Lack of legal certainty affects RI's exports

JAKARTA (JP): The lack of legal certainty in Indonesia, which is most noticeable in the poor enforcement of law, is affecting Indonesia's export performance, according to a law professor.

Charles Himawan, the former dean of the Law School of the University of Indonesia, said the lack of legal certainty in Indonesia can discourage foreign traders and investors from doing business with Indonesia.

"People prefer to do their business in a country where there is equality in the law," Himawan said during a lecture organized by Makes & Partners law firm on Friday night to mark its anniversary.

Dorodjatun Kuntjoro-Jakti of the School of Economics of the University of Indonesia was the other speaker of the night.

Countries like Singapore, Taiwan, Malaysia, Hong Kong and Korea are doing better than Indonesia in their exports because they implement the law there better, Himawan said.

As an example, he cited that many international arbitration awards were not enforced in Indonesia. Another example is the lack of certainty in the relationship between creditors and debtors, he said.

He said Indonesia still often resorts to extra judicial measures in settling disputes that should be settled legally. "The political power, the military power, the financial power, and the economic power influence the judicial system...."

Himawan said another reason for the lax enforcement of the law in Indonesia could be attributed to the small salaries received by the judges.

He said the time had now come to hike the net pay of judges.

The average monthly earning of a senior judge is less than Rp 1 million (less than US$500).

Himawan called for a conducive environment for the implementation of the law, saying that this was no less important than the substance of the law itself. Otherwise, Indonesia would be unable to catch up with the other countries and their exports.

Dorodjatun in his brief presentation said the chief preoccupation for Indonesia this year and next is the high rate of inflation.

"Our job next year will be how to control inflation," he said.

Indonesia has succeeded in maintaining the inflation rate to just below the double digit figure of the last few years.

The inflation in the first eight months of 1994 has already reached 6.85 percent.

Dorodjatun said however that he was still optimistic that Indonesia's economy would remain strong this year and next. (sim)