Indonesia: Governance Partnership

Initial Participant Survey Results and Selected Issues for Discussion

Background Handout Prepared by World Bank as input to participatory discussions during October

10th Video-Link and subsequent discussions

The final results of this participant survey (once all entries are in) and further materials on governance can be found at:

http://www.worldbank.org/wbi/governance

Corruption can change Over TimeCorruption can change Over Time(Selected Countries; ICRG index, rescaled 0-10)(Selected Countries; ICRG index, rescaled 0-10)

00

22

44

66

88

High High corruptioncorruption

Low Low corruptioncorruption

19921992 19931993 19941994 19951995 19961996 19971997 19981998

IndonesiaIndonesia

IndonesiaIndonesia

FinlandFinland

El SalvadorEl Salvador

1010

El SalvadorEl Salvador

FinlandFinland

RussiaRussia

RussiaRussia

PolandPoland

PolandPoland

1988-921988-927

Government/Jdcl33%

Civil Society32%

Private Sector27%

Int'l Donor Community

8%Respondents’ Occupation

Initial Analysis of Participant Responses from survey (IGOPASU) for

Indonesia Governance Partnership Workshop. Based on 40 responses.

IGOPASU

Governance Partnership Participant Survey Initial Results (IGOPASU; as of October 9th, subtotal of 40 responses)

48%52%

% of contractscorrupt

24%

76%

Bribefee'cut'

Extent and Cost of Corruption

IGOPASU

3%

5%

8%

13%

34%

37%

0% 10% 20% 30% 40%

Police

Military

Budgetinstitutions

Top Executive

Bureaucracy

Judiciary/Courts

Most Vulnerable Institution (misgovernance)

% of respondents

IGOPASU

0% 10% 20% 30% 40% 50% 60% 70% 80%

Legislature

Budgetinstitutions

Military

Top Executive

Bureaucracy

Judiciary/Courts

Government/Judic.

NGO/Media/Academia

Private Sector

Int'l Org./Donor

Most Vulnerable Institution(by occupation)

IGOPASU

15%

23%

30%

33%

10% 20% 30%

Lack ofMeritocracy

Low Salaries

PoliticalInterference

EconomicVested Interests

Main Obstacle to Transparent Justice

% of respondents

Note: no respondent chose lack of training or job security

IGOPASU

IGOPASU

0% 10% 20% 30% 40% 50% 60% 70% 80%

Lack ofmeritocracy

Low salaries

Politicalinterference

Economicinterests

Government/Judic.

NGO/Media/Academia

Private Sector

Int'l Org./Donor

Main Obstacle to Transparent Justice (by occupation)

Note: no respondent chose lack of training or job security

IGOPASU

3%

11%

16%

26%

45%

0% 10% 20% 30% 40% 50%

Tax/customs reform

Civil service reform

Government financialaccountability

Increased public oversight

Judiciary reform

Key Focus in Short Term (Likely Early Wins)?

% of respondents

IGOPASU

0% 10% 20% 30% 40% 50% 60% 70%

Tax/customs reform

Civil service reform

Government financialaccountability

Increased public oversight

Judiciary reform

Government/Judic.

NGO/Media/Academia

Private Sector

Int'l Org./Donor

Most Important Short Term Focus/Measure (by occupation)

IGOPASU

3%

8%

10%

13%

13%

18%

38%

0% 10% 20% 30% 40%

Parliament

Private sector

Donors/IFIs

Judiciary

Government

Press and media

Civil society

Main Governance Partnership Ally?

% of respondents

IGOPASU

0% 20% 40% 60% 80% 100%

Parliament

Private sector

Government

Donors/IFIs

Judiciary

Press and media

Civil society

Government/Judic.

NGO/Media/Academia

Private Sector

Int'l Org./Donor

Main Ally for Governance Partnership (by occupation)

IGOPASU

3%

3%

8%

40%

48%

0% 10% 20% 30% 40% 50%

Cannothelp/homegrown

Providefinancial/technical

resources

Provideinformation

Stay neutral/workin partnerships

Support civilsociety

Best Role for Donors?

% of respondents

IGOPASU

National Governance: Challenges in Integrating Anti-Corruption Into Institutional Change

A simple Formula synthesizing Governance/Anticorruption:

IG and AC = KI + LE + CA

Improving Governance and Anti-Corruption =

= Knowledge/Info.Data + … ...+ Leadership (incl. Political) + ...

... + Collective Action (change)

Anticorruption: 8 common myths

• Government the ‘driver’ in Anti-Corruption (A-C)• Awareness-Raising and Educating population is key• Need to study the full situation anew before any action• It is perfectly well known what needs to be done• Paramount: A-C Autonomous Agencies/Commissions• High Pay to public service for combating corruption• It is central to fight bureaucratic corruption • Strict Enforcement approach: ‘A-C campaigns’

Complementing previous Survey Results, from other materials...

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

Myan

mar

(Bu

rma)

Azerb

aij

an

Ind

on

esia

Pakis

tan

Ru

ssia

Bo

livia

Ban

gla

desh

Th

ail

an

d

Bra

zil

Ko

rea,

So

uth

Co

sta

Ric

a

Belg

ium

Jap

an

Ch

ile

Au

str

ali

a

Sin

gap

ore

New

Zeala

nd

Control of Corruption: Aggregate Research Indicators (Out of 155 worldwide, selected countries, 1998)*

Source: ‘Governance Matters’, PRWP 2196 by Kaufmann, Kraay and Zoido; based on data from 1998. For details and data, visit http://www.worldbank.org/wbi/governance There is a margin of error (thin line); extreme care in interpretation is needed.

