This chapter examines technical innovations and financial technologies, particularly, the potentials of smart contract in reshaping Islamic trade finance. It explains modern Islamic trade finance practices with a focus on products, problems and prospects. The chapter focuses on smart contract and its current application in the finance industry. It presents the process of smart contract implementation in Islamic trade finance with a proposed model of new smart platform and relevant discussions on legal implications and Shari‘ah aspects of the model. The chapter provides a conclusion and some areas for further research and describes the gap by examining potentials of smart contract in Islamic trade finance as well as possible legal and Shari‘ah implications of the implementation. The ability to change and adopt new technologies will determine the future of Islamic finance generally, and in particular, Islamic trade finance. Smart contract’s potential for disruption of Islamic trade finance goes beyond simple digitisation of Islamic trade finance products and services.
Muhammad Amir Husairi Che Rani, Ahmad Dahlan Salleh
Bitcoin is the most popular virtual currency in a virtual community. Appearing with various innovations that focus on transforming the worldwide monetary system, bitcoin is confronted with legitimacy constrain, absence of regulation and becomes a platform of legal violation. In general, this article will discuss on the mechanism of bitcoin operation as well as malaah (best interest) and mafsadah (harm) that exist in the bitcoin financial system in the actualization of the concept of if al-Ml (safeguarding properties). Moreover, this article also lists some views of Islamic scholar and fatwas related to the status of bitcoin according to Shariah and conduct analysis on the relevance of bitcoin usage as a medium of payment according to the perspective of siysah shar'iyyah. The outcome of this discussion explains the arguments, reasons and the laws of bitcoin usage as currency and means of payment according to Shariah.
AbstractThe use of bitcoin as a currency or payment instrument is prohibited by Indonesian Bank. However, bitcoin as an object of sell buy in the form of digital assets or intangible goods is traded on indodax.com. The method used is statute approach and conceptual approach. The results of this study can be known that the law of sell buy bitcoin on indodax.com in the perspective of sharia is forbidden because in fiqh, the contract of sell buy bitcoin on indodax.com. include fasid contract because bitcoin contains elements gharar, maysir, syubhat, and dharar as an object of sell buy so as to violate the provisions of sharia. Indonesian Ulema Council should issue National Sharia Board About Bitcoin. Keywords : Sell Buy, Bitcoin, Digital Assets, Indodax.com, The Perspective of Sharia AbstrakPenggunaan bitcoin sebagai mata uang atau alat pembayaran dilarang oleh Bank Indonesia. Namun, bitcoin sebagai obyek jual beli yang berbentuk aset digital atau barang tidak berwujud diperjualbelikan di indodax.com. Metode yang digunakan adalah statute approach dan conceptual approach. Hasil penelitian ini dapat diketahui bahwa hukum jual beli bitcoin di indodax.com dalam perspektif syariah adalah dilarang karena dalam fikih, akad jual beli bitcoin di indodax.com. termasuk akad yang fasid karena bitcoin mengandung unsur gharar, maysir, syubhat, dan dharar sebagai obyek jual beli sehingga melanggar ketentuan syariah. Seharusnya Majelis Ulama Indonesia (MUI) mengeluarkan Fatwa Dewan Syariah Nasional (DSN) tentang Bitcoin. Kata Kunci : Jual Beli, Bitcoin, Aset Digital, Indodax.com, Perspektif Syariah.
Artikel ini ingin menjawab permasalahan utama terkait pajak di daerah. Dengan menggunakan pendekatan normatif, dapat digambarkan bahwa era otonomi daerah, dikaitkan dengan pajak daerah melalui asas desentralisasi, pemerintah daerah diberikan kewenangan untuk memungut pajak daerah. Pajak tersebut dalam rangka meningkatkan pendapatan asli daerah dan menyelenggarakan serta membiayai pembangunan di daerah. Dasar hukum bagi pemerintah daerah untuk memungut pajak adalah Undang-Undang Pajak Daerah dan Retribusi Daerah. Selain itu, Pemerintah Daerah juga membentuk peraturan di daerah sebagai peraturan teknis dibidang pajak daerah dan retribusi daerah. Peraturan yang dibentuk di daerah disebut politik hukum, yang merupakan kebijakan hukum negara untuk mencapai tujuan nasionalnya dengan membentuk hukum untuk mengatur sesuatu hal yang berkaitan langsung dengan kepentingan nasional. Political Law of Regional Tax in Polewali Mandar District West Sulawesi This article aims to answer the main problems related to taxes in the region. This is a normative research, aiming to describe the regional autonomy era to be associated with regional taxes through decentralization principle, local governments are given the authority to collect regional taxes. The tax is used to increase local revenue and organize the finance development in the region. The legal basis for local governments to collect taxes is the Regional Tax Law and Regional Retribution. In addition, the Regional Government also established regulations in the region as technical regulations of regional taxes and regional retribution. Regulations established in the region are called legal politics, which are the state legal policies to achieve national goals by establishing laws to regulate issues related to national interests.
