Selling the Road

So you’ve been dispatched to investigate illegal payment on the road made by truck drivers in an attempt to measure cost of transporting goods. The best way to do this, of course, by taking a ride with them and directly observing how much and how frequent such payment occurs along the trip.

And since you are in this country, you may, understandably, assume that they would pay large sum and frequent bribes on the road.

Equipped with this knowledge, thick questionnaire, GPS gadget, and two packs of cigarette, off I went to the one leg of Trans Sumatra East Route in North Sumatra.

You know what, it was fun. And I was surprised that in that 9 hours trip, 298 km long, the truck that I rode did not pay any single payment. Not a single one. Not to policemen, DLLAJR (Road Traffic Authority Office), or preman (thugs) –the common culprits for such crime-. I knew that the other trucks paid some money in three weighing stations along the way, but since my truck did not violate weight limit, they let us go freely.

Is that good news? Scroll down.

But then I learned from my conversation with my truck driver buddies that each of them has to pay monthly payment to three organizations associated with the military and police in return to security protection in that particular route. And in this case they deliver the services –-no additional payment apart to them--

This is indeed in accordance to Shleifer and Vishny (1993), who wrote that the most efficient market of corruption is when it is very fragmented --numerous agents charging the fee are in fierce competition, so that the utility and cost of bribe met at the lowest possible price of bribe.

The worst case is when it is only partially fragmented. There are numerous agents, in less competition, uncoordinated, and can cancel each other’s service. It is like, A doesn’t give a damn whether you have already paid to B. Because B can not imposed their role against, or control, A. And vice versa. This kind of noisy harasshment happened in another route surveyed in Sulawesi, as my colleague reported.

The second best, or worst, you may say, case is when organized agents who can impose the rule –security protection here-- against the potential suppliers monopolize the market of bribe. And this is what I experienced. Those agents take the money, but at the same time deliver the services.

You may then ask: Would the illegal fee –approximately 350K IDR per month—too high? I don’t think so. They know that they have to keep their subjects –the truck drivers—alive, so they won’t rip them off excessively.

In this setting, you need powerful agents to monopoly the market. What are the sources of power? Well, ability to enforce violence and money. And this is why those organizations are not only associated with military, but also capital owners, who happens, coincidentally, to be Chinese ethnic, the tauke.

Is that good news? You tell me.

Corruption