Foreign investors cheer Indonesia graft war


Dean Yates


August 6, 2005

They are just anecdotes doing the rounds in Indonesia.

The traffic cop who refused a bribe. The expatriate who did not have to pay an extra fee for his work permit. The brokers, who once helped foreigners jump the queue for a driver's license, finding themselves out of a job.

But to many foreign investors, they are a sign President Susilo Bambang Yudhoyono's war on graft is biting, raising hopes one of the world's most corrupt nations will significantly reduce a major barrier to doing business.

``People are talking about this campaign and asking, is it real?'' said James Castle, a business consultant who has lived in Jakarta since the 1970s. ``How long has it been since expats, or anyone, has felt anything but cynicism about these things? So it's really positive.''

Added Dennis Heffernan, publisher of a political and business report on Indonesia: ``I'm not sure how long it will take for there to be measurable differences to business, but it is clear SBY [the president] is making it expensive to be corrupt. People are being fired, governors are in jail, district councils are having their feet held to the fire.''

Yudhoyono has partly staked his 10-month-old presidency on tackling graft in a country rated the world's fifth-most corrupt by Transparency International.

He has energized the independent but fledgling anti-corruption commission and set up another graft team cutting across various agencies that reports directly to his office.

A spate of graft investigations has followed. Suspects in detention in Jakarta include the former head of the country's largest bank, the chairman of the general election commission and a former minister of religion.

In total, Yudhoyono has approved graft probes into 57 provincial officials, city chiefs and national legislators.

Indonesian officials say the campaign is having a positive impact on business confidence, helping drive the stock market to record highs and giving foreign investment a jumpstart. Indeed, foreign direct investment pledges rose 71 percent to US$5.93 billion (HK$46.25 billion) in the first half from the same period last year.

But that is still a far cry from 1997 and its full-year approvals of US$33.1 billion. That was the year Indonesia began to unravel as the Asian financial crisis took hold. The best since then was US$15.3 billion in 2000.

Indonesia Corruption Watch head Teten Masduki said that while the government is more serious about corruption than previous ones, it is paying scant attention to judicial graft.

Yudhoyono has kept a distance from the judiciary, arguing the government should not interfere despite dubious decisions in commercial courts that often go against foreign companies.

The Supreme Court, itself not free from accusations of graft, is responsible for judicial supervision.

A 2003 World Bank report said many lawyers were ``apparently often the conduits for bribes to judges, prosecutors and the police''.

``The legal institutions need to be cleaned up,'' said Masduki. ``The majority of judges are dirty.''

Foreign businessmen say there is still plenty of concern about dealing with various government departments such as customs and state-owned companies.

Some also question whether those detained in recent months are really big fish. None are national political or senior government figures.

Then there is the issue of low salaries of officials, which encourage many to take bribes.

Yudhoyono, who has been free of any scandal, himself only gets an annual salary of around US$60,000.

Despite that, it seems clear Indonesians are thinking twice before pocketing or offering a bribe.

``You are starting to see changes,'' said Indonesian Automotive Association chairman Bambang Trisulo. ``Even just giving `thank you' money to someone is scaring people. They are thinking twice about this now.''REUTERS

 


Copyright 2005, The Standard, Sing Tao Newspaper Group and Global China Group. All rights reserved. No content may be redistributed or republished, either electronically or in print, without express written consent of The Standard.



 

 




FRONT PAGE | BUSINESS | CHINA | METRO | FOREIGN | WEEKEND | OPINION | NOTICES
SUBSCRIPTIONS | ABOUT US |  CONTACT US | ADVERTISE | COPYRIGHT NOTICE

The Standard

Trademark and Copyright Notice: Copyright 2005, The Standard Newspaper, Ltd., and its related entities. All rights reserved.  Use in whole or part of this site's content is prohibited.   Use of this Web site assumes acceptance of the
Terms of Use and Privacy Policy.