In Indonesia, the State recognizes political parties as constitutional bodies, as stated in Article 6A, paragraph 2, and Article 22E, paragraph 3, of the 1945 Constitution. As a form of recognition of the existence and role of political parties, the State also provides financial assistance funded by the state budget. The objective is to enhance the role and capacity of political parties in carrying out their various functions, both political and constitutional.

Unfortunately, according to the Election and Democracy Syndicate (SPD), state funding for political parties in Indonesia is merely a formality, even though the practice has been in place for a long time. The SPD suspects this is due to inconsistent policy frameworks, ranging from the amount of funding to the basis for its calculation, which vary from one term to the next—especially during general elections.

To gain a comprehensive understanding of this issue, SPD, with the support of the Tifa Foundation, conducted a study focusing on political party funding in Indonesia, particularly funding derived from the state budget. SPD also examined the relationship between this funding scheme and party typology or classification.

SPD Executive Director August Mellaz said that, until now, these two aspects have often been omitted from discussions on state funding for political parties. Through this study conducted by the SPD, he hopes to offer a new perspective that the government can use in formulating its policies.

“The issue of party financing, both in theory and in practice, has been addressed in Indonesia. However, both the practice and the discourse fail to provide a deeper analysis of the characteristics and typology of political parties. Thus, in summary, this literature review aims to examine the characteristics and typology of political parties, as well as the models of state-funded party financing schemes. Does a particular typology have a tendency to influence the state’s party financing schemes or models?” explained August.

After conducting research, the SPD concluded that the majority of political parties in Indonesia established after the reform era tend to fall into the category of catch-all parties or parties oriented toward electoral competition. SPD notes that political parties in Indonesia are built from the top (elite) down to the grassroots, not the other way around, and with a short preparation period for their establishment that is generally centered on specific individuals or elite party figures. Efforts to build party membership are often focused solely on recruiting candidates ahead of general and regional elections, reflecting an elitist party culture and creating a distance from voters.

In addition, the SPD also found that state funding for political parties lacks a clear framework. This issue is evident in the lack of clarity in the legal provisions determining the amount of state funding allocated to parties—the amount fluctuates without adequate justification for why such amounts are granted. Not only that, but the basis for state funding for political parties is also inconsistent; previously based on votes, it changed to being based on the number of seats won, and then changed again to being based on the number of votes. The SPD suspects this occurs due to an ever-changing policy framework, ranging from the nominal amount of funding to the basis for its calculation from one period to the next—especially during general elections.

In response to these findings, the SPD has provided the government with five recommendations for improvements regarding a political party funding model that aligns with the evolving typology of political parties in the country, including:

1. There needs to be a paradigm for party financing. For example, a managerial paradigm aimed at preserving a country’s democratic order. This would grant the state the authority to regulate the behavior and organization of political parties. Given the limitations of any single paradigm, it should be combined with other paradigms.
2. As both a constitutional body and an instrument of democracy, state subsidies should be directed in such a way that every political party is held accountable for contributing to the maintenance and preservation of the democratic system.
3. Until now, the allocation of state funding has been based on the number of votes received. Other alternatives should be considered. For example, funding could be based on a party’s activities outside of election periods or campaigns, its commitment to helping young people and women organize, research or training institutions, and so on.
4. In principle, state funding for political parties is intended to serve as a tool and an incentive to foster the development of internal democratic mechanisms within political parties.
5. If state financial assistance for political parties is to be increased, there must be internal party reforms and additional requirements for receiving state funds.

Read the full SPD research findings and recommendations on political party typologies and funding schemes below.

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