Indonesia Research Update #17: Institution, Lies, and Islam by Lury Sofyan



Although humankind creates institutions as a foundation for human interactions, there are some circumstances where an institution does not perform well in providing adequate control to inhibit or punish unethical behaviour, nor to stimulate or grant the positive. We have seen that institution, in particular in developing countries, is ineffective in curbing corruptions, bribery and other rule violation acts.

When an institution is weak, it produces an “unbinding” law since the value of the law is not internalized into the belief that touches the heart of the individual in the society and applied in day to day behaviour. The weak institution promotes a corrupted political system that does more harms than goods and most of the time allows only elite groups to gain privileged access to valuable information and resources. Mostly this practice compromises market institutions which in turn benefits only the haves, left behind the destitute, and worsen inequality. The haves, later on, support their political networks as payback through money politics and media control to channel propaganda which in turn undermining democracy.

A weak institution also damages state capacity. Government spending does not reach its objective since procurement system is corrupted. Tax morale is degraded. People unwilling to pay tax and the tax authority itself is politically weakened to benefit the haves. Quality of public services becomes poor since the government is running out of the budget. Hard Infrastructure such as roads, terminals, ports, public transportation are remained underdeveloped contributing to high transportation cost, higher price of goods & services, and inflation; making the whole economy inefficient. Soft infrastructure such as educations, health and social security system is also inadequate thus discourage human capital development. These all are hindering country capacity to develop and gain prosperity.

One thing that avoids individual to break the law when institution under-performed, among others, is intrinsic honesty. Since honesty construct trust and trust is a key aspect of sustainable performance of firms, industry and even nations (Cohn, Fehr, & Maréchal, 2014). Most importantly, study shows that country which has high honesty or low-rank PRV (prevalence of rule violation) index is found to be rule obeyed (Gächter & Schulz, 2016). Hence, understanding honesty and lie is important to shape a better institution.

General lie theory suggested 3 different perspectives of lie. First, the lie theory that assumes people are dishonest. This theory is in line with the standard economic theory which perceives people as homo-economicus thus lie when they get benefit out of it (Fischbacher & Heusi, 2008). This theory is also in line with the standard cost-benefit model which perceived people as purely individual who think about them self, calculating for their own benefit, and only care about external rewards (Mazar, Amir, & Ariely, 2008). Second, lie theory that assumes people are honest. People are honest because they avoid guilty feeling if others expectation is violated (Dufwenberg & Gneezy, 2000). Third, there is an increasing support of lie theory that situated in between. This theory argued that there is no sharp difference between full honesty and dishonest, rather than a continuum that spread between this contradicts two ends – suggesting elastic justification (Hsee, 1995, 1996). Mazar et al. (2008) also claimed so-called Self-Concept Maintenance that people are not fully cheating even they have the opportunity to do so. They argued that when people had the ability to cheat, they cheat, but, the magnitude of dishonesty per person is low relative to the possible maximum amount.

When a child born, however, he or she is not inherited with a tendency to lie or honest. It is the surrounding environment that influences people’s belief since people internalize the norms and values of their society (Henrich & Gil-White, 2001). Lie and any other rule violation attitude is contagious; if people live and grow in the area when lie is prevalent, it will affect individual to tend to act lie too. Bad environment crowding out honesty (Frey, 1992; Romaniuc, 2016) and weak institutions and cultural legacies impair individual intrinsic honesty (Gacther & Schultz, 2016). People also react to the unethical behaviour of others, and their reaction depends on the social norms (Gino, Ayal, & Ariely, 2009). When elders do lie, the juvenile will copy and then passes this to future generations as an accepted culture. This fact suggesting a vicious circle effect that keeps institution difficult to move to better equilibrium.

In this very moment, the only question left is the role of religion. How is the role of religion in preventing rule violation act? Does religion prevent people from breaking the rule such as corruptions and bribery? Does religion promote positive social norm such as: keep promises, don’t cheat, do queue, and don’t tell lies? Unfortunately, PRV index shows that religious countries in particular Moslem majority country such as Indonesia, Malaysia, Kenya, Guatemala, Tanzania, Maroco, and so forth have higher rule violation act (higher PRV rank) than less religious country.

