JP\/13\/WB<\/p>\n
WB urges speedier legal and governance reforms<\/p>\n
The Jakarta Post
\nJakarta<\/p>\n
World Bank country director Andrew Steer said on Tuesday it
\nwas now time for the Indonesian government to take the political
\nresolve it had demonstrated in its sound macroeconomic management
\nand its prompt response to the terrorist bomb attack on Bali, and
\nfocus on improving the investment climate, reforming the legal
\nsystem and developing good governance.<\/p>\n
Steer said at a business luncheon that over the past five
\nyears after the onset of the economic crisis, Indonesia had come
\na long way in restoring macroeconomic stability and managing the
\ndecentralization and democratization processes.<\/p>\n
But it was now high time to move ahead with the next reform
\nagenda to improve the investment climate and speed up legal and
\ngovernance reforms, he added.<\/p>\n
Sound macroeconomic management, as indicated by steady fiscal
\nconsolidation, decreasing government debt burdens, initial
\nbanking recovery and declining capital outflows, was one good
\nnews about Indonesia these days, he said.<\/p>\n
Continuing, he said other positive developments included
\nrecent amendments to the Constitution, responding promptly to the
\nBali bombing, implementing a cease-fire agreement in Aceh,
\nspeeding up the pace of structural reforms, enacting the law on
\nthe anti-corruption commission, finalizing a new reform program
\nwith the International Monetary Fund, and initiating a poverty
\nalleviation strategy.<\/p>\n
He warned, however, that the challenges ahead were not less
\nformidable.<\/p>\n
The business luncheon was hosted by the Australia-Indonesia
\nBusiness Council, the American Chamber of Commerce and the
\nAssociation of Foreign Bank Branches in Indonesia.<\/p>\n
In his presentation at the meeting, the country director
\ncharted out Indonesia's development prospects, spelling out the
\ngood and bad points.<\/p>\n
Many of these points have been elaborated on in the latest
\nWorld Bank report on Indonesia, which was submitted at the recent
\nannual meeting of Indonesia's international creditor consortium,
\nthe Consultative Group on Indonesia (CGI).<\/p>\n
The main challenges within the investment climate, according
\nto Steer, consisted of corruption and bureaucratic inefficiency
\n-- notably within the tax and customs service, labor tension,
\nissues related to decentralization, erosion of basic
\ninfrastructures, perceived insecurity and a mistrusted legal
\nsystem.<\/p>\n
He declined to reply directly to a question as to whether the
\ngovernment had the political will and capability to fight
\ncorruption.<\/p>\n
Meanwhile, he observed that it could be understandable if the
\ngovernment, which had so far been preoccupied with restoring the
\ncondition of its macroeconomy and managing the decentralization
\nand democratization processes, had not put judicial reform and
\ngood governance at the top of its priorities.<\/p>\n
"But it is now time to do so," he said.<\/p>\n
He noted how corruption and bureaucratic inefficiency had
\nstifled investment, as it was now much more time-consuming and
\ncostly to obtain business licenses for Indonesia than for other
\ncountries. It took three times as much time and money to process
\nbusiness licenses in Indonesia than in Thailand, and twice as
\nmuch than in China, he pointed out.<\/p>\n
In addition, illegal levies accounted for 10 percent of the
\nrevenues of small and medium enterprises, he revealed.<\/p>\n
Steer especially recounted the gross inefficiency within the
\ncustoms service, suggesting that it may be time to return to the
\npre-shipment inspection system that was launched in 1985 by then-
\npresident Soeharto, which would strip the corrupt customs service
\nof its inspection authority.<\/p>\n
Asked about the calls by politicians and Cabinet members to
\nend the IMF program in Indonesia, Steer replied that it is simply
\nnot rational at this stage to get rid of the IMF.<\/p>\n
"But I see it (the demand) as a healthy nationalist sentiment
\nif it leads to the right policies to enable the government to
\nmake a graceful exit, graduate from the IMF program," he said.<\/p>\n
The IMF five-year extended facility will end later this year
\nand there have been increasing political pressure for the
\ngovernment not to renew the program.<\/p>",
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"sponsor": "Okusi Associates",
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