Historically, the means of payment has evolved from time to time. The current phenomenon is Bitcoin, claimed by its users as a means of future payments, that have been the major attention of many people, from people in business to students. The research question in this study was how the existence of Bitcoin as a medium of exchange is, and how its existence as a medium of exchange is viewed based on the maqāṣid al-syar 'īyah. This used the literature research method and the maqāṣidī approach by applying the tarjih maslahat method. The existence of Bitcoin as a medium of exchange is considered valid because of the 'urf recognition. However, it requires a legal status from the government because it is related to al-maslahat al-mmāmmah, the mafsadat (damage) value of Bitcoin is higher than its maslahat (benefit) value. Hence, it is concluded that Bitcoin is valid as a medium of exchange. Still, its use must be limited due to the mafsadat (harm) probability that is more dominant at the ḍarūriyyāt (primary needs) level, following the principle of "rejecting the harm is prioritized than realizing the benefit."
 Abstrak: Berdasarkan sejarah, alat pembayaran dari masa ke masa telah mengalami evolusi, pada saat ini terdapat sebuah fenomena yaitu fenomena Bitcoin yang diklaim oleh para penggunanya sebagai alat pembayaran masa depan yang telah banyak menyita perhatian orang mulai dari kalangan pengusaha hingga mahasiswa. Bitcoin memiliki beberapa kelebihan jika dibandingkan dengan alat pembayaran yang biasa digunakan, di antaranya yaitu sifatnya yang desentralisasi sehingga tidak ada pengendali pusat yang akan ikut campur di dalamnya. Sedangkan pada kebiasaannya, alat pembayaran di suatu wilayah berada di bawah pengawasan pemerintah karena alat pembayaran tergolong kepada kebutuhan primer yang menyangkut kesejahteraan umum. Pertanyaan penelitian dalam skripsi ini adalah bagaimana eksistensi Bitcoin sebagai alat tukar dan bagaimana keberadaan Bitcoin sebagai alat tukar berdasarkan maqāṣid al-syar‘īyah. Dalam penelitian ini penulis menggunakan metode penelitian kepustakaan dan pendekatan maqāṣidī dengan menerapkan metode tarjih maslahat. Keberadaan Bitoin sebagai alat tukar dianggap sah karena terdapat pengakuan secara ‘urf. Akan tetapi status sah tersebut perlu mendapatkan pengesahan pemerintah karena terkait dengan al- maslahat al-‘āmmah, nilai mafsadat pada Bitcoin lebih dominan jika dibandingkan dengan nilai maslahatnya. Dari paparan di atas disimpulkan bahwa keberadaan Bitcoin sah sebagai alat tukar, namun penggunaannya merupakan sesuatu yang harus dibatasi karena probabilitas mafsadatnya lebih dominan yang berada pada tingkat ḍarūriyyāt.. Hal ini sesuai dengan kaidah “menolak mafsadat di dahulukan dari pada mewujudkan maslahat.”
 Keyword: Eksistensi, Bitcoin, Maqāṣid al-Syar‘īyah.
In the long journey of development of a government increasingly multiply and enrich the understanding of the government itself, so that the concepts of government can be viewed from various angles and aspects that can further clarify the notion of the concept of government itself, one of which is the concept of the principle of governance. The existence of a Local Government in the system of government is an integral part of a system of state government or national government, even the concept and theoretical existence of local government is much earlier than the existence of elements of central government or state government. The principle of "Medebewin" as a relic of the Indies government system, at the beginning of the revolution, precisely in 1948, was called "uncompleted surrender", to overcome the principle of full-fledged decentralization. The difference with the principle of decentralization is that the "medebewind" governmental affairs are only handed over the task of execution alone, excluding the authority that determines the policies, the financing, and the execution workers. One of the principles of local governance that has been applied in Indonesia in the history of local governance is the Assistance Task Principle, apart from the principles of decentralization and deconcentration. The principle of the implementation of regional government consists of the principle of decentralization, the principle of deconcentration and the principle of co-administration. In Dutch legislation, between co-administration and medebewin are divided into two, namely mechanical medebewind or more detailed andfacultative medebewind or which provide wider freedom to determine the wisdom of the medebewind ". Definition of assistance task is; assignment with an obligation to account for its execution to the assignee. In its implementation the task of assistance has its own development and dynamics in accordance with the Law on Regional Government which regulates it.