More research must be done to understand this. However, learning from the history of Islam, it suggested contrasting phenomena. Historically, Islam gave an external shock to bad institutions at that time and bring the era of darkness to brightness. Islam promoted the value of humankind as the basis of economic, politic and social institution. For example, before the ritual of 5 times prayer and fasting took place, honesty became one of the first fundamental things that Prophet Muhammad S.A.W delivered to Arabian society. His positive attitude became an effective preach of Islam religion and brought him to become a model of a truthful, honest, trustworthy person; the “Al-Amin”. Honesty and trust is lubricant of any transactions and contracts.   Prophet Muhammad S.A.W had shown us an example that honesty had brought him to become a successful trader and respected political leader.

While incorporating Sariah study in above the line system such as financial syariah, political syariah, etc. is important, emphasizing the act of honesty and other positive values are crucial since honesty is the fundamental driven of positive behaviour that works below the line in whatever system human live. A study in asset market experiment (Smith, Suchanek, & Williams, 1988 – and its variances) gives a perfect example that dealing only with market institutions – such as excluding interest in the market – in fact, do not omit the incident of price bubbles. Individuals still racing up to trade in the market even the market price is higher than fundamental value showing the animal spirit forcing individual to gain profit as much as possible.

In Quran, the word “honest” appears 64 times, while “lie” 4 times. This two words represent good and bad and have become the root of all human decision making. Supposedly, it shapes individual belief to do something good, it prevents individual to cheat, avoid corruption and bribery. How this honesty in Islam is internalized and rooted in every Moslem behaviour is an important issue that must be tackled and, in my opinion, it must be the centre of Indonesia cultural transformation. Honesty shall underpin every decision in the economy, politics, and social life. In that way, honesty will promote cooperation, stimulate trade, boost economic growth and shape better institution for better prosperity.

If we can generalize rule compliance model by Allingham & Sandmo (1972) – and its variances – besides role model and law enforcement, education perhaps is the key to stimulate honesty. However, it is a challenge to design an educational based system that could effectively influence day to day behaviour and does not stop at school curricula, good grades, and formality perspectives only.



Allingham, M. G., & Sandmo, A. (1972). Income tax evasion: A theoretical analysis. Journal of Public Economics, 1 (3-4), 323-338.

Cohn, A., Fehr, E., & Maréchal, M. A. (2014). Business culture and dishonesty in the banking industry. Nature, 516.

Dufwenberg, M., & Gneezy, U. (2000). Measuring Beliefs in an Experimental Lost Wallet Game. Games and Economic Behavior, 30, 163–182.

Fischbacher, U., & Heusi, F. (2008). Learning and Peer Effects Lies in Disguise An experimental study on cheating. Research Paper Series Thurgau Institute of Economics and Department of Economics at, 40.

Frey, B. S. (1992). Tertium Datur: Pricing, Regulating, and Intrinic Motivation. Kyklos, 45 (2), 161–184.

Gächter, S., & Schulz, J. F. (2016). Intrinsic honesty and the prevalence of rule violations across societies. Nature, 531(7595), 1–11.

Gino, F., Ayal, S., & Ariely, D. (2009). Contagion and Differentiation in Unethical Behavior. Psychological Science, 20(3), 393–398.

Hsee, C. K. (1995). Elastic justification: How tempting but task irrelevant factors influence decisions. Organizational Behavior and Human Decision Processes, 62, 330–337.

Hsee, C. K. (1996). Elastic justification: How unjustifiable factors influence judgments. Organizational Behavior and Human Decision Processes, 66, 122–129.

Henrich, J., & Gil-White, F. J. (2001). The evolution of prestige: Freely conferred deference as a mechanism for enhancing the benefits of cultural transmission. Evolution and Human Behavior.

Mazar, N., Amir, O., & Ariely, D. (2008). Dishonesty of Honest People: a theory of self-concept maintenance. J. Mark. Res, 45, 633–644.

Romaniuc, R. (2016). Intrinsic motivation in economics: A history. Journal of Behavioral and Experimental Economics, 10(0), 1–9.

Smith, V. L., Suchanek, G. L., & Williams, A. W. (1988). Bubbles, Crashes, and Endogenous Expectations in Experimental Spot Asset Markets. Econometrica, 56(5): 1119–1151.



Lury Sofyan is currently doing a Doctoral Program in Behavioral Economics at University of Nottingham.

He is a staff at Ministry of Finance Republic Indonesia.

His research interests are related to institution & behavior, inequality, and taxation.

Contact him at


Indonesia Research Update is an initiative by GoLive Indonesia that aims to promote and disseminate knowledge and information obtained through research completed by Indonesian students outside of Indonesia.

We sincerely thank Lury and wish the best for his future endeavours in career and life.

