Sat, 31 Oct 2009
From:
By Reuben Carder and Joko Hariyanto
JAKARTA -(Dow Jones)- Legal certainty is vital to Indonesia's goal of supporting economic growth by improving its investment climate, Finance Minister Sri Mulyani Indrawati told reporters Friday, following the controversial arrest of two of the corruption-ridden southeast Asian nation's top antigraft officials.

"There must be legal certainty. This is vital for creating a [conducive] investment climate," Mulyani said. "Whatever debate occurs regarding problems related to corruption will affect perceptions on whether Indonesia is progressing or not with regard to stamping [it] out."

Mulyani declined to comment directly on the arrests. Industry Minister Mohammad Suleman Hidayat issued a more direct warning earlier Friday, saying he feared the arrests could lead investors to believe Indonesia lacks legal certainty.

The government has said it needs to increase direct investment--including by foreigners--by almost 50% to achieve its target of raising economic growth to 7% by 2014. The economy is expected to grow 4.3% this year, slower than 6.1% growth in 2008, due to the weaker global economy.

Outcry from the media and the public over the arrests prompted President Susilo Bambang Yudhoyono to call a press conference Friday, to address concerns that the notoriously corrupt police, judiciary and Parliament are attempting to cripple the independent Corruption Eradication Commission, or KPK.

"If anyone wants to break up the KPK I will be on the frontline to fight them, " Yudhoyono said in his speech, Agence France Press reported. Thursday, police detained KPK deputy directors Chandra Hamzah and Bibit Samad Rianto, who were recently suspended following accusations that they overstepped legal boundaries in their duties at the commission.

Authorities have yet to clearly articulate why the pair were arrested, raising the ire of the public and adding to speculation that the KPK is under threat.

In May, Antasari Azhar, the KPK's then chairman, was arrested in connection with the murder of a businessman. Yet the highly publicized trial proceedings against Azhar have so far yielded little real evidence, focusing instead on lurid details of his affair with one of the wives of the slain man.

In September, parliament passed a law which appeared to dilute the KPK's powers by allowing regular court judges rather than ad hoc judges to form a majority on panels hearing graft cases.

This week, local media carried reports of leaked wiretap transcripts from a KPK anticorruption operation, in which Yudhoyono is purported to be mentioned as supporting a campaign against the KPK.

Yudhoyono has ordered an investigation to determine if the transcripts are genuine, according to media reports.

-By Reuben Carder and Joko Hariyanto, Dow Jones Newswires; 62 21 3983 1277; Reuben.Carder@dowjones.com



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