1. Jakarta, 6 July 2011 Curbing Corruption While Promoting Business & Economic Growth By: Wijayanto wijayanto@paramadina.ac.id

2. Among the Most Corrupt Country? Source: Corruption Perception Index, Transparency International, 2010 What is Indonesia’s Main Challenge as a Nation? (Kompas, 2010)

3. Encouraging Development..... Source: Corruption Perception Index, Transparency International, 2010 3 Source: Corruption Perception Index, Transparency International CPI Change (2003 – 2010) Indonesia Malaysia Over the last eight years, Indonesia’s CPI has shown the most encouraging development, while Malaysia has decreased continuously;

4. Press Freedom Bias? Source: TI, Freedom House, and “Korupsi Mengorupsi Indonesia”, Wijayanto & Ridwan Zachrie Corruption Perception Index, Indonesia (1995 – 2009) Press Freedom Bias?? Establishment of KPK

5. Why Curbing Corruption is so Tough? Source: Transparency International Indonesia: Most Corrupt Institutions Global: Most Corrupt Institutions (2010) The four most importance institution on curbing corruption are among the most corrupt; This phenomenon is not unique. Globally, Police, Legislative and Political Party are among the most corrupt institution; However, in many countries, the judiciary system is relatively less corrupt;

6. From Whom We Should Learn? Source: Transparency International Indonesia, 2010

7. Learning from Yogya & Solo....... Source: Transparency International Indonesia Website (Jokowi and Herry Zudianto) and Various Sources 1.The city majors drive Toyota Kijang, instead of high-end sedans; 2.Establish pro-people budget, a large portion of budget is allocated to improve public facilities instead of for personnel expenses; 3.Simplify business licensing and building permit process: Create clear standard operating and procedure; Publish cost and time line; Established task force to managed this process; 4.Firing or removing public officials who are not inline with government’s agenda to improve public service quality; Simple initiatives with huge impact

8. Corruption and Doing Business.... Source: Transparency International 2009; World Bank 2010 Strong Correlation between Ease of Doing Business and Corruption Perception Index (C=0.69); Improving business climate & governance is inline with reducing corruption; Klitgaard Theorem: Clear rule of the game in business will reduce discretion, monopoly and improve accountability Corruption Perception Index, vs. Ease of Doing Business CPI Score Ease of Doing Business BestWorst Best CDMA Corruption Discretion Monopoly Accountability

9. Ease of Doing Business: The Ranking Source: World Bank, Ease of Doing Business 2010 Ease of Doing Business (Total Ranking) Building Permit Cross Border Trading Protecting Investor

10. Ease of Doing Business: The Ranking Starting Business Registering Property Getting Credit In Indonesia, Starting Business, Getting Credit and Registering Property are rather difficult and complicated. In the 6 main ASEAN economies, we are only better than the Philippines Source: World Bank, Ease of Doing Business 2010

11. Ease of Doing Business: The Ranking Closing Business Enforcing Contract Paying Taxes Indonesia is behinds ASEAN’s peers in term ease of paying taxes and enforcing contract. Serious improvement should be done if we would like to keep our economy competitive; Source: World Bank, Ease of Doing Business 2010

12. High Tax Rate, But Low Tax Revenue... Source: Heritage Foundation & Forbes: Tax Misery Index Tax Misery Index (2009) Tax Revenue / GDP (2009) Despite Indonesia’s high tax rate (second highest in ASEAN)........tax revenue only account for 11% of GDP (the lowest in the six main ASEAN economies); In part, it is because the lack of inefficient and complicated tax collection procedure, a possible source of corruption;

13. Thank You