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Indonesia Research Update #16: Utilizing Effective and Efficient Legal Drafting in Investment Treaty by Surya Oktaviandra



The greater purpose of Foreign Direct Investment (FDI) is to bring substantial benefit to states involved and the world through the expansion of international trade. At the time when host state can increase the level of its capital and economic growth, the investor may also obtain benefits such as lower cost in the production and further profit by expanding the business into new market.

Despite the empirical statistic of the impact of foreign direct investment is, unfortunately, inconsistent since researchers have different result due to method`s disparity, the practice of FDI is obviously fruitful in the world economic activity. Furthermore, the framework of FDI is usually covered by two mechanisms; first, by Treaty with Investment Provisions (TIPs) and second, by Bilateral Investment Treaty (BIT).

BIT is conceived as a vigorous commitment between two countries since the first discussion until the execution stage. In International Law context, the principle of Pacta Sunt Servanda stipulated a contract or an agreement between two or more sides should be respected as a law for the contracting parties.

The concept of BIT arises because of the concern of risk in foreign investment. A BIT is deemed as a device or mechanism to attract inward investment of investor by offering host state`s commitment in accordance with property rights. Moreover, BIT sets to define the minimum standard of behaviour towards the investor to reduce the risk of expropriation or regulatory measure. Furthermore, the original purpose of BIT is, undeniably, to ensure adequate or, in some occasions, full protection for the investment of the investor.

In many BITs, investment protection clauses such as Most Favoured Nation (MFN), National Treatment (NT), Indirect Expropriation (IE), Full Protection and Security (FPS), sunset/survival clause or even, umbrella clause become an international standard and widely adopted by many countries to govern their BIT.

However, the recent development shows many states raise their concern to the application of BIT by terminating, or at least, evaluating their BIT in a drastic path. Many reasons emerge, two of them are crucial, the lack of regulatory space and the concern of dispute settlement mechanism. Those factors are interdependent and contribute to the investment dispute in recent years. Therefore, many legal scholars attempt to impart some recommendations on how to balance between regulatory space and the investment protection.

When it comes into Bilateral Investment Treaty, the challenge is even higher for host state in regulating a fair protection compare to Multilateral Agreement because there is only two state face to face to determine what law they will establish.

Surya’s research will exert to provide the practical recommendation on fair BIT`s provisions and states will be advised in drafting them for a better balance in their investment agreement.

Surya believe we can exercise specific instrument to improve our regulation in Bilateral Investment Treaty. A tool which he propose is through the language of legal drafting in the agreement. Surya will examine how prompt language in a Bilateral Investment Treaty can produce a narrower interpretation, clearer understanding and how this is beneficial in reducing dispute settlement.

A quick example how this works is in the term of Full Protection and Security Clause. Some BITs adopted this language, and the word of ‘Full’ creates broad interpretation on the application and can sometimes confuse even before the international court. When we shift the language of ‘Full’ into “Adequate’, the interpretation becomes narrower.

In his research, Surya will attempt to provide that type of method, especially for all important provisions that may lead to the opportunity for a dispute. The effectiveness of this approach, in my opinion, is fruitful and legitimate. In the case of Bilateral Investment Treaty where both parties delegate their consent to apply for their agreement, it governs as ‘treaty contract’. The application of this law will be based on the Pacta Sunt Servanda principle whereby what parties have been agreed must be respected.


Surya Oktaviandra is currently studying Master degree Law at Maastricht University, Netherlands and is on his way to finishing his research thesis.


Indonesia Research Update is an initiative by GoLive Indonesia that aims to promote and disseminate knowledge and information obtained through research completed by Indonesian students outside of Indonesia.

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Dias-cussion highlights by PPIA South Australia and GoLive Indonesia

PPIA (Indonesian Student Association in Australia) South Australia supported by GoLive Indonesia in Dias-cussion, a discussion on economy development with Dias Satria on February 2018. The discussion series highlighted on innovation on economic development in Indonesia and was held in Rumours Café, The University of Adelaide. The interactive discussion went for 75 minutes and attended by around 20 participants.

The session began with warm greetings from President of PPIA South Australia, Aditya Ramdho, who mentioned Dias Satria’s vital contribution in improving the organization’s culture in PPIA South Australia and in founding the Rombengan Adelaide.


Greetings from Aditya Ramdho, President of PPIA South Australia

Harry Wardana as moderator introduced Dias Satria, who obtained his PhD degree in The University of Adelaide, with expertise in the field of agriculture economy. He is a lecturer at Faculty of Economics, Universitas Brawijaya.