The development of the virtual world has penetrated the world of national borders. Not only unlimited distances but applicable laws in cyberspace are increasingly not bound by the laws of the state. In buying and selling in cyberspace, especially the internet, money that is used is no longer monotone in currency issued by a particular country but has created a payment system that does not require legitimacy of a country. The most phenomenal emergence of Bitcoin is that its use as currency in a purchase transaction has been appointed exceeds a country's currency. Several countries in the world have determined stance against the imposition of BitCoin, some accept and some refuse. Indonesia has not determined a clear stance for the development of new Bitcoin in Indonesia limited to the internet world and not stray into the real world. Keyword : Relevance, Law no. 7 In 2011, the Virtual Currency, Phenomenon, BitCoin, Indonesia
This paper gives an overview of the implementation of the constitution laws such as the embodiment of the political will of the Central Government, but in practice occur various obstacles. The model has become divided in 3 (three), namely: the bottleneck in the autonomous region, of good Governance and capacity building in implementing Regional Autonomy. The Government of the provinces, counties and cities should implement the values of good Governance, such as strategic vision, transparency, responsiveness, fairness, consensus, effectiveness and efficiency, accountability, freedom of Assembly and participation, rule of law, democracy, in cooperation with community organizations, our commitment to the market, and commitment to environment and decentralization. Some elements of capacity development in order to realize a good Governance can be seen from some of the items, the first development of the vision and mission of regional and provincial government institutions/district/city. Second, the institutional development of the Government of the province/district/city. Third, the development of a network of Government provincial/district/city. And fourth, the development and utilization of the environment of the Government of the province/district/city.
Raden Ricky Pratidiningrat, Jurnal Mahasiswa S Hukum Untan
ABSTRACT This thesis discusses the function of law enforcement in the era of regional autonomy under Article 2 of Law No. 2 of 2002 on the Indonesian National Police in the city of Pontianak. The method used in this study is a socio-juridical approach. From the results of this thesis can be concluded as the reform efforts to improve the livelihood of Governance and Development in the form of a change from centralized to decentralized, intended as the acceleration process of achieving national objectives, namely the creation of a just and prosperous society. Decentralization means the delegation of powers to the Autonomous Region of Central Government to run the government as well as regional development sendiri.Desentralisasi been, because in this system enable even better democracy and provide space and access freely to the community to participate in all areas of governance and development. So the implementation of governance and development are not solely based on the government or the state, the public will play a part and give kontribusinya.Selain positive things that have been able to be achieved by the Reformation, as mentioned above, it also followed a negative impact mainly concerns the behavior of the public. At this time changing people's behavior caused the reforms implemented so quickly, involving almost the whole order of life, also result in changes in the existing social order. From the changing social order that ultimately affect people's behavior to change as well as a reaction to the changes that occur. Behavior change is actually a social phenomenon that can arise at any time and by any cause, and it will become a problem when such behavior is contrary to the norms and values, which in turn it will hamper the implementation of the process of government and development itself. Democracy is translated as freedom of action of individuals who freely and participation addressed by coercion-coercion will. Police as the formal institution according their main duty, highly demanded to carry out its function and role to be able to present the situation of security and public order conducive thus enabling governance and development can work well. Efforts to make it happen, given the limited resources available, the police not only through law enforcement (Low Enforcement), but also followed by efforts that are prevention, namely Pre-emptive and Preventive. Law enforcement purpose to force obey and follow the existing norms and values, is being implemented with the aim of prevention grow and develop deterrence from within the community. So dominant sendiri.Pelaksanaan public order law enforcement and public security in accordance with Law # 2 of 2002 on the Police, can not be implemented fully or substantially total impossibility of enforcement because the law can reach out to its destination (order, order and justice) for their influence and intervention in its implementation. Here the role of police discretion to decide cases of criminal cases handled by police. Discretion granted by operational officers in the field directly on the spot and without asking for directions or decisions of his superiors an Individual discretion. Discretion based or guided by the policies of the leadership in the police organization is bureaucratic discretion. Keywords: Function, Law Enforcement, Police, Regional Autonomy . ABSTRAK Tesis ini membahas fungsi penegakan hukum di era otonomi daerah berdasarkan Pasal 2 Undang-Undang No 2 Tahun 2002 Tentang Kepolisian Negara Republik Indonesia Di Kota Pontianak. Metode pendekatan yang digunakan dalam penelitian ini adalah pendekatan yuridis-sosiologis. Dari hasil penelitian tesis ini diperoleh kesimpulan Reformasi sebagai upaya memperbaiki tata kehidupan Pemerintahan maupun Pembangunan dengan wujud perubahan