Muhammad A.S. Hikam describes constitutional and governance reforms and efforts to build a civil society in Indonesia since 1998. A member of the Hanura (People’s Conscience) political party, a former member of the Indonesian Parliament, and a former state minister for research and technology, he explains that prior to Indonesia’s financial crisis in 1988 and the collapse of the Suharto government, civil society in Indonesia was “corporatist”; that is, that except for the Nahdlatul Ulama (Islamic Scholars Awakening) Party, all civil society organizations and political parties were controlled by the state. In 1998, it was recognized that a strengthened civil society was the only avenue to challenge the overwhelming power of the state. The result was a flowering of as many as 100,000 civil society organizations and 38 political parties. However, nearly all came into being without the capacity or understanding to pursue their roles effectively. Many were based on ethnic or identity interests and did not know how to relate to the political life of the country. The challenge was to train civil and political society to find synergies between interests and needs. Without that, governmental reform has been, and will continue to be, a patchwork, he says. He discusses the successes and shortcomings of reforms in four principal areas: changing the constitution to reduce state domination, opening the political process to opposition parties, removing the military from politics and placing civilian control over the police and armed forces, and decentralizing government and ceding some autonomy to the regions. These efforts have proceeded without regard for capacity building, he says. As a result, poorer regions simply establish regional governments funded by the central government without developing their own capabilities. Hikam stresses that economic development is essential if regional autonomy is to work.    

Erry Firmansyah, former president of the Jakarta Stock Exchange, describes business and public responses to reforms in the Ministry of Finance, Tax Court, Securities and Exchange Commission, and Customs by the government of Indonesia. He says that, though it is not possible to eliminate all bribery or illegal payments, employees in the Ministry of Finance were acting professionally and focusing on making Indonesia’s markets more attractive and liquid for both local and foreign investors and surveillance of illegal financial activities. Taxpayers and businesses find that they are treated much more impartially and fairly as “customers,” he says. It is no longer assumed automatically that everyone is cheating on taxes. When there are disagreements, disputes can be taken to the Tax Court, which gained a reputation for being fair and impartial. He says these changes were the result of a new mindset brought about through a system of performance rewards, incentives and improved compensation of employees to more closely match the private sector. These reforms were reinforced by the Komisi Pemberantasan Korupsi, an agency that can arrest and prosecute both government officials and citizens for corrupt activities. In addition, he says, the budget process was reformed so that vendors and contractors found the system fairer and easier to work with. He says there still was room for improvement in the tax system because many small businesses were not registered and corrupt practices persisted. Some court procedures also needed to be improved, he says. Nonetheless, the country weathered the recent world economic recession fairly well because of these reforms and the increased trust of both local and foreign investors in the country’s improved financial integrity. He expects the reforms will be sustained for the foreseeable future.