Dias began his presentation with the challenge of economy development in Banyuwangi, a district in East Java infamous for their image of “santet” (witchcraft) town. As the consultant of Banyuwangi Regent, he has supported the government in improving the creative economy in the region.

Banyuwangi is now famous for its 77 festivals, as festivals are regarded as invaluable in boosting the region’s creative economy. Dias elaborated that through these festivals and aggressive tourism marketing, the livelihood of the community has improved and many investors have invested in Banyuwangi.


Dias Satria (left) presenting as observed by Harry Wardana

Dias then highlighted the four important factors in improving innovation in local areas: (1) Institution and leadership; (2) Hard connectivity; (3) Soft connectivity; (4) Policy.

He also further elaborated the key points from Banyuwangi Festival, they are: (1) Fostering the talent of local youth; (2) Promoting region through festival and events; (3) Continuous improvement; (4) Coordinated strategy, especially between government agencies; and (5) Attracting investment.

The session then concluded with handing of placard from PPIA South Australia by Aditya to Dias, and a photo session.



PPIA South Australia and GoLive Indonesia would like to thank Dias Satria as the speaker and Harry Wardana as moderator.

Further information on the presentation could be obtained by contacting Dias Satria in or visit 

Photos courtesy of Nurul Ikhsan and Indra Kiling

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Indonesia Research Update #15: Interventions for Young Children with Disabilities in Indonesia by Indra Kiling


A recent study published by SAGE Open (click here) gave insights on what has been done in supporting young children with disabilities in Indonesia.

In this article, Indra Kiling, a PhD candidate at The University of Adelaide, and his supervisors reviewed on interventions specifically developed to help developmental process of young children with disabilities in Indonesia.

A thorough and exhaustive search resulted in only a few intervention studies, marked with several methodological limitations.

This review highlights the urgency of more rigorous and culturally relevant research to fulfill the developmental needs of young children with disabilities in Indonesia.

The earlier abstract version of this study has been published at International Journal of Psychology (click here), and also presented at the 31st International Congress of Psychology Japan and at the 6th Asian Psychological Association Convention Malang.


More information could be accessed by contacting Indra in



Indra Yohanes Kiling is a current PhD candidate at School of Psychology, The University of Adelaide.

He is also spending his last days of managing GoLive Indonesia as its coordinator.


Indonesia Research Update is an initiative by GoLive Indonesia that aims to promote and disseminate knowledge and information obtained through research completed by Indonesian students outside of Indonesia.

We sincerely thank Indra and wish the best for his future endeavours in career and life.


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Indonesia Research Update #14: The Safety of Tourists and Criminality in Mars by Devi Triasari


Man has always been interested in conquering space, and the idea of life outside earth has been explored for years. The planet that has attracted most interest in this regard has been Mars, and plans are ongoing to have the first manned mission to the planet.

The Mars One enterprise is spearheading this project and aims to take four astronauts to Mars in the year 2027. The four astronauts will be chosen from the large number of volunteers that has currently signed up to the project. This idea may seem absurd to some, but it definitely has not deterred the over 30,000 number of volunteers wishing to participate in the project.

Most studies analyzing this mission have focused on the technical challenges associated with the mission and aimed to provide ideas on how the group of people can cope with these challenges. Few have looked at the legal challenges associated with the mission and how this will affect the mission in terms of it being successfully undertaken with no legal hindrances.

Drawn to this issue, Devi Triasari, a graduate student in Master of Business Law program at The University of Adelaide, decided to investigate on this issue.

The difficult nature of the mission caused by the unnatural habitat coupled with the psychological makeup of human beings means that legal challenges will most definitely arise.

The high number of legal challenges associated with the Mars One mission means that it is highly likely that the mission could fail to take off since due to the safety and criminality issues that can be connected to the mission.

More information could be accessed by contacting Devi in


Devi Triasari is the best graduate of Universitas Sebelas Maret Surakarta at June 2015.

She is a current student in Master of Business Law program at The University of Adelaide.

Devi is also active as general secretary in PPIA The University of Adelaide.


Indonesia Research Update is an initiative by GoLive Indonesia that aims to promote and disseminate knowledge and information obtained through research completed by Indonesian students outside of Indonesia.

We sincerely thank Devi and wish the best for her future endeavours in career and life.

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Indonesia Research Update #13: A reconciling communion in the light of the Indonesian massacre 1965/66 by Elia Maggang


The massacre of Indonesians at 1965/66 remains an issue that continues to boggle the mind of the nation’s leaders and activists alike.