dari Sentralistik menjadi Desentralistik, dimaksudkan sebagai akselerasi proses pencapaian tujuan Nasional, yaitu terwujudnya masyarakat adil dan makmur. Desentralisasi berarti pelimpahan kekuasaan Pemerintahan Pusat kepada Daerah Otonomi untuk menjalankan pemerintahan maupun pembangunan daerahnya sendiri.Desentralisasi dipilih, sebab pada sistem ini memungkinkan terlaksananya demokrasi yang lebih baik dan memberikan ruang maupun akses secara leluasa kepada masyarakat untuk berpartisipasi dalam segala bidang pemerintahan maupun pembangunan. Jadi pemerintahan dan pembangunan pelaksanaannya tidak hanya disandarkan pada pemerintahan atau negara saja, masyarakat akan banyak berperan dan memberikan kontribusinya.Selain hal-hal positif yang telah mampu dicapai oleh Reformasi sebagaimana disebutkan diatas, ternyata juga diikuti akibat negatif terutama menyangkut perilaku dari masyarakat. Pada saat ini perilaku masyarakat berubah disebabkan reformasi yang terlaksana begitu cepat, menyangkut hampir pada seluruh tatanan kehidupan, mengakibatkan berubahnya pula tatanan sosial yang ada. Dari berubahnya tatanan sosial itu akhirnya mempengaruhi perilaku masyarakat untuk berubah pula sebagai reaksi atas perubahan yang terjadi. Perubahan perilaku sebenarnya merupakan fenomena sosial yang dapat timbul kapanpun serta oleh sebab apapun juga, dan akan menjadi permasalahan manakala tingkah laku tersebut bertentangan dengan norma dan nilai yang berlaku, yang pada gilirannya justru akan menghambat pelaksanaan proses pemerintahan maupun pembangunan itu sendiri. Demokrasi diterjemahkan sebagai kebebasan bertindak individu yang sebebas-bebasnya dan partisipasi disikapi dengan pemaksaan-pemaksaan kehendak. Polri sebagai Lembaga formal sesuai tugas pokoknya, sangat dituntut mampu melaksanakan fungsi dan perannya untuk dapat menyajikan situasi keamanan dan ketertiban masyarakat yang kondusif sehingga memungkinkan pemerintahan serta pembangunan dapat berjalan dengan baik. Upaya mewujudkannya, mengingat keterbatasan sumber daya yang ada maka Polri tidak hanya melalui penegakan hukum (Low Enforcement) saja, tetapi juga diikuti dengan upaya-upaya yang bersifat prevensi, yaitu Pre-emtif dan Preventif. Penegakan hukum tujuannya untuk memaksa mentaati dan mengikuti norma maupun nilai yang ada, sedang prevensi dilaksanakan dengan tujuan menumbuh-kembangkan daya tangkal dari dalam diri masyarakat. Jadi yang dominan masyarakat sendiri.Pelaksanaan penegakan hukum ketertiban dan keamanan masyarakat sesuai Undang-undang No.2 Tahun 2002 tentang Kepolisian, tidak dapat dilaksanakan secara sepenuhnya atau total enforcement karena secara substansial ketidakmungkinan hukum dapat menjangkau sampai pada tujuannya (ketertiban, keteraturan dan keadilan) karena adanya pengaruh dan intervensi dalam implementasinya. Disini diskresi kepolisian berperan untuk memutuskan kasus perkara pidana yang ditangani oleh kepolisian. Diskresi yang diputuskan oleh petugas operasional di lapangan secara langsung pada saat itu juga dan tanpa meminta petunjuk atau keputusan dari atasannya merupakan Diskresi Individual. Diskresi yang berdasarkan atau berpedoman pada kebijaksanaan-kebijaksanaan pimpinan dalam organisasi kepolisian adalah Diskresi Birokrasi. Kata Kunci: Fungsi ,Penegakan Hukum, Polri, Era Otonomi Daerah.
AbstractSince the enactment of Law No. 12 Year 2008 on the second Amendment to the Law Number 32 Year 2004 on Regional Government, as an interpretation of Article 18 , to bring new changes in governance in the region. This law has fundamentally changed the practices of government, one of which is related to the position, duties and functions of the District. The main changes was in the definition of the township itself besides the other changes such as the shape of the organization, financing, personnel appointments, logistics fulfillments and accountability,. Previously, the District was an administrative region in the context of the work environment that organizes the implementation of tasks in the area of public administration. While according to the Law No. 12 of 2008, Article 126 Section 3, the District is the district/city in the context of the principle of decentralization. That is, if used within the framework of the principle of deconcentration district, it is one of the administrative area, in addition to national, provincial, district and municipality, as well as administrative city. At the present time the Districts is the working area of the districts of the region. However, districts are not a territory, it is a service areas.Keywords: Delegation of authority, Head of District, Regional Government
The implementation of regional autonomy within the framework of decentralization is a complex and continuous work . In the early stages of decentralization , there is a transfer of various types of authority from the center to the various institutions , especially institutions subnational governments . After the transfer of authority will then be followed by the transfer of financing , documents and facilities . After the completion stages passed , does not mean the work has been completed . It appears a series of new challenges related to the ability of isntitusi who obtained the transfer of authority to manage it properly . Without good management , decentralization is precisely that for democracy , effectiveness , efficiency and fairness can not be achieved . It would appear the sources of inefficiency , ineffectiveness and new injustices in areas that can be a trigger for a second series of multidimensional crisis
As a fiscal policy within the framework of regional autonomy, the allocation of DAU is an act that very important. It was meant to address financing capability gap between regions. The reason is because the DAU is the largest component of balance funds, namely the lack of 26% of the net domestic income in the state budget the amount of DAU scheme is not limiting, because it can only grow with the size of the authority delegated to the regions. DAU legal standing as a regional income in the financial relationship between the center and the regions based on the principle of autonomy is as a subsidy coming from the state revenue in the state budget that is allocated to local revenue in the budget based on fiscal decentralization. Keywords: General Allocation Fund, autonomy, regional autonomy
