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When is a budget not a budget?

Digest No. 37 (Indonesian news with comment) - July 2, 1997

'Extra-budgetary' financing has always placed a question mark over the meaning of the Indonesian state budget. A new law might change all that. But only if it enjoys enough backing to overturn decades of departmental do-it-yourself financing.

Last December outspoken Golkar parliamentarian Tadjuddin Noer said official receipts bypassing the state budget and going straight into the bank accounts of individual cabinet ministers could be three times larger than the state budget. If true, that would make a mockery of all the serious annual discussion about the official budget, now just over Rp 100 trillion (US$ 50 billion). Other estimates are much lower - an official figure for funds held by individual ministers is Rp 8 trillion, under 10% of the state budget. Perhaps no one knows the truth.

One example often mentioned is the Reforestation Fund (Dana Reboisasi, DR), drawn from forestry concession license fees and managed by the Forestry Minister. This fund reputedly supports 65% of the department's expenditure. It has also been used to fund the development of new aeroplanes, of a huge private pulp factory owned by Bob Hasan, and of transmigration projects. Recent rumours said it was financing Tommy Suharto's hard-pressed 'National Car'.

Other examples include special funds to rescue the copra and the cloves industries, millions in small fees for cellular phones, TVs and radios to the Minister for Tourism, Post & Telecommunication, huge mining fees to the Minister for Mines & Energy, fishing royalties, 'development taxes' levied by a range of ministers, the annual pilgrimage to Mecca managed by the Minister for Religious Affairs at a cost of US$ 700 million a year, fees levied on companies by the YDSM welfare foundation chaired by the President himself, levies on electricity bills to pay for the Southeast Asia Games later this year, and levies on building contracts apparently paid into Golkar slush funds all over the country. State-owned companies (BUMN) also apparently did not report their incomes to parliament.

Cautious commentators preface these examples by saying they are only a small selection. They never mention military businesses.

Funds held by individual ministers are so untransparent it is often not clear if they are for personal or official use. They are a great source of corruption allegations in intra-cabinet rivalries. The last 18 months they have been publicly flung three times into the faces of their proprietors. Transport Minister Haryanto, Tourism, Post and Telecommunications Minister Joop Ave, and Mining Minister Sudjana have all faced such allegations.

In January Finance Minister Mar'ie Muhammad introduced a raft of five new taxation bills. Centre piece among was the Bill on State Non-Tax Receipts (PNBP). This has now become law and is being implemented with enabling regulations. It forces cabinet ministers to pass all their funds through central control. Another law puts the spotlight on uncontrolled levies in the provinces. But whether this brave attempt to regularise what has been practised since the beginning of the Republic remains to be seen.

More in line with the mysterious way things are normally done was an instruction by the President to Health Minister Azwar Anas mid-April to do what he could to uncover funds both inside and outside the country that by rights belong to the state. When revealed two months later, puzzled commentators could find no explanation for the instruction, which appeared to have nothing to do with health. They were, however, reminded of a similar presidential instruction a couple of years ago to recover a huge Revolutionary Fund that President Sukarno had reputedly stashed away in Swiss accounts in the early 1960s. That investigation yielded nothing.

[Gerry van Klinken, Editor, Inside Indonesia magazine.]