Security of contracts<\/p>\n
Anger at revelations of wealth accumulated by those close to
\nformer president Soeharto during his time in office, and the
\nnationwide clamor to root out corruption which this has prompted,
\nhas led many government agencies and state companies to announce
\na review of all contracts concluded with companies linked to the
\nextended Soeharto clan. However, this fury, if misdirected, could
\nserve to undermine the perceived legal sanctity of contracts in
\nIndonesia and further taint Indonesia in the eyes of potential
\ninvestors.<\/p>\n
Since Soeharto fell on May 21 and his 32 authoritarian rule
\nfinally came to an end, hardly a day has gone by without yet more
\nofficial and unofficial disclosures of business ventures linked
\nto what has come to be known as Soeharto Inc. The size of this
\nbrand name corporation is beyond the bounds of imagination.<\/p>\n
But there has been a legitimate concern that unilateral and
\nindiscriminate cancellation of business contracts simply because
\nthe contracted parties are linked in some way to Soeharto's
\nfamily and cronies could deal a further blow to investor
\nconfidence, something which our battered economy could do without
\nif it is to shake of the economic crisis.<\/p>\n
A market economy such as ours depends, among other things, on
\nthe security of legal contracts arising from consensual
\nagreements. Without any such legal protection our economy would
\nbe governed by the law of the jungle.<\/p>\n
But domestic and foreign investors fully agree that legal
\nbusiness contracts are not the same as those which have been set
\nup on a corrupt footing and which are tainted with allegations of
\ncollusion and crony capitalism. These unhealthy business
\npractices are shunned in most countries and are criminal offenses
\nliable to heavy penalties. Laws in most market economies prohibit
\nthese unsound practices to improve economic efficiency and create
\na level playing field and healthy climate in which business and
\nentrepreneurship can thrive.<\/p>\n
As a basic principle, legally binding business contracts
\nshould be honored. However, it must be remembered that Soeharto,
\nduring his 32 year authoritarian rule, could make almost anything
\n'legal', if it suited his purposes. Therefore the condition of
\nlegality alone should not spare all contracts from the clean-up
\ncampaign. As official disclosures over the past three weeks have
\nshown, many government agencies and state companies were forced
\ninto business contracts with Soeharto's family and cronies under
\nduress.<\/p>\n
Bona fide businesspeople should be fully aware that a contract
\nmust be negotiated and concluded in good faith, without any
\npolitical or bureaucratic interference. After all, the principle
\nof freedom of contract underpins commercial law in most
\ncountries. The freedom of parties to determine for themselves
\nwhether or not to enter a particular deal and to agree on the
\nterms of that transaction is the legal lynchpin of the market
\neconomy. The law only serves to enforce those legal duties which
\na party can be understood to have voluntarily undertaken.<\/p>\n
Businesspeople, including foreign investors, should therefore
\nnot have to worry about their contracts or ventures, despite the
\nfervent anti-corruption campaign which is currently being waged.
\nThey should be allowed to rest assured that their contracts will
\nremain under the protection of the law, provided they were
\nentered into in good faith and not obtained through bribery or
\nthe wielding of political influence through local partners.<\/p>\n
Moreover, foreign investors, notably those from developed
\ncountries renowned for their high business ethics, should have
\nknown that winning contracts through passing bribes (and a whole
\nlist of other unsavory and unprincipled practices) violates the
\nAnti-Corruption Convention which was signed by the 29 member
\ncountries of the Organization for Economic Cooperation and
\nDevelopment (OECD) last December.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/security-of-contracts-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}