In the perspective of regulation, some basic things that needs attention is that the policy principles of financial balance, the basic local government funding, the source of local revenue, local revenue, the fund balance, miscellaneous revenue, borrowing, financial management in the context of decentralization, deconcentration funds, support funds, financial information systems area, as well as transitional provisions, must obtain a more serious concern. On the application of the dimensions of the Financial Balance between the Government and the Regional Government is a subsystem of the State Treasury as a consequence of the division of tasks between the Government and Local Government showed inconsistencies with the provision of financial resources of the state to the regional government in the implementation of decentralization. It is certainly a negative impact, because it is only based on the transfer of duty by the Government to the Local Government with regard stability and fiscal balance. Local finance should be managed in an orderly, obedient to laws and regulations, efficient, economical, effective, transparent and accountable with regard to fairness, decency, and the benefits to society. Keywords:State Financial Regulation,Relations Regional Center,Financial Decentralization
Funds of district development sourced from district of earning and budgeting (APBD) constrained when source of revenue rely on district revenue (PAD) as like as taxes. An act penetration innovatory solution is needed to solve the budget deficit problem such as the potency of Sharia bonds (Sukuk). This article discusses what kinds of potency that become strengths and weaknesses then how opportunities and challenges are faced by Banten Province in an effort to take advantage of sukuk as the source of development budgeting in Banten. Furthermore, what strategis are effective to apply in an attempt to make sukuk as the source of development budgeting in Banten. An analysis of classical SWOT (SWOT Analysis-K) used to solve the problem above. First step of SWOT-K analysis is identifying the internal and external factors faced by the Banten province to take advantage of sukuk as a source of development budgeting in Banten. Second is making combination of internal and external factors. Final step is formulating appropriate strategies to be sukuk as an alternative of development funding in Banten.
 Result of SWOT-K anafysis in Banten Province has the power of aspects of economic resources as basic capital to make use of sukuk for regional development budgeting. Whereas there are two weakness become obstacles, there are human resources and government management. Besides, the market opportunity to make use of sukuk is widely open because Banten Province is one of the provinces that have a positive economic growth. Opportunities become greater with decentralization right in district financial management, but faced challenges are none of juridis basis for the implementation of district sukuk. The existence of UU SBSN does not yet give potency for district to take advantage of sukuk as APBD because the utilization of new sukuk is allowed for APBN. Priority strategic is improving the quality of human resources in field of Sharia finance by increasing professionalism and accountability in management. Improvement of the
 quality of human resources is accompanied by efforts to encourage the central government and the legislature to revise the constitution of governing district finances in order that accommpodate the source of society loans as instrument of district Sharia bonds (sukuk).
 Keywords: Budgeting, Bonds, Sukuk, Banten, APBD.
Abstract The election of Head of region as the democracy mechanism to the head of region that the application is based on the Law Number 23 2004 about Regional Government is still found some problems, such as the application of the head of region election gives the burden the government finance plan so that it’s not really efficient and effective, and also the head of region election results the unharmonious head and the vice head of the region (about 93.84% all over Indonesia). So that for the consequence as the lawful country, Indonesia has to revise that problem that needs to administer the law to become the ideal law in regulating the head of region election. The ideal law regulation will become the basic to the application of the head of region election with the better result as the effort to accomplish the purpose of autonomy region in boosting the society welfare of the autonomy region’s people as the implementation of people’s sovereignty through the process of political decentralization to the autonomy region. Keywords: Ideal Law, People’s welfare, People’s Sovereignty. Abstrak Pemilukada sebagai suatu mekanisme demokrasi untuk pengisian jabatan kepala daerah yang penyelenggaraannya didasari Undang-Undang Nomor 32 Tahun 2004 tentang Pemerintahan Daerah dalam penerapannya masih dijumpai berbagai persoalan, diantaranya; pelaksanaan pemilukada cukup membebani anggaran pemerintah sehingga dirasa tidak efisen dan efektif, juga pemilukada justru menghasilkan pasangan kepala daerah yang tidak harmonis (93,84 % se Indonesia). Oleh karena itu sebagai konsekuensi Indonesia negara hukum, maka untuk memperbaiki berbagai persoalan tersebut, perlu dilakukan penataan hukum menuju hukum ideal dalam pengaturan pemilukada. Pengaturan hukum ideal akan menjadi dasar untuk penyelenggaraan pemilukada dengan hasil yang lebih baik sebagai upaya untuk mewujudkan tujuan otonomi daerah dalam meningkatkan kesejahteraan masyarakat daerah otonom sekaligus perwujudan kedaulatan rakyat melalui proses desentralisasi politik kepada daerah otonom. Kata kunci: Hukum ideal, Kesejahteraan rakyat, kedaulatan rakyat.
