is an indication of how important corrupt practices are to party financing.
A third argument for increasing party financing relates to parties’ biggest defect: transparency and accountability. If private benefactors can make demands on parties, so can the state. Increasing state subsidies should be used to force parties to undertake internal reforms to improve transparency and accountability, for example, by periodically publishing financial reports audited by the State Audit Agency (BPK).
Law No. 2 of 2011 on Political Parties only obliges parties to reveal revenue and expenses in a single report validated by their own auditor, making illegal donations and spending difficult to detect. As it stands, few parties observe the law anyway, because the sanctions it imposes on parties that violate its provisions are unworkable. The General Elections Commission (KPU), the Elections Supervisory Body (Bawaslu), the Supreme Audit Agency (BPK) and the National Police share the task of supervising party and campaign financing. But none has principal responsibility for conducting investigations and imposing sanctions, meaning that even glaring violations are often not investigated.
For these reasons, a 10-fold increase in state funding for parties is a good start to improve Indonesian party politics. But it is only part of the solution and will need to be backed by staunch commitments and political will from parties and politicians to comply with regulations.
Given that many politicians have publicly stated that low state funding of parties is the main cause of political corruption and have praised the 10-fold increase, there is a chance some will want to comply with regulations. Civil society groups are also likely to intensify their calls for parties to be more accountable if they receive a larger portion of state funds.
Law enforcement officials must also ramp up supervision and impose even-handed sanctions on people who violate the rules. Designating a single body responsible for leading investigations and imposing sanctions, and providing it with the financial and human resources it needs, would overcome some of the existing problems with penalties.
Failure to do so will perpetuate or even aggravate already rampant political corruption, and that is the last thing that Indonesia needs.