Regional Elections and Natural Resource Exploitation

Kompas/Wisnu Widiantoro

A large banner for the 2018 concurrent regional elections is displayed at the General Election Commission (KPU) building in Jakarta on Saturday (17/6). The regional elections on June 27 will be held in 17 provinces, 115 regencies and 39 cities across Indonesia.

The high political costs of the regional elections are considered a primary cause of the corrupt acts among regional heads.

This statement is deemed correct, because money for repaying the high costs is frequently sought from public resources and it is fact that more regional heads have been convicted of corruption. However, beyond that, what has been the role of state institutions in governing state administrators that have left public resources open to such sacrifice?

Since the Corruption Eradication Commission (KPK) coordinated a memorandum of understanding (MoU) on the National Movement for Natural Resource Rescue (GNPSDA) with 29 ministries and 12 provinces five years ago, at least three facts can illustrate the role of state institutions and the responses of state officials in relation to corruption.

Corrupt institutions

First, among formal state institutions are pseudo-legal institutions that create a framework for corruption, or let us simply call them corrupt institutions, that have their own rules and norms. These corrupt institutions help facilitate transactions by individuals equivalent to state officials and their networks, but not as intended or mandated by law.

The networks of state officials, in connection with the usage license for natural resources as widely used materials, consists of business people, individuals or institutions as consultants or intermediaries, or eminent persons applying pressure. This is supported by the KPK’s data (2017) that, from 2004 to May 2017, 80 percent of corruption perpetrators in 650 cases involved the private sector and public/government agencies using bribery and gratuities as a main means of influencing the policies of state administrators or civil servants.

Transactions within a corrupt institution enables state administrators to open more opportunities to entrepreneurs. For example, broader concessions are issued or no restrictions are placed on the requested concession areas, or full support is provided when the concession overlaps with those of other companies or community land. Another common method is regulatory capture. Violations that have occurred or will occur are engineered so they will be voided or protected by legislative regulations.

This can be done, for example, in determining spatial planning. For example, the current draft Regional Bylaw (Ranperda) in Riau only leaves 21,615 hectares of the 1,693,030 hectares of protected peatland mentioned in the 2016-2035 Academic Study on the Riau Ranperda. This is even narrower than the area mentioned in the Environment and Forestry Ministry Decree No. 129/2017 on the national peatland hydrological unity map, which stipulates 2,473,383 hectares in Riau as a protected area. As a result of the reduced area of protected peatlands, it is suspected that illegal companies will be more easily legalized. This was confirmed by the findings by the Riau Legislative Council Special Committee on evaluating its data under the GNPSDA-KPK MoU, that 1.8 million hectares of oil palm plantations had been developed outside the permitted area.

Regulatory support

Second, the sustainability of a corrupt institution is supported not by the perpetrators, whether individually or collectively, and not because regulations are not applied or because of weak law enforcement, but is supported by the regulations themselves. There are at least three types of regulations that may be a cause of corruption (Nagara, 2017): systemic corruptive regulations, criminogenic regulations and vulnerable regulations.

The first type of regulation causes direct or indirect losses to the state, or is designed to benefit a particular group and to disadvantage another group. The second type creates conditions of entrapment: whoever works under such conditions will tend toward corruption. The third type establishes conditions that encourage opportunistic behavior.

For example, due to the few facilities and low salaries given to forest and mining production supervisors, it appears that field supervisors are forced into committing deviations, including being confined by the companies’ provision of their monthly. An assessment of licensing transaction fees by the KPK in 2013-2015, reveal this reality. Such employees must be faithful, not only to the companies, but also to their superiors regardless of whether the orders given are right or wrong. This is where the ties between the providers, supervisors and permit holders are established, so they cannot report the deeds of others. They never say that such a relationship is wrong, because it is guided by the three regulatory types mentioned above.

Even though such ties are seen only at the lower level, they can drive the manipulation of licensing for buying at high prices, resulting in excessive profits, as well as from unpaid taxes on unreported production outputs. The KPK review (2015) estimates annual losses in state revenues from timber to converted forests, and from farming and mines, at Rp 49.8 trillion to Rp 66.6 trillion during 2003-2014. The GNPSDA-KPK also discovered a Rp 126 trillion shortfall in taxes from mining, oil palm plantations and the marine sector in 2014. The value of such a large sum could potentially to be used to fund regional election campaigns.

The Routledge Handbook of Corruption in Asia (2017) illustrates this reality. It says that corruption in Asia is often associated with culture, not in the sense of individual initiatives, but as already present in the societal structure of a community, where officials and entrepreneurs form informal systems as a platform for corruption. The most common practices are bribery, embezzlement, extortion, abuse of power, illegal campaign financing, and electoral fraud. In Indonesia, the prevalent conditions of natural resource licensing as applied in the field constitutes a major platform that supports such practices.

Closing

Third, the two above mentioned factors as the cause of corruption, even though very difficult, can be addressed innovatively to control corruption. In this case, technology can establish a clean transactional environment. This is proven by the regional leaders who won the 2016 Nirwasita Tantra, an award from the Environment and Forestry Ministry for green leaders in environmental management. Discretion, open and transparent information, administration of a government\'s online system, or managing natural resources production, can be done as an innovation of bureaucratic efficiency, budgeting or activities. In the forestry sector, an online system for reporting timber production, as cited by several entrepreneurs, can reduce the cost of licensing transactions by up to 60 percent from the 2014 figure, which amounts to Rp 680 million to Rp 22 billion per company per year. In this case, private anti-corruption initiatives are critical.

The experience of the GNPSDA-KPK has identified two mutually supporting factors. First, a network, socialization and co-optation system that produces and reproduces corrupt institutions as a shadow institution. Second, regulations that are systemically corruptive, criminogenic or vulnerable. These two factors can lead to illegal financing – in the high, unequal advantages of natural resource utilization – of the regional elections through the state’s role that, by design, is weakened to the grassroots.

Therefore, a control mechanism needs to be installed in the upstream, namely in the realignment of regulatory and supervisory rules and the licensing bureaucracy, in addition to law enforcement as the KPK has done. Local leaders who are able to free themselves from the entrapment of political corruption should be supported by the general public so that the sustainability of corruption eradication is guaranteed.

Hariadi Kartodihardjo, Professor, Bogor Institute of Agriculture