Jakarta—Muhammad Nazaruddin, a bright 32-year-old, was an up and coming national politician destined for high office, perhaps even president. He was one of the new political tigers that won office as the result of Indonesian President Susilo Bambang Yudhoyono’s election victory in 2004. By 2010, Nazaruddin was already treasurer of the ruling Democratic Party and a member of the House of Representatives Budget Committee, which oversees government projects.Nazaruddin’s downfall came last May when local newspapers reported he received bribes totalling 25 billion rupiahs ($2.8 million) for a construction contract to build athletes’ housing at the Jakarta 2011 Southeast Asian Games. In late September, two members of the project consortium were convicted of involvement in the bribery scandal and were sentenced to only two and two-and-a-half years in prison and a fine of Rp 200 million ($22,300). “If that’s all they get, there won’t be any deterrent effect,” says Indonesia Corruption Watch chairman Danang Widoyoko.Shortly after these charges first surfaced, the Corruption Eradication Commission (kpk) formally accused Nazaruddin of accepting bribes involving the project. Subsequent charges included two cases that totalled Rp 2.3 trillion ($256.5 million) in bribes. In August, Nazaruddin’s lawyer revealed a letter from his client suggesting he’d keep mum about crimes committed by the Democrats if Yudhoyono would guarantee his family’s safety, leading to the obvious, if unproven, conclusion that the party’s leaders are culpable in as-of-yet-undisclosed offenses. Then in September 2010, the chief of the Constitutional Court alleged Nazaruddin had offered an unsolicited payment of $120,000 to the court’s secretary-general. Nazaruddin resigned hastily, launching a series of stinging attacks accusing high-ranking government figures, including the Sports Minister Andi Mallarangeng and the secretary of the Democratic Party’s ethics committee, Amir Syamsuddin, of crooked deals. After implicating powerful former associates, he fled to neighboring Singapore for what he claimed was a medical appointment. However, he never bothered to return—at least not for three months. That is when Indonesian authorities discovered him, living under an assumed name in Cartagena, a plush Caribbean beach resort in Colombia. The Indonesian government sent a specially chartered executive plane at a cost of Rp 4 billion ($468,000) to collect him. That too provoked a few raised eyebrows, until the kpk pointed out that a previous whistle-blower who returned on a commercial flight had been poisoned.“Corruption in Indonesia is just like Coca-Cola,” says Widoyoko. And indeed the problem has permeated far beyond the billion rupiah bribes that prop up the already rich and powerful. It has become a deeply embedded feature of Indonesian society and everyday life. Corruption is sapping the growth and undermining the foundations of the world’s third largest democracy.In the time of Indonesia’s long-time leader, Suharto, life was a lot simpler for the foreign investor. Suharto ran a one-stop shop. You paid your money to one person, and everything was arranged. Today, in the wake of regional power-sharing, you not only have to bribe officials at the federal level, but also at regional and local levels. This complicates matters. Today, a foreign investor often needs a professional team based in Jakarta and in the appropriate provinces to figure out all the people who need to be paid off.Corruption has trickled down to every aspect of life. It’s routine for authorities to pull over drivers—whether or not a motoring offence has actually occurred—and ask for Rp 50,000 ($5.64) to avoid being taken to court. Agung, a Jakarta property developer, explains, “You are told you have been speeding, or there is something wrong with your car. You are then asked for ‘some money for a friend.’ This is a code phrase that the officer is demanding a bribe for some sort of alleged motoring offense.”Truck drivers and transportation firms make regular payments to police, officials at weigh stations, even local thugs at checkpoints to allow their overloaded trucks to pass. Few of these tolls ever make their way into government coffers, so it’s no surprise to find major roads routinely dotted with large potholes. Hauling cargo from Jakarta to Surabaya requires payment of at least Rp 450,000 ($50) in illegal levies to officials at 14 different weigh stations along this 400-mile route, according to Indonesia’s Food and Beverage Industries Association. Truck drivers claim they must overload their trucks to cover the illegal levies. These overweight vehicles further churn up the already decaying roads. In the Indramayu region alone, there are more than 50 miles of failed roads in need of repair, and no plans to repair them. The Iskandar Agus Bandji Cirebon chapter of the Organization of Land Transportation Owners says truck owners must change their tires every two to three months instead of the normal six months because of the poor state of the roads.Indonesians resent the vicious cycle of corruption that’s become so deeply embedded in their lives. It is a constant topic of conversation, a media fixture, and the focus of countless conferences. “Indonesians have a love-hate relationship with corruption,” says Agung. Many hate paying the bribes on a daily basis to get things done, he says, “but given that public officials take home barely $200 a month in salaries, it’s hardly surprising they look for ways to supplement their incomes.”In the past, politicians have talked about halting corruption, but in the end, it has always been just that—talk. Despite years of anti-corruption rhetoric, the scale of the problem is only growing. The most recent Corruption Perception Index prepared by Transparency International ranks Indonesia as more corrupt than Egypt, Brazil, India, and China. A survey released in October found 91 percent of Indonesians believe corruption is widespread, up from 86 percent five years ago. Many Indonesian executives agree with Agung that “corruption is becoming more bureaucratic at all levels of society.” Ironically, Indonesia’s efforts to improve democracy and accountability after Suharto by building strong regional governments have only made matters worse.In 1999, Time magazine estimated that Suharto amassed a fortune of $15 billion between 1967 and 1998 in cash, shares, property, jewelery, and art. Many businesses included one of Suharto’s children on their board to protect investments from rivals and threats from low-level civil servants. Few want to return to the