POORGOOD

Broadening our Perspective: Assessing Governance

• Control of Corruption (or Graft)

• Rule of Law

• Absence of Regulatory Burden

• Government Effectiveness

• Voice and Accountability (Civil Liberties)

• Political Stability and lack of Violence

Not Free Partly Free Free

Co

rru

pti

on

[an

d A

bse

nce

of

Ru

le o

f L

aw]

Co

rru

pti

on

[an

d A

bse

nce

of

Ru

le o

f L

aw] High

Low

Civil Liberties

Corruption/Absence of Rule of Law & Civil Liberties

Based on averages of data from 160 countries.

0

5

10

15

20

25

30

35

40

45

50

Hungary Estonia Russia Azerbaijan

Parliamentary legislation

Decrees Central Bank Influence

Firms Reporting Negative Impact of High Level Corruption‘State Capture’ Source: WBES Survey 1999, 20 transition countries

%of

all

Fir

ms

repo

rt n

egat

ive

impa

ct o

f gr

and

corr

upti

on

%

%

%

%

%

%

%

%

%

%

Adverse Impact of ‘Purchases’ of:

% Firms that pay public procurement kickbacks% Firms that pay public procurement kickbacks(of those that trade with the state)(of those that trade with the state)

0

5

10

15

20

25

30

35

40

% o

f fi

rms

Enormous Social/Economic costs of state capture: Enormous Social/Economic costs of state capture: Much lower growth in sales and investment in economyMuch lower growth in sales and investment in economy

0

5

10

15

20

25

Ave

rage

rat

e of

gro

wth

'97-

'99

High capture Countries Low capture countries

SalesInvestment

Another bad result: weak property rights

0

10

20

30

40

50

60

70

80

Est

Uzb Pol Sln

Aze

r

Hu

n

Cro Slk

Geo

Bu

l

Arm

Rom B

el

Cze

Kaz L

it

Kyr

Ru

s

Uk

r

Mol

Firms reporting insecure property and contract rights

% o

f A

ll F

irm

s

%

4.2

2.11.4

0

1

2

3

4

LowIncome

MiddleIncome

HighIncome

Lower Income Households ‘Pay’ Disproportionally

Bribe/Total Income ratio % ( A Latin American Country )

* Average bribe to public officials

In diagnostic in Latin American Country it is found that lower Public Sector Salary does not Increase Bribery

7.7%

15.5%

8.4%

Bribe*=

3MS

Bribe*=

0.2MS

Bribe*=

0.5MS

0%

3%

6%

9%

12%

15%

Monthly Salary

Less than 3MS Between 3 & 13 MS More than 13 MS

Monthly SalaryMonthly Salary

Corruption

Public Oversight and Civil Society:Public Oversight and Civil Society:

OmbudsmanOmbudsman in Albania and Bolivia in Albania and Bolivia•• Private Sector CoalitionPrivate Sector Coalition in Bolivia in Bolivia•• Diagnostic Diagnostic Surveys and Surveys and NGO NGO monitoring in Ecuador and others monitoring in Ecuador and others

Governance Improvement in Practice:Differentiated Strategies in Five Countries

Financial Controls:Financial Controls: ProcurementProcurement Reform in Bolivia, Reform in Bolivia, Ecuador and Georgia Ecuador and Georgia

Institutional and Civil ServiceInstitutional and Civil ServiceReform:Reform: TransparentTransparent Privatization Privatization in Ecuador in Ecuador•• SalarySalary Reform in Bolivia Reform in Bolivia•• Disclosure of AssetsDisclosure of Assets in in Bolivia and Georgia Bolivia and Georgia

Legal-Judicial:Legal-Judicial:

Revamp of Revamp of Supreme CourtSupreme Court in Bolivia in Bolivia •• Competency test and firingCompetency test and firing of judgesof judges in Georgia, Albania and Latviain Georgia, Albania and Latvia•• Mediation Mediation in Albania in Albania

Economic Policy:Economic Policy:

Deregulation and Deregulation and DelicensingDelicensing in Bolivia in Bolivia•• Revamping Revamping CustomsCustoms in Ecuador and Latvia in Ecuador and Latvia•• Tax AdministrationTax Administration in Latvia and Ecuador in Latvia and Ecuador•• Tax/CustomsTax/Customs Code Reform in Albania Code Reform in Albania

Implications for Further Participatory Discussion

• Anti-corruption efforts should also focus on ‘grand’ corruption and state capture

• Use Broader Governance framework• Incentives and Systemic Reforms vs. pure enforcement • Collective responsibility and Collective Action• Judiciary part of the problem or the solution?• Build on work already done; no ‘wheel-reinventing’• The ‘power’ of Information and Data-Empirics• Consensus and Coalition-Building is key

For details, survey, and data: http://www.worldbank.org/wbi/governance/

http://www.worldbank.org/wbi/governance/

Data Presented for Analysis and informing Policy Advise, not for Precise Rankings

The data contained in this presentation originates from various enterprise surveys (as well as outside expert rating agencies) and are subject to a margin of error. The purpose is therefore not to present precise comparative rankings across countries, but instead to illustrate characteristics of governmental and corporate performance in order to assist in drawing implications for action. No ranking of countries or official endorsement is intended in presenting results from these external sources.

Further details and data, visit: http://www.worldbank.org/wbi/governance