The struggle to regain effective government under democracy in Indonesia*

With Soeharto's demise, Indonesia gained democracy but lost effective government. A return to sustained, rapid economic growth will require an overhaul of Indonesia's bureaucracy and judiciary which, along with the legislatures, the military and the state-owned enterprises, had been co-opted by the former president into his economy-wide ‘franchise’—a system of government designed to redistribute income and wealth from the weak to the strong while maintaining rapid growth. This franchise has disintegrated, its various component parts now working at cross-purposes rather than in mutually reinforcing fashion. The result has been a significant decline in the security of property rights and, in turn, the continued postponement of a sustained economic rebound. To reform the civil service it will be necessary to undertake a radical overhaul of its personnel management practices and salary structures, so as to provide strong incentives for officials to work in the public interest.