`Court abuses hamper investment'

`Court abuses hamper investment'

Mark Drajem, Bloomberg, Washington

The Indonesian government needs to rein in the abuses of its
courts, army and police if the Southeast Asian nation is going to
attract foreign investment, a U.S. State Department official
said.

Matt Daley, the department's top official for East Asia, urged
the government to improve both security and justice to counter
the economic fallout from last month's terrorist bombing in Bali.
The U.S. estimates the bombing will shave as much as 1.5
percentage points off of the country's growth rate this year.

"Indonesia is still a dangerous place for Americans and others
and will likely remain so for some time," Daley told a meeting of
the United States-Indonesia Society. Still, after the attack,
"the government has more room to maneuver than it may have
realized."

Because of the continuing threat, the State Department has no
plans to remove a warning that Americans avoid Indonesia because
of the threat of additional attacks.

Daley's warning underlines U.S. concern about the world's
most-populous Muslim nation. Many analysts blame Indonesia for
failing to take terrorist threats seriously before the Bali
bombing, which killed more than 190 people and injured 300.

Most of those people injured in the Bali attack were
Australians and Balinese workers. Indonesia has conducted a "very
thorough" investigation of the attack and of the links of the
group alleged to be responsible -- Jamaah Islamiyah -- to the al-
Qaeda organization, according to the State Department.

The U.S. is also pressing Indonesian President Megawati
Soekarnoputri to do more to curb human rights abuses by the
military and to make sure the courts are functioning as they
should.

The Indonesian courts are a "non-transparent legal maze,"
Daley said. Investors want "the government to demonstrate it
understands the gravity of the problem."

Clear and orderly courts are essential to attract investors,
according to the World Bank. And the government has made
attracting investment one of its top priorities. Indonesia needs
to accelerate state-asset sales in order to cover a widening
budget deficit.

Just two weeks after the Bali attacks it hosted potential
investors at a Bali resort in an effort to lure them to bid on
some of the $3.9 billion worth of asset sales planned this year.

If the Indonesian courts worked better, then human rights
groups might not try to use American courts to try to link U.S.
companies to abuses by the Indonesian military or police, he
said.

In July the State Department urged a federal judge to dismiss
a lawsuit against Exxon Mobil Corp. over its operations in
Indonesia, saying the suit may harm the U.S.-led war on terrorism
and U.S. regional interests.

The suit, on behalf of 11 Indonesian villagers, claims that
company-paid security forces committed murder, torture and rape
in Aceh province where the company operates a government-owned
oil field. The company has denied the allegations.

"We continue to work for legal reform in Indonesia," Daley
said. "We are pushing for accountability for human rights abuses
by the (army) and others."