Kadin warned against colluding with state officials

Rendi A. Witular and Zakki P. Hakim, The Jakarta Post, Jakarta

While the business community is still facing chronic government red tape in running their businesses here, Vice President Jusuf Kalla is urging them not to use is as an excuse to collude with government officials.

Speaking during a leaders meeting of the country's powerful business lobby -- the Indonesian Chamber of Commerce and Industry (Kadin) -- last week, Kalla repeated earlier calls by President Susilo Bambang Yudhoyono to drop corrupt practices in doing businesses.

"It is time for businessmen to detach themselves from collusion practices. It is time for us to run our businesses fairly," said Kalla, who is the former chairman of family-run Hadji Kalla business group.

Kalla's remark was made at a time when the government is in the process of tendering a number of massive infrastructure projects. The first batch offers 91 projects valued at US$22.5 billion, to be followed later in November by a second offering of projects worth about $57.5 billion.

There are concerns that the projects would only be granted to those who have strong political ties.

Meanwhile, Kadin chairman Mohamad S. Hidayat said the calls for "clean" businesses could only take place if corruption within the civil service is reduced and the bureaucratic chains are cutback.

"It is good advice. But the government has to show that it has managed to clean up corruption on the part of state officials and has reformed the bureaucracy. This is the only way to prevent corrupt business practices," said Hidayat.

Critics have said that the Susilo-Kalla administration has failed to produce improvement in the country's investment and business climate during its first three months.

Questions also linger over the seriousness of the government in trying to cut the corruption and collusion chain between the business community and state officials, given the questionable track record of some high-ranking state officials, including Kalla himself.

When Kalla was the coordinating minister for people's welfare under president Megawati Soekarnoputri in 2002, his company PT Hadji Kalla managed to convince state social security firm PT Jamsostek to invest in the company's medium-term notes (MTNs) worth Rp 200 billion (US$22.2 million).

The Supreme Audit Agency (BPK), that audited Jamsostek, declared later that the MTNs issued by Hadji Kalla had a high risk of default due to some irregularities during the issuing process.

Kalla has denied the accusation, saying that his company had followed all necessary regulations in issuing the MTNs.

"We have to ensure that Susilo and Kalla are not abusing their authority to allow their family members and friends to receive state facilities. We need that assurance before we can believe in them," said a noted businessman who asked for anonymity.

Recommendations made during Kadin meeting

* Improve coordination between the private sector and the government.

* Provide a minimum rate for air transportation.

* Improve the role and performance of the Supervision Agency for Air Carrier Safety.

* Support the formation of a national profession certification agency (BNSP).

* Set up a national productivity council in a bid to help increase the country's industrial output.

* Enhance the country's product standards.

* Promote the use of local products.

* Reduce rates for value-added tax and income tax.

* Waive taxes for equipment used in research and development activities.

* Revoke departure tax.

Source: Kadin