Party Financing in Post-Soeharto Indonesia: Between State Subsidies and Political Corruption

Abstract

This article discusses party financing in Indonesia after the fall of Soeharto in 1998. It shows that the cut in state subsidies for parties in 2005 has contributed to a significant increase in their illicit fund-raising efforts. Most importantly, parties have intensified their endeavours to exploit legislative and executive institutions as alternative sources of income. This trend has not only reinforced the public image of parties as rent-seeking and self-serving, but has also undermined their internal coherence and their ability to carry out basic democratic functions. Building on recent comparative research on party financing, this article points out that most consolidated democracies provide substantial state subsidies for parties in order to counter the kind of tendencies that have emerged in Indonesia. Consequently, while it certainly has its own problems, public party financing appears to be the most effective way to contain the spread of corruption in party politics.