(photo by Mick Tsikas / Reuters) 

 

 

Free elections aside, no country is really a democracy until it builds strong civil institutions. That takes strong leadership, especially in a country like Indonesia, long considered one of the world’s most corrupt.

 

It’s hard to overstate the institution-building contribution made by Sri Mulyani, who has served as finance minister since 2005. A U.S.-educated former executive director of the IMF, Mulyani, 46, has quashed corruption in the notorious tax and customs offices, dramatically increasing the government’s revenues. She has helped Indonesia avoid the worst of the global economic crisis. And most importantly, she would argue, she has burnished the reputation of her country.

 

In this first part of a two-part interview with GlobalPost’s Peter Gelling, Mulyani talked about how she has slayed corruption where others have failed. (The second installment will address her management of the economy, and for more on Mulyani, see this GlobalPost profile.)

 

Passport: Many people have described you as Indonesia's great big hope. They say you represent a new style of government here, that you are person committed to reform, clean governance. Why do you think you have this reputation?

 

Mulyani: As minister of finance, what first comes to my mind is the question, "Why are we stuck in this situation?" Living abroad, I saw how an international audience perceived Indonesia. In a way, I knew immediately when I assumed this responsibility that there was a serious problem of perception. I set out to change that perception.

 

The economy will never develop as long as the society does not trust the government. So this has become quite an obsession for me. I want to be part of a government where the people trust you. It is not easy of course. But this idea has guided my decisions.

 

When I first started, everyone was skeptical.

 

When I first came here, the Jakarta elite, the businessmen and politicians, they were watching me to see if I would be corrupted by the bureaucracy or if I was going to make real changes.

 

The directors of the tax and customs offices had strong reputations. But despite that, after six months here, I replaced them. I had to because it was important to have a new beginning. We needed to do something different. The first thing people want to see is a major change.

 

So that is one reason why I think I developed my reputation. That was seen as a brave move. Then I tried to communicate. The only way to keep this momentum of change moving forward is to tell the people what I am doing. They need to know so they can check me. This is the beauty of democracy and an open society.

 

Passport: You aren’t the first government minister to try to push through aggressive reforms. But you have been one of the most successful. What are some of the reasons, you think, for this success?

 

Mulyani: Part of the reason I have been at all successful is because of my willingness to punish people. When I heard that the human resources department at the Ministry of Finance was manipulating data for the benefit of some people, I dismissed everyone in the department. Thirty people were totally out. Some people thought it was overkill. But this needed to be done because otherwise they will constantly try and test me. I wanted to show them that I really would do it.

 

Also, cleaning up the customs office was important. When the anti-corruption commission continuously embarrassed us by exposing all the bribes being taken at the port in North Jakarta, I replaced everyone working there. They said we didn’t have enough people to replace them. So I gave them three months to find new people.

 

Leading this reform movement is not just a job of motivating people and giving nice speeches. You have 62,000 people under you and they are constantly challenging and testing you.

 

Corruption is so bad because the salaries are no good. I wanted to increase the salaries but people said I wouldn’t get the support of the Parliament. I said, let’s just see. If Parliament says no, then it is on the lawmakers.

 

Passport: Speaking of parliament, you had very little political experience coming into this job. Have you found it difficult working with Parliament?

 

Mulyani: It was a challenge at first to deal with the Parliament because I was a newcomer, and I was a minister from a university background. They would say, “You are good at lecturing but not good at managing.” They would say, “We understand your reasons but it would not work politically.”

 

You can divide the critics in Parliament between those who are connected to special interests and those who are concerned for the public. I say to them, “You ask me to fix the problem and I fix it. If you don’t agree with me then you have to tell me how to fix it. If you have no other ideas then at least give me the opportunity.”

 

I think lawmakers see that I am sincere, that I don’t have any personal interests. They just see me as a technocrat, as someone who is not working for anyone, just trying to fix problems. I think I have gained their trust. Now I feel like the only minister who has their support so strongly.

 

Passport: Corruption in Indonesia is sometimes described as a cultural problem. How have you worked to change the culture of corruption within the Finance Ministry?

 

Mulyani: The connection between business and politics is for us not a new thing. And those connections often represent a huge challenge. The president, however, has always promised the people that he would eradicate corruption, collusion and nepotism. So I just try to do exactly that.