days of Suharto’s New Order regime when the military massacred hundreds of thousands in the 1960 s, then brutally repressed regional uprisings in Aceh and East Timor from the 1970 s to the 1990 s. Yet, the Suharto system centralized the collection of bribes and established mechanisms to halt deviations from the agreed upon pattern of corruption. People who bought “permits” received guarantees that they were getting the whole package and would not face any more requests for bribes. Corruption under Suharto was compatible with high growth and inflicted minimal damage on economic development. While Suharto was president, Indonesia’s economy boomed, with over three decades of 7 percent per annum growth. The president’s wife, Tien Suharto, was widely known as Madam Ten Percent for the level of payoffs expected for approval of major contracts or development projects. At the time, Indonesia and India were about equally corrupt, according to Ari Kuncoro at Inside Indonesia magazine, but Indonesia’s economic performance was healthier. Only three groups—Suharto’s extended family, top members of the military elite, and leaders of Indonesia’s Chinese conglomerates—dominated corruption.Bribery in post-Suharto Indonesia is different. Corruption is no longer monopolized by a select few. Indonesia launched its regional decentralization program in 2001. Instead of a strong centralized state, the country’s government fragmented into a host of power centers. With this power shift, centralized corruption has been replaced by a haphazard bribe collection system. The Indonesian Chamber of Commerce (Kadin) has complained that decentralization produces additional regulations in the form of taxes, levies, and permits, which drive up corruption at the local government level. The phenomenon is called “overgrazing the commons,” because officials from all levels of government prey on the same economic activities. Today, everyone from ministers to assemblymen to local police officers demand payoffs.During this summer’s Ramadan, local officials took little time off from collecting their take. For a new passport or driver’s license, the quickest way to avoid endless queues at local government offices is to pay an intermediary. It normally costs Rp 175,000 ($20) to obtain a new driver’s license, but the application and processing is time consuming. Instead, the standard bribe for obtaining an instant driving license is Rp 500,000. For migrant workers seeking a new passport, the process routinely takes eight days, but slipping a bribe of Rp 600,000 to an intermediary means a passport can be obtained instantly.Sundah, who lives in Denpasar, Bali, decided he was going to try to snag a driver’s license by going through official procedures without paying a bribe. “I took the written test three times, and each time they failed me,” he says. “I was a couple of points short each time, but when I asked to see the test papers initially, the officials refused. The others in my exam room told me that if I just paid an extra $20, I would get my license.” In the end, Sundah managed to get his license when the police realized he was not going to pay them a dime. “Finally I asked to see the exam paper, and I spotted the question: ‘What would you do if you hit someone in an accident?’” he chuckles. “I got the question wrong, because the correct answer, according to the official exam paper, was to run away.”Effectively, this all but institutionalized system is an express fee for expedited processing—standard practice in most western nations. In Indonesia, however, instead of the government as the beneficiary, these payments go into the pockets of individuals. People have increasingly become both resigned to such fee structures and lured into efforts to see how they, too, might profit.It’s not just passing a small bribe to a public official that’s routine. Corruption has spread to the private sector. Today, Indonesia is home to more than 60,000 millionaires and 20 billionaires (in dollar terms)—figures that have doubled in the past two years, according the Indonesia’s Ministry of Finance. The financial sector is sizzling with deals—and scandals—from a bribery case involving a former governor of the Bank Indonesia that has implicated dozens of politicians, to Citibank, where an employee is charged with skimming millions from her customers. Such cases highlight fears about endemic corruption within Indonesia’s financial sector.Churchill Mining, a publicly traded London-based firm, announced in May 2008 that it had found 150 million tons of coal in Indonesian Borneo. This turned out to be a vast underestimate. The firm now believes there are 2.8 billion tons, making it the seventh-largest undeveloped reserve in the world. Unfortunately for this British firm, other investors quickly became interested. The Nusantara Group, a conglomerate backed by Prabowo Subianto, a politician and Suharto’s son-in-law, had previously controlled mining in that area. Six companies affiliated with Nusantara held licenses for six blocks in the East Kutai district of East Kalimantan province but never explored for coal. After the six licenses expired between March 2006 and March 2007, the district government began offering the area to other mining firms. Churchill entered the picture by acquiring from the Ridlatama Group, an Indonesian company, a 75 percent stake in the four new licenses awarded for the same area.In July 2008, two months after Churchill revealed its discovery, the district chief of East Kutai suddenly extended the six expired licenses that had been held by Nusantara’s affiliates, ignoring the fact that Churchill’s local partner had already been awarded licenses for the same tracts. Churchill claims that it has since been the target of a campaign to drive it out of Borneo. In May 2010, a new district chief of East Kutai revoked the Churchill-Ridlatama licenses, leaving Nusantara-affiliated companies in sole control of the 2.8 billion-ton reserve. Local courts rejected Churchill’s complaints, though it has recently appealed to Indonesia’s Supreme Court. And in the process, Churchill Mining has launched a global public relations campaign alerting the financial world that Indonesia is not a trustworthy place to invest.From the point of view of private companies, corruption is like taxation. Both take money from private business, but the need to avoid detection and punishment makes corruption less efficient than taxation. A bribe is a contract that cannot be enforced in court, increasing the chances the bribe-giver will renege or the bribe-taker will suddenly demand