Various corruption cases involving law enforcement officials have eroded public trust, yet public trust plays a crucial role in economic growth. How can the government restore public trust?

Negative news stories about state institutions have been a constant source of controversy over the past year. The court has sentenced a high-ranking National Police officer for premeditated murder and is currently hearing a drug case involving another high-ranking National Police officer.

Not long after, two supreme court judges were arrested by the Corruption Eradication Committee (KPK) for bribery.

As a result, public trust has declined. A report by Transparency International last January showed that Indonesia ranked sixth in ASEAN and 110th globally in the 2022 Corruption Perception Index. The highest ranking was held by Singapore (ranked fifth globally), followed by Malaysia (61st), Timor Leste (77th), Vietnam (77th), Thailand (101st), and Indonesia (110th).

Over the past month, news coverage has been dominated by the rise in the unnatural wealth of several officials within the Ministry of Finance. In fact, according to Coordinating Minister for Political, Legal, and Security Affairs M. Mahfud MD, the value of irregular transactions suspected of being linked to money laundering has reached Rp 349 trillion. These transactions involved hundreds of employees from various ministries and other institutions over the past 14 years.

It will certainly be interesting to see how the public reacts. Overall, the Kompas Research and Development survey shows a decline in public satisfaction with government performance compared to the beginning of last year. Indications of corruption among officials within the Directorate General of Taxes have even given rise to calls for tax evasion.

How should the government restore public trust?

Corruption and public trust

The past five decades have demonstrated the crucial role of public (social) trust in economic growth. The evidence suggests that developed countries have societies that trust each other (interpersonal trust) and their governments (institutional trust)—high-trust societies. In contrast, developing countries are characterized as low-trust societies.

Various studies have shown that social trust can be a key driver of economic growth. A study by Kalish et al. (2021) showed that a country's gross domestic product (GDP) increases when 50 percent of the population trusts others. Specifically, in Indonesia, the GDP increase could reach 2.3 percent (equivalent to Rp 374 trillion).

Public trust will also strengthen democratic and efficient governance. At the micro level, public trust will reduce transaction costs and increase product innovation.

The primary cause of declining public trust, particularly institutional trust, is corruption. There are two perspectives on corruption's role in development. First, corruption acts as grease to drive and grow the economy. Suboptimal economic growth due to inefficient regulations is facilitated by corruption.

Second, corruption acts as a "grinder" because it hinders production efficiency and innovation, thus suboptimal economic growth. Recent studies indicate that the latter role is dominant. Corruption has a cumulative long-term impact, resulting in a 17 percent decline in GDP when perceptions of corruption in a country increase (Grundler and Potrafke, 2019). This negative impact is accompanied by decreased foreign investment and increased inflation.

Restoring trust

Trust is a psychological state in which vulnerability is tolerated due to positive expectations about the intentions and actions of another party. In the context of governance, the public believes the government is consistently striving to provide prosperity and justice for Indonesia. A breach of trust occurs when these positive expectations are not met by reality.

A breach of trust will create a crisis. According to the crisis life cycle theory (Fink, 1986), there are four stages of a crisis. The first is the "prodromal," when violations occur and accumulate. Reports of irregular transactions since 2009, involving more than 460 employees within the Ministry of Finance, fall into this stage.

However, the follow-up to the report has not yet shown any impact.

The next stage is "Acute," which is when attention becomes widespread and occurs over a short period of time. Starting with the assault, public attention focused on the perpetrator, who was the son of an official at the South Jakarta Directorate General of Taxes.

In a short time, various irregularities in wealth and transactions began to be exposed to the public. As a result, public attention grew on the social media phishing practices of government officials and their families.

The third stage is “Chronic”, which is when the approach used is effective so that the impact of the crisis begins to weaken even though it takes a long time.

Finally, the "Termination" stage occurs, with the impact of the current crisis gradually fading away. However, anticipating the emergence of new crises in the future must still be addressed.

To restore trust, Xie and Peng (2010) offer three approaches. First, the "affective" approach, such as showing concern for those affected by the violation, issuing a public apology and acknowledgement, or promising not to repeat the violation.

Second, the “Informational” approach by communicating to the public why the violation occurred, clarifying false rumors, and disclosing true information.

Third, the “Functional” approach by providing compensation to the party whose trust has been violated.

Recent research conducted by Zhang et al. (2021) shows that the approach taken must be adapted to the stage of the crisis being experienced.

In the "Acute" stage, an effective approach is "Affective." This approach will alleviate negative public sentiment surrounding the crisis. When the crisis enters the "Chronic" stage, an "Informational" approach is necessary. When the public loses trust in an organization, providing requested information will be effective in mitigating the crisis.

The "Termination" stage will be effective if a "Functional" approach is used. Compensation for those affected, improvements to procedures and oversight mechanisms, and risk mitigation for future crises can be implemented to quickly end the crisis and prevent its recurrence.

Recommendation

The crisis of public trust in government is a shared concern. Furthermore, numerous empirical studies demonstrate the negative impacts it has had, particularly on the nation's social and economic well-being.

Structured, systematic, and massive efforts are needed to quickly restore public trust in the government and its officials. Recovery will be optimal if the approach used is appropriate to the stage of the crisis.

Of course, preventing a crisis of confidence is crucial. This task is not solely the responsibility of the government and its officials, but of all citizens.

Let's work together proactively to restore and maintain the nation's social trust. We must not lose the momentum to become a developed nation by 2045 due to a lack of public trust, both interpersonal and institutional.

Economic growth will be suboptimal, and the threat of the middle-income trap will become real. The task of national leaders, both current and future, is to transform Indonesia into a high-trust society as a foundation for national progress.

Badri Munir Sukoco, Professor of Strategic Management, Faculty of Economics and Business, Director of the Graduate School Universitas Airlangga

 

 

https://www.kompas.id/baca/opini/2023/03/23/memulihkan-kepercayaan-publik