 

At first it was not easy to change the culture even within the ministry. I had to replace the head of customs in Tanjung Priok [port in North Jakarta] because he was not following through with reforms. When I asked why, he said he had received a text message from someone in the government telling him not to do it. I had to tell him that if it doesn’t come from me then it is not official. And if there is a problem, then it is me who will be fired. He said that Indonesia has always worked [with corruption]. And I said, well, that is the past and this is now.

 

Passport: You have many political and business connections just like everyone else. Have you ever been approached or have you ever felt tempted by bribes or other corrupt practices?

 

Mulyani: There are always interests from other ministers about what I am doing here and, yes, it often pushes me to the limit. But I just stick to my principles.

 

I am always being approached by special interests. And, yes, bribes and other things are always on the table. We live in a society where this is everywhere.

 

At one point during the G-20 meeting in April, on my left was Barack Obama and on the right was the prime minister of India. The prime minister had been the minister of finance before and he told me that being finance minister is a very lonely job. I think I am now fully aware of that.

 

I have to ask myself what I am going to get from this position. It is all about reputation. These five years are an investment for myself, my family and Indonesia. It will be worth all the sacrifices that I have had to take. I have to limit my friends and my partying. I have to live by strict rules about receiving people here and taking meetings alone. Anything can happen in that situation because we are still in transition. I don’t want to get into difficult situations. All the sacrifices will be worth it if I can leave with a good reputation for both me and the country.

 

When I was at the IMF, there were very certain and robust rules on conflicts of interest. Everything is put into regulations: how much you can treat people for dinner, the size of gifts you can receive, etc. This is a new thing in Indonesia. I am trying to lead by example.

 

An Indonesian businessman once gave my daughter a significant amount of money while she was studying in Australia. She asked me why. I went straight to him and asked that he never give us any money. Some people think giving money is polite, that they are not bribing me. But as long as I hold this public position, it is too easy for people to accuse me of corruption.

 

I have sacrificed a lot to make a difference. And now, I think I can see there is a result.

 

Passport: One notable decision you made was to ban major CEOs from mining corporations from traveling until they settled their back taxes. The press loved it. What was the reaction from within the government to that decision?

 

Mulyani: As we tried to reform the tax department we wondered why the revenue was so low. It was either because we are so stupid we can’t collect all the taxes or it was because we are all receiving bribes. So we tried to calculate it. We did an audit. And we saw that even though the price of commodities was increasing, we were not getting the appropriate amount of tax in return.

 

I told the CEOs of those companies that we were going to start collecting those taxes. The other side said that they didn’t do anything wrong, that it was approved in the past. We negotiated and they didn’t accept it. So I banned them from traveling. It created a lot of headlines. Even the president asked me what is going on and asked if I could do it without so many big noises. But we had to set new standards.

 

It definitely created some discomfort within the cabinet. But I think they finally understood.

 

There is no point for me to stay in this position if I can’t work by my principles. I think they tried to respect my principles. But, I don’t know, maybe I am no longer popular (laughing).

 

Passport: You are often pitted against older, established businessmen and government officials — for example Aburizal Bakrie. (Bakrie is the Minister for People’s Welfare and one of the country’s wealthiest businessmen. He was a major contributor to the president’s campaign in 2004.) Does this present any problems for you?

 

Mulyani: Personally, I am quite close with Aburizal Bakrie. I also warn him when I am making changes that could affect his business. I tell him to be mindful. I tell him to please tell your family that we are going to do this, not because we don’t like you, but because we have to.

 

Certainly it is not easy for him. He complains. But in a way he also understands that this is a time of transition and he respects the fact that the country needs people like me. But that means that sometimes they will have to sacrifice. I said to him that I am not playing a hero, but I am trying to do something. And anyway, I think the potential for profit is big here, you don’t have to do anything illegitimate to make money.

 

Passport: In your career so far, what are you most proud of?

 

Mulyani: I think I am proud that I do a job that I feel comfortable with and enjoy. I think I can assure myself that I have never compromised my principles — that is most important. It is very simple. I just want to make Indonesia better and respectable in the eyes of the world. When I am in international forums, I want the country to which I was born and in which I live to be well regarded.

 

I think I can also be quite proud that even with all the pressure, the pain and the loneliness, I have never sacrificed my principles.

 

I am also proud that I can influence and motivate all the people in the Ministry of Finance. Hopefully I am not deceived by my own observations.

 

 

[Editor’s note: In part two of our conversation, to be published next week, Sri Mulyani will address how Indonesia has avoided the worst of the global economic crisis.]
 

 

http://www.globalpost.com/passport/090625/sri-mulyani-the-enforcer