a higher payment. Still, there are some practices many foreign observers (and even Indonesian commentators) would call “corruption” even though it’s totally legal in Indonesia.In Indonesia, like elsewhere, golf clubs exist not only as a place to play golf, they are equally a place to conduct business—organize deals, network, and bribe officials. It is a good place for an important official to win prestige jobs for his expensively educated children. It is also a good place to receive bribes. A top civil servant is invited to play a round of golf and discuss business. The official has conveniently forgotten his bag of golf clubs. His business friends lend him a set; they play a round of golf, with the prize being the golf clubs. The government official wins, and he decides to them at the golf professional since he has a of clubs at The paid by the is always the agreed as the bribe for the the official has made with the executives that This is not is it when a like Indonesia it has given some million to police and Indonesian military officers as a fee to their mining Many private however, these payments as bribery and the legal system is a vast of must be in the The state to the in a In 2010, police two in a for they had in were accused by police of the for without in Indonesia and being in of the for which had not been as a Many found such to the by the police given that for years many of had not been for the same In a Jakarta the to are more by a corrupt than companies to their and Such companies must a of their to Corruption when licenses have to be so businesses often without them since a firm need up to to be At least of all drivers in Jakarta have licenses, says a local one means drivers have not taken an official driving hardly a given the driving that on in For without a license, it means a police It would take at least at to the cost of obtaining an official license, the bribes to up the some for business in recent years, Indonesia’s and legal many foreign and companies to avoid the system It is not surprising that investors are often by to through because the system and The local business the and system as corrupt with many Ironically, many of these regulations have been in an to efforts to a the a Bank found that some percent of investments in Indonesia because of the high costs to corruption. The problem has become so that it Indonesia’s of becoming a India, Indonesia, and have which will make it increasingly for foreign investors to in Indonesia’s corrupt A from the found that a third of British and a of companies would avoid to avoid the of being at At least for the of this not Asian without anti-corruption regulations from in such payments to win business in Indonesians the of corruption has to do with its and Indonesia has of a of regional and at It is not surprising since the has been by of often members of the public as as of the Agung says when he is paying a he he is to a their to of For many up in such a the offering of a bribe is not as corruption but as of the way of life. In many local who have widely in the little between a politician to government contracts in Jakarta and a to change a in the it’s called widely that corruption has out of control in Indonesia because of the high costs of a of over million people some legal and in a regime with no established of by members and Rp billion million) paid in to all in Indonesia’s is hardly to run a professional political the vast of members pay no the small state to were by percent in and politicians try to from companies and state to the of or development through procedures have often been the of political in both and Indonesian Corruption Watch the political in the federal their financial in with the which that have their and to do so from further government Only three political Despite over many to the Corruption Watch as of the six had failed to be a to Indonesia’s as one of the world’s largest a political four have been in Indonesia since the of Suharto’s years of in an increasing of Indonesians question the of given the run of reported by the country’s by the rich not And the Indonesian government is too to make this corruption has not Indonesia’s percent growth since 2007, and there are other for as For the first time since Indonesia won its from the in and some from the political elite, the legal system to have a a surprising of people are being and official a official who by both and foreign companies or their amassed a small fortune of Rp billion was sentenced to years in prison in August, extended to He a to in the the Indonesian media and to their into the within the in the Indonesia’s anti-corruption has for and and of the country’s and corrupt police a to Jakarta last August, official the kpk was a it as and are their For a they have a The kpk has convicted 150 high-ranking including members of more than government four and a of high-ranking chief executive officers and according to its It has also received more than of percent a little too good in any legal system and there needs to be a look at how cases are in the first new drive to corruption has been by from investors to up the and from a new of Indonesian executives and politicians to the economy into the global The in their way of from the country’s economic growth and that in many of Indonesia, a lot of government have a about how to government money in an so need to them and them what practices are the in Indonesia, corruption even the to the is a of have made anti-corruption their The problem the leading anti-corruption up by officials to the of the needs to a of and to corruption. These down and increasing pay levels for civil and officials. have been in Indonesia without the state must become a more powerful and like the kpk have on a corruption, it is all but to build a or power without to pay bribes to win the and the and and the legal foreign investors often and they are in an Indonesian of they often take their business
Discourse concerning local autonomy have long expanded in Indonesia. But clearly just started in 1974 published of Law No 5/1974. This law do not be executed as expected. Then go out Law of No. 22 1999 generating various important problems in public administration systems especially in policy of compilation of APBD. The problems result to be published Law No. 32 2004 representing penyempurnaan of Law No. 22 1999. In fact of this Law perform a elementary change to public administration and local finance systems. This change is in decentralization of fiscal, although from facet of regulasi, problems still also emerge so that need deeper study.