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.