November 29, 2016
Rampant corruption is a major policy challenge throughout much of emerging Asia. The combination of rapid growth and underdeveloped legal regimes created conditions ripe for graft. That mix enriched a generation of government and business elite, while sowing the seeds of political and social instability.
In recent years, no Asian government has been more intent on heading-off the risk of a popular backlash to corruption than China, where President Xi Jinping’s anti-corruption campaign has upended long-standing business and government practices. The Chinese leadership’s commitment to Communist Party rule means that structural reforms that could reduce corruption — like establishment of an independent judiciary, rule of law, and transparency — are out of bounds. So Xi’s campaign has focused instead on the aggressive prosecution of corrupt officials.
Indonesia is launching an anti-corruption campaign, led by President Joko Widodo. And unlike China, Indonesia has the institutional basis for the effort — a powerful anti-corruption commission (the KPK), founded in 2002 after decades of kleptocratic government under Suharto. But while the KPK has collared a number of high-profile political targets (including sitting Sports Minister Andi Mallarangeng in 2012) it has not had sufficient budget or political heft to truly institutionalize corruption fighting throughout the bureaucracy and at the regional level.
Jokowi seeks to change that — he called last week for a stronger KPK with a bigger budget, and better coordination between the nation’s police forces and the KPK (their relationship has been fraught given the KPK’s investigations into a number of high-profile targets within the leadership of the police). Jokowi has also set up a new task force to fight the practice of illegal levies imposed by public servants, and is pushing for changes to funding practices for political parties to try and reduce the influence of vested interests in government.
All these steps are positive for fighting corruption case-by-case, but we argue that the measures will probably fall short in terms of generating meaningful change in Indonesia’s political economy – connect with our team for our lead story. Indonesia has the requisite institutional structures that China lacks, but they are weak and capable only of piecemeal enforcement. And the fragility of Jokowi’s ruling coalition makes broader structural reforms much harder.
Meanwhile, Asia remains awash in speculation about U.S. president-elect Donald Trump’s likely Asia policies. We are dedicating considerable effort toward understanding Trump’s Asia team and their likely policies. But the team is not solidified and it is far too early to draw any conclusions. We do know that Trump’s newly-named National Security Advisor Michael Flynn has little experience in Asia policy and will be focused on counter-terrorism. That suggests that much will depend on Trump’s picks for Secretary of State and Secretary of the Treasury — the two institutions that share the driver’s seat for implementing America’s China policies. With infighting in Trump’s transition team over the Sec State pick spilling into public view over the weekend, this next week may deliver better insights and more clarity into who to expect. We’ll be watching.