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Tackling Corruption In Indonesia

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April 8, 2004—For the past eight months, Joel Hellman, one of the Bank's leading anti-corruption experts, has been in Jakarta co-ordinating an ambitious program to tackle corruption in Indonesia from the ground up.

The Jakarta team is attempting to recruit local governments to a good governance initiative that may pave the way for a major improvement in accountability, transparency and participation at the local level in Indonesia - and it is hoped the economic and poverty reduction performance in the selected regions.

Hellman says there is a strong demand from both the general Indonesian population and foreign investors to see concrete results in reducing corrupt practices in the country. Corruption is widely seen as endemic and "extremely difficult to eradicate", Hellman, the senior governance advisor, to the Bank's Indonesia resident mission says.

"Corruption is often said to be ingrained at all levels of the system in Indonesia. Even Government ministers talk openly to the press of the problem of corruption," Hellman says. "There has been a general feeling of where do you begin?"

The Bank is moving to capitalize on Indonesia's current program of decentralizing power to the country's more than 400 local governments.

The Jakarta team's anti-corruption campaign has focused on finding local administrations that are receptive to improving their governance outcomes and tackling systemic corruption.

"We have been concentrating on finding those who are committed to improving accountability, participation and transparency and finding ways to help them achieve their goals," Hellman says. "We hope that a reform-minded group of regions will pull away from the pack and that their performance will begin to attract investment and other advantages."

Hellman says corruption has been one reason Indonesia has struggled to mobilize domestic investment and attract foreign investment. The country has not been seen as ready to take the next step in terms of governance.

The Bank has made governance the centerpiece of its most recent Country Assistance Strategy for Indonesia and tried to mainstream governance issues in all of its activities in Indonesia. The strategy makes the crucial link between governance and weaknesses in the investment climate and public service delivery that hinder growth.

Hellman says the Bank has been attempting to make service providers more accountable to the poor and the operation of public services more transparent.

The Bank hopes to work with 50 to 60 of the best local governments for the time being. Early work has involved boosting the capacity of the regions to improve financial management and public procurement by bring greater participation and openness to these processes.

Hellman says ultimately those areas which are committed to good governance and anti-corruption initiatives will receive more assistance from the Bank in terms of investments in infrastructure and other sectors, such as roads and health facilities. "It makes sense that our sectoral investments will be more effective in reducing poverty where the funds are spent in line with the demands of the clients, so we need to link our governance capacity-building and our traditional sectoral investments in a more coherent program at the regional level".

There have been some hopeful signs to date. The team is finding many leaders of local administrations in Indonesia who are very interested in improving their governance outcomes, creating accountable and transparent public services and engaging with civil society and non-governmental organizations. These regions are attempting to build their reputations through demonstrating progress on the tough governance issues.

Hellman says he hopes the anti-corruption initiative will also strengthen a new generation of political leaders who will make their own political reputations on improving governance and stamping down on corruption.

These efforts at the local level are being combined with new initiatives on legal and judicial reform, support for Indonesia's recently established Anti-Corruption Commission, more forthright dialogue with the government and the public on corruption issues, and enhanced outreach with organizations in civil society dedicated to fighting corruption.

After eight months in Indonesia, Hellman is optimistic. But he concedes that change will not happen overnight.

"We have a long way to go."

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