How quickly things can change. Never mind earthquakes, the 2004 tsunami, several terrorist attacks, bird flu and multiple global crises involving food security, energy, climate change and the world financial system, Indonesia was on a roll during most of President Susilo Bambang Yudhoyono’s first term. The Indonesian economy kept on growing and might have soared even higher were it not for the global recession. But even then, the Indonesian economy was poised to grow by more than 4 percent, the third best performance in Asia, further proof of the region’s resilience and ability to weather the current storm even while other areas are still suffering.
Thus we were thanking our lucky stars when Yudhoyono’s second term was about to start. By then, however, Indonesia was losing some momentum. First, there was the “United Indonesia II” cabinet that did not sufficiently tap Indonesia’s pool of technocratic talent and disappointed many who had expected that with an overwhelming mandate, the president had no need to stuff his cabinet with political party cadres.
To be sure, despite widespread dissatisfaction over the cabinet’s composition, it isn’t totally bad: It has the saving graces of Minister of Finance Sri Mulyani Indrawati, Marie Elka Pangestu as minister of trade, MS Hidayat in the industry post and Marty M Natalegawa as minister of foreign affairs. It also has exceptional performers like Hatta Rajasa, coordinating minister for the economy, and Kuntoro Mangkusubroto, head of the Presidential Unit for the Management of Reform Programs. But many observers maintain that it could have been much better without the involvement of political parties.
Then came the detention of two leaders of the Corruption Eradication Commission (KPK) by the police on the basis of questionable evidence and the spectacle of the fight between corruption-fighting “geckos” and the “crocodiles” of the police force, as they came to be billed in the media. When the KPK made public tape recordings that strengthened the suspicion that there was a sinister plot among legal “case brokers” and law enforcement authorities to weaken the KPK by framing its leaders, a huge public outcry demanded that the two KPK men, Bibit Samad Rianto and Chandra M Hamzah, be released from custody.
The presidential fact-finding Team of Eight minced no words in recommending that the case against the two KPK leaders be dropped. The president thought things over for about two weeks before finally acting to put an end to the controversy by recommending the case be dropped and the matter settled out of court. By then, the damage was done to the public’s confidence in the legal system and the president. He had been too careful and paid a dear price for his delay in acting.
But Indonesia would have no respite from controversy. Even while the rumble between the gecko and the crocodile was going on, another scandal reared its ugly head. This was the squabble involving the Rp 6.7 trillion ($710 million) bailout of Bank Century during the onset of the global financial crisis in 2008.
Eye of the Storm
In the eye of this storm is Sri Mulyani, who in her capacity as Chair of the Financial System Stability Committee approved the bail-out on the recommendation of Bank Indonesia, then headed by now-Vice President Boediono. The Supreme Audit Agency has deemed portions of the bail-out apparently illegal. Boediono and Sri Mulyani maintain that it was not only legal but absolutely necessary to save the entire Indonesian banking system from risk.
It turns out that the Rp 6.7 trillion from the Savings Guarantee Board (LPS) that was injected into Bank Century merely covered losses due to the plunder of the bank by shareholders and major depositors. Now the real question is: where did all that money go? There has been much speculation that the money went to political parties during the elections last year and to a few very powerful individuals.
Much of that speculation was articulated in George Aditjondro’s book, “Unmasking the Cikeas Octopus: Behind the Bank Century Scandal.” The book is apparently selling like hotcakes on the streets of Jakarta, despite it being too hot for many bookstores to handle. But to this day there is no real disclosure of the facts from the authorities concerned, neither from the Supreme Audit Agency nor from the Financial Transactions Report and Analysis Center (PPATK), as to where the money went. Even the politically charged inquiry into the controversy underway in the House of Representatives does not seem interested in this question as it probes the legality of the bail-out decision.
Meanwhile, Sri Mulyani remains enmeshed in the vortex of this murky mess. All the crimes committed in connection with Bank Century were perpetrated before the bail-out, but she is the target of enemies she made as a reformer during Yudhoyono’s first term. These powers that be now want the head of their tormentor on a platter.
In the last several weeks there has been a great deal of talk that either the vice president or Sri Mulyani (or both), will become the scapegoat in the Centurygate controversy. That may be the only way to buy peace from the politicians complicating the debate. If the price of political peace is Sri Mulyani’s head, that will be a very expensive purchase.
Sri Mulyani is easily one of the most competent and principled individuals who ever worked for the Indonesian Government. The mining industry used to be notorious for its huge backlog of unpaid taxes. She made it catch up on its payments by barring the executives of delinquent companies from travel.
She launched fiscal and bureaucratic reforms that restored public confidence in government: During her first six months as Minister of Finance, foreign direct investment surged by 70 percent over the previous year. She has often been quoted as saying that her obsession is to work in a government that is completely trusted by the people. But that trust has to be earned, and it can only be earned by public servants like her.
What Would We Lose?
Sri Mulyani earned her global reputation for competence as an executive of the International Monetary Fund, a consultant to the United States Agency for International Development and a lecturer in the US on the Indonesian economy. It was in those capacities that she saw what was wrong with the Indonesian economy, and when she was finally given a chance to help fix it, she knew exactly what to do.
She immediately fired the directors of the tax and customs offices, not because they were corrupt but because she wanted to signal that change was forthcoming and must be accepted. And the changes she instituted served the country well, especially during the global economic and financial crisis. If she is forced out of government, the country will survive. But it would take a long time to recover from such an immense loss.
First, the government would lose an effective and passionate crusader against corruption and incompetence. Many corruptors would rejoice. Many do-nothing bureaucrats would feel safer in their indolence. And many foreign investors would think twice before risking their capital here.
Second, the Government would lose the powerful force of her courageous example. Many bureaucrats and policy makers would take the path of least resistance in order to avoid risks to their careers. Nobody would rock the boat, but the boat would not be going anywhere.
This is a sad time for Indonesia. It has just lost two of its great men: Gus Dur, whose vision was so far ahead of its time that men of small minds questioned his sanity, and Frans Seda, a former minister of finance who pioneered making Indonesia acceptable to international financial institutions. These two men passed away after they had already done their greatest service to the country, so while we are saddened by their deaths, we can accept the loss with equanimity.
But we should not be so calm if we are going to suffer a third loss at this time. Indonesia could survive the loss of Sri Mulyani, as it can survive anything, but the country’s momentum and future would suffer greatly. There might not be a great bang but there would be a lot of whimpering.
We must not let that happen.