Elia Maggang, a graduate of Theological Studies Master degree at Flinders University, completed a thesis investigating on the issue of the 1965/66 Massacre and Indonesian community. His thesis argues that the doctrine of the Trinity is the key of Christian faith to encourage the Christian church in Indonesia to be a reconciling communion in the light of the Indonesian Massacre of 1965/66

The discussion is divided into three chapters. The first examines how a doctrine of Christian faith, particularly the doctrine of the Trinity, can lead to Christians’ practices in their daily lives. This discussion has its basis on the thought of Catherine M. LaCugna in her book God For Us, arguing that human beings can only know God (theologia) if God reveals God’s self through God’s actions (oikonomia). From the oikonomia, human beings know that God also invites them to participate in God’s actions, certainly, in a creaturely way.

Based on that pattern, the second chapter discusses the reconciling action of the Triune God that makes God known as the relational God. This chapter insists that reconciliation is the work of the Triune God – the Father initiates the reconciliation, the Son executes it, and the Spirit activates it.

The last chapter examines how the knowledge of the Triune God, as the reconciling God, has impact in Christian church fellowship (experience) where its members are in broken relationship as an impact of the Indonesian Massacre of 1965/66. That God is the reconciling God as God is the relational God. The relational God that reconciles human beings to God invites all Christians (victims and perpetrators) to participate in the reconciling work of God. This is by coming reconciliation and living in loving relationship with their neighbours.

As spiritual aspect has remained a vital aspect of how Indonesians lives their life, Elia’s work is expected to shed the light regarding the relations of Christian’s doctrine and community behaviour change.

More information could be accessed by contacting Elia in


Elia Maggang has a master degree in Theological Studies from Flinders University.

He was active in PPIA Flinders University and currently act as team member of Theology Development Unit at The Protestant Evangelical Church in Timor Synod.

Recently granted a PhD scholarship by the Indonesia Endowment Fund for Education (LPDP), he expect to start his doctoral degree anytime soon.


Indonesia Research Update is an initiative by GoLive Indonesia that aims to promote and disseminate knowledge and information obtained through research completed by Indonesian students outside of Indonesia.

We sincerely thank Elia and wish the best for his future endeavours in career and life.

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Indonesia Research Update #12: Integrative mental health services in Indonesia by Andrian Liem

Andrian1 small size

With only 451 clinical psychologists (CP) among 240 million people in 2015, mental health services in Indonesia requires interdisciplinary and multisector collaboration.

Integration between conventional medicine (including conventional psychotherapy) and Complementary-Alternative Medicines (CAM) could be one example of that collaboration because researchers have confirmed CAM’s effectiveness both for physical and psychological issues.

Moreover, CP as health professionals, should also have basic CAM knowledge to be able to provide psychoeducation about CAM based on the latest scientific research to their clients.

Therefore, the aim of Andrian’s study is to explore Indonesian CP knowledge of, attitudes towards, experiences with, and educational needs for CAM using mixed-methods design.

A link to online survey was emailed to 1,045 registered CP in Indonesia. The quantitative phase followed by interviews with 43 CP working at public health centres in Yogyakarta Province.

As preliminary results, he found that CP in Indonesia report inadequate knowledge of CAM and positive attitudes towards CAM, especially integrating CAM into their clinical practice. The majority them had used CAM for personal purpose but the percentages were lower for professional use.

In addition, Indonesian CP strongly agreed that CAM education was needed in psychology curricula. Integration of CAM content in psychology curricula is suggested to be conducted at undergraduate level, master level, and continuing education for registered CP with different aims for each level.

Currently Andrian is working on the qualitative data that will be combined with the qualitative results.

It is expected that the findings from this research will be used for CP communities in Indonesia, education institutions that provide professional psychology programs, and psychology associations to create more integrative mental health services in Indonesia.


Andrian Liem is a PhD candidate at the School of Psychology, the University of Queensland, Australia, with a scholarship from the Indonesian Government (BPI LPDP RI). He completed his bachelor and master in psychology from Universitas Sanata Dharma and Universitas Gadjah Mada.

Andrian’s research interests include indigenous-cultural psychology, clinical-health psychology, gender and sexuality, drug-abuse, HIV-AIDS, and interfaith-dialogue.

More information could be accessed by contacting Andrian on


Indonesia Research Update is an initiative by GoLive Indonesia that aims to promote and disseminate knowledge and information obtained through research completed by Indonesian students outside of Indonesia.

We sincerely thank Andrian and wish the best for his future endeavours in career and life.

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