Indonesia Is Tackling Graft to Attract Investors, Minister Says

Indonesia Is Tackling Graft to Attract Investors, Minister Says

Sara Webb
Bloomberg/Vientiane, Laos

Indonesia, which frequently ranks as Asia's most corrupt country,
is making progress in tackling widespread graft in a bid to woo
more foreign investment, Minister of Trade Mari E. Pangestu said.

"We are addressing legal certainty and corruption issues," she
said. "We cannot eliminate corruption overnight. You must look at
it as a process and we continue with the process, this is the
signal that we are trying to send."

President Susilo Bambang Yudhoyono's government needs to
tackle corruption to help attract the foreign investment required
to spur growth in Southeast Asia's biggest economy and create
more jobs. As many as 40 million of Indonesia's 220 million
people are either unemployed or work fewer than 35 hours a week,
according to government estimates.

Susilo promised to reduce corruption when he campaigned in
Indonesia's first direct presidential elections last year. At a
dinner at New York's Pierre Hotel on Sept. 15 organized by the
American Indonesia Chamber of Commerce, Susilo told U.S.
investors that corruption remains one of his top priorities.

"I know we in Indonesia cannot improve productivity and
competitiveness so long as corruption prevails and pervades our
system," he said. "So the fight against corruption continues, and
every day we make progress inch-by-inch."

Susilo said the "biggest catch" recently was the uncovering of
an oil smuggling syndicate operating that involved state oil
company Pertamina and "rogue police officials" and which robbed
the country of billions of dollars.

"My ambition is that at the end of my term in office,
corruption will be the exception rather than the rule," he said.

Mari said several local officials and police have been
affected in the anti-corruption drive, including high-level
police officials.

"The signals are there," she said. "The government officials,
the people involved in security such as the police, are getting
the message."

Mari spoke in an interview on the sidelines of the ASEAN
economic ministers meeting in Vientiane, Laos. Trade ministers
for the Association of Southeast Asian Nations are meeting this
week to discuss simplifying trade rules and ways to spur exports
and attract more overseas investment.

ASEAN last year agreed to accelerate tariff cuts to form a
common market by 2012. It is pursuing free trade agreements with
countries such as China, India, Japan and Australia to expand
markets for its goods.

ASEAN's members, of which Indonesia, Thailand, Malaysia and
Singapore have the largest economies, have a combined GDP of
US$800 billion and a population of 550 million. Other members are
the Philippines, Myanmar, Vietnam, Cambodia, Laos and Brunei
Darussalam.

Indonesia was ranked Asia's most corrupt country for the
fourth year in a row, followed by the Philippines, Vietnam and
India, according to a survey by Political and Economic Risk
Consultancy Ltd. published in March.

On a scale of zero to 10, with 10 indicating a maximum level
of corruption, Indonesia was ranked 9.1, according to the Hong
Kong-based consultancy. Indonesia overtook Vietnam as the most
corrupt nation in 2002 and has held that rank since then.
Singapore was ranked as the least corrupt nation.

Mari said U.S. investors were among the hardest to attract to
Indonesia because of their concerns over corruption and
governance.

"Right now we are focusing on Asian investors, Singapore,
Malaysia, South Korea and Japan," she said. Indonesia is "doing a
lot of work with China, government to government," she said.
China has provided soft loans for infrastructure projects and is
helping with the construction of a double-track railway, a
bridge, and power generation projects, she said.