The Indonesian court system was the worst of all Indonesian government institutions and required a "complete overhaul", said a foreign lawyer speaking at a panel discussion on Indonesia's trade and investment prospects in Jakarta on Wednesday.
U.S. attorney Andrew Sriro, from the Indonesian law firm Dyah Ersita and Partners and author of Sriro's Desk Reference of Indonesian Law, said Indonesia exists in an environment where the rule of law is "very weak".
A lack of respect in the community, antiquated procedures, lack of access to law, and career judges without practical experience all work against Indonesian justice, said Sriro.
"There are honest judges, but there are too many ready to prejudice their impartiality for economic gain. The entire system has to be scrapped and rebuilt," he said. "It is the hardest system to rebuild, requiring a radical shift, perhaps to a common law system."
Sriro called for a verbatim court reporting system, publication of all judgments and access to evidence for all parties.
"A laziness has developed in Indonesia, based upon its reputation where everything can be arranged through corruption", Sriro said.
"There is no reason to be overly concerned with the law because it is all going to come down to money in the end."
The lawyer said this contributes to businesses starting to operate outside of the law "digging a hole and waiting for an explosion and then seeking assistance through corruption."
Sriro did say there were some improvements to the government's new investment law to attract foreign investors in the form of extended land rights and the extension of limited-stay permits.
The deputy for the Investment Coordinating Board (BKPM), Dharmawan Djajusman, told the panel discussion that the government was endeavoring to improve Indonesia's image to attract foreign investors.
This was being done through the new investment law, which seeks to give equal treatment to foreign investors, he said. It also planned to integrate investment services and grant extended visas and extend land rights to boost employment opportunities and spur growth.
Also speaking at the investment panel discussion, John Prasetio, vice chairman of the Indonesian Chamber of Commerce and Industry, said the past six months had seen an increase in investment sentiment through new investment law and new tax administration. He said foreign companies were beginning to look at Indonesia as an important investment destination.
Prasetio said Indonesia rated higher than the Philippines and Malaysia within ASEAN countries as a growing market for potential investment, but was behind countries such as Vietnam and Thailand.
He said this was because these countries are seen as being more hospitable to companies planning to produce cheap goods for export, whereas Indonesia was behind in the regional production network.
Prasetio said some of the major concerns facing foreign investors included political, social and macro-economic instability. There were also problems with the legal and regulatory environment as well as economic policy uncertainty.
Indonesia is perceived "to be not the most outstanding place to do business", Prasetio said.
"On the ground investors are still seeing policies being wrongly implemented and some rules not being enforced."
Referring to a World Bank report, Prasetio said Indonesia ranked poorly in effectiveness of government, rule of law and corruption.
"The report suggests there is a credibility gap", he said. "Investors don't think the Government has the capacity to produce and implement high quality policies to help private sectors to develop."