Peter McCawley is a Visiting Fellow at the Indonesia Project, ANU, and former Dean of the Asia Development Bank Institute, Tokyo.

Stephen Grenville ('Democracy and Indonesia's economy') notes that government decision-making has become much more difficult in Indonesia since the end of the Soeharto era. One of the standard gripes in the business sector these days is that 'at least corruption was centralised under Soeharto; with democracy the system is so chaotic that you never know who to pay to get things done!'

Another standard gripe is: 'People say that we have democracy in Indonesia, but what we really have is "democrazy".'

It's true that it's often hard to get things done in Indonesia. There are delays at every turn. But there are two fundamental aspects of this problem that the international development commentariat often doesn't seem to think about very carefully: corruption and 'money politics'.

Corruption has received enormous attention in Indonesia in recent years. An impressive stream of big names has been caught up in corruption inquiries conducted by the well-known 'KPK' (Corruption Eradication Commission or Komisi Pemberantasan Korupsi). The latest big fish to be caught is the former senior deputy of the central bank (Bank Indonesia), Miranda Goeltom. In what has turned into a remarkably high-profile case, Miranda has been charged with corruption in connection with the payment of more than $2 million to MPs for vote-buying during her election as Deputy Governor to Bank Indonesia in 2004. She will come to trial this coming week.

But there have been downsides to the intense campaign against corruption in Indonesia.

One is that many public servants have become fearful of campaigns against corruption which sometimes verge on witch-hunts. Senior officials fear being noisily charged with corruption over even trivial misdemeanors and have thus become extremely risk-averse. Many government approvals – including many quite reasonable business approvals – are now often badly delayed because officials are reluctant to sign anything with the faintest whiff of risk.

The second problem is the way that the growth of democracy in Indonesia has led to an expansion of 'money politics'. As Stephen Grenville notes, the election campaign for the governorship of Jakarta has been accompanied with all sorts of expensive populist activities. Somebody has to pay for all of this fun. Fund-raising is now a major challenge for any aspiring politician in Indonesia.

It's not clear what to do about the huge problem of money politics in Indonesia. In fact, the international development commentariat hasn't come up with many answers to the key question of how to fund democracy in developing countries.

The operations of a vigorous political industry cost money. In Indonesia there are now over 20,000 politicians in central, provincial and district parliaments. All of them need to run offices, keep supporters happy, and support frequent campaigns. The major political parties often hold big jamborees in grand Jakarta hotels with up to 1000 delegates flown in from all parts of Indonesia. The delegates attend dinners for several days and spend up big on generous expense accounts.

There is now widespread agreement in Indonesia that the high cost of politics is a major problem. The former deputy head of the Corruption Eradication Commission recently said that 'the commercialization of authority for the sake of winning elections and building and sustaining power and wealth' is causing great harm. He pointed out that, among other things, this problem contributes to the 'rampant issuance of mining concessions' because regional politicians find it easy to raise the money they need by selling mining and plantation concessions.

Nobody disagrees that democracy is flourishing in Indonesia or that the campaign against corruption is a vital part of good governance. But it would be a useful step forward in the international development debate if it was more widely recognised that democracy and anti-corruption measures bring new challenges.

One of the major challenges is that, in some important ways, the management of government becomes much harder. The old ways of cutting corners were an unacceptable way of running a country, but they were fast. When modern ideas about good governance bring ever-growing layers of bureaucracy, the system clogs up. Purists wouldn't be happy but there is a lot to be said in favour of Merilee Grindle's practical idea of focusing on 'good-enough governance'.

Photo by Flickr user Shanghai Daddy.