Non-cash transactions would end ‘cash-and-carry’ corruption

Non-cash transactions would end ‘cash-and-carry’ corruption Pandaya  ; A medical doctor from the University of Indonesia (UI), A health advocate and an independent researcher; She was the Global Cancer Ambassador for Indonesia from the American Cancer Society and a country representative for the UN General Assembly on non-communicable diseases in 2011

JAKARTA POST, 24 Agustus 2014

                                                

Too many state officials, politicians, private lobbyists and businesspeople have been caught red-handed engaged iun corrupt transactions, oblivious of the secret presence of Corruption Eradication Commission (KPK) agents. The tragicomedy about corruption in Indonesia is that even though lots of people have been apprehended in the act, other crooks keep making the same mistakes. Every other day after news breaks about state officials and their cohorts being hauled up for bribery, TV footage will show the stacks of banknotes — usually US and Singapore dollars and of course rupiah — that were seized from the crooks. In 2012, Dharnawati, a representative of private company PT Alam Jaya Papua, was caught handing over Rp 1.5 billion (US$128,498) in cash stuffed in a large cardboard box made to ship durian fruit to Manpower and Transmigration Ministry officials as a gratuity for awarding a Rp 73 billion project in Papua. When arresting former Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) chief Rudi Rubiandini last year, the KPK also seized $690,000 in cash from his residence that he had allegedly received from a company seeking to curry favor. The list goes on. But the moral of the long story made short is that cash remains the most preferred “legal tender” in most of the corrupt transactions in Indonesia — a primitive “cash-and carry” robbery of public funds in a country where major transactions involve cash. Crooks love to settle payments in cash because it is safer than bank transfers, which can be easily traced by the Financial Transaction Reports and Analysis Center (PPATK) that can pass the information to the KPK. The PPATK, which works hand-in-hand with the anti-graft body, has warned that the free use of cash also gives rise to money laundering, as the source of the funds is more difficult to trace. Obviously, only the dumb will use the electronic-transfer method to collect their ill-gotten money. The PPATK has proposed that — until the country passes a law on business transactions — Bank Indonesia issue a decree limiting cash transactions to Rp 100 million. Any transactions exceeding Rp 100 million should be conducted through bank transfers. More developed countries, including neighboring Singapore, have curbed the use and regulated the circulation of cash as a way to prevent the money from being used to fund illicit activities such as bribery, money laundering, gratuity, kickback and terrorism. Corruption in high places remains rampant in Indonesia despite the arrest and prosecution of high profile figures because the leeway remains wide open. Among the large loopholes is the unregulated use of cash for virtually all major transactions. This situation, which goes against the rigorous measures the government takes to combat corruption, has prompted ever louder calls for the state to introduce laws that limit the use of cash in business transactions. For unknown reasons the Yudhoyono administration has largely ignored these calls, but fortunately president-elect and Jakarta Governor Joko Widodo has begun promoting less-cash business transactions. In fact Jokowi, as the governor is better known, already made Jakarta the first province to pass legislation making it mandatory for official business transactions to be conducted through the banking system, a move that had been recommended by the Supreme Audit Agency (BPK) as a means of improving governance transparency. The regulation on the use of cash and circulation of foreign currency by way of a tighter enhanced due diligence is also expected to reduce the amount of counterfeit money, a common problem in societies where people rely heavily on cash. The less-cash policy is also expected to boost economic activity. Along with the increased flow of funds into the banking system, it will be used in the capital market and for financing the real sector – not to mention the savings from government expenditure on printing banknotes. A major hurdle facing the effort to make Indonesia a less-cash society is that a majority of the country’s population, especially those living in rural areas, have yet to open bank accounts and every transaction has to be conducted in cash. Even the fabulously wealthy coffee and cacao farmers in the outlying regions of Sumatra and Sulawesi still use their trucks to carry what could be billions of rupiah in cash — and not all of them yet have bank accounts. Meanwhile, it’s hard to imagine that opening a savings account crosses the minds of people surviving on bare subsistence. According to Telematika Sharing Vision Research Institute, 68 percent of the 247 million Indonesian citizens did not have a bank account last year, while 80.4 percent of the population aged older than 15 years did not have an account with a formal financial institution. But the good news is that the number of people using banking facilities such as e-money, mobile banking, credit cards and Internet banking was rising sharply, according to the institute. In 2013, the number of people subscribing to credit cards, Internet banking and mobile banking reached 14.6, 5.7 and 16.5 million respectively. “Many people need [banking] services but the banking system has yet to create adequate means of reaching people in typically remote regions where a pensioner going to collect his or her money has to spend Rp 100,000 in boat fares to takes them to another islet,” Telematika Sharing Vision chairman Dimitri Mahayana said in a media statement. The next government will have to have the courage to take a bold move and introduce legislation that will promote non-cash transactions as a way of combating corruption. Experience has taught us that any bill aimed at strengthening the anti-graft campaign will meet fierce resistance at the House of Representatives. ●