Law on fight against graft: What about it?

Law on fight against graft: What about it?

Some economists believe that Indonesia's economy is likely to
recover in 1999 but corporate lawyer T. Mulya Lubis sees that
corruption and uncontrolled spending might hamper the rapid
recovery.

JAKARTA (JP): Economics guru Sumitro Djojohadikusumo has
predicted that Indonesia's economy, recently hard hit by a
monetary crisis, will recover in 1999, based on the assumption
that deregulatory and reform measures will be consistently
implemented.

This is quite an optimistic prediction, which is also
relieving. Many, however, believe that Indonesia's economic
condition is grave and that two years will be too short for a
full recovery.

The statements made by many government officials and economics
experts that the country's economic fundamentals are strong turn
out not to be fully correct. Many parts of the economic structure
prove to be fragile, while loopholes are found here and there,
even though the economy grew significantly in the past years.

The rupiah has sharply declined against the U.S. dollar and
some parties believe that the exchange rate of Rp 3,700 per
dollar is not yet its bottom line and that it might further
decline to Rp 4,000 a dollar.

The rupiah's sharp depreciation has suddenly raised the amount
of Indonesia's foreign debts, while the prices of many shares
listed on the capital market have fallen by about 50 percent.

Such conditions have affected all sectors of the economy and
forced companies to tighten their budgets even though budget
tightening is already next to impossible.

Indonesia has not many options left and belt tightening is
absolutely necessary. The high debt service ratio and a possible
two-digit inflation rate will further deteriorate the economic
condition. The government, therefore, should never impose
conflicting policies.

Unfortunately, there are no evident efforts to control
spending. The government, for instance, has revived some of the
mega projects previously suspended under Presidential Decree No.
39/1997. The government, which has promised not to use the reform
aid from the International Monetary Fund to bail out private
companies' foreign debts, is also likely to use it to help
private companies solve their liquidity problems.

Irrespective of whether or not the IMF and the Singapore
government accept this bail-out policy, many are wondering about
the direction of the government's policy on economic recovery.
Just like in the case of a sick person, the problem is whether or
not the "sick man" will listen to his doctor's advice and is
willing to swallow the bitter pill he is prescribed.

It is true that the way out is not easy. It is just like the
chicken and the egg riddle: Which should come first? To leave
private circles in their liquidity troubles will have a serious
impact on the economy and will force companies to dismiss workers
or to go bankrupt. But if the government bails out private
companies' debts, many will protest, saying that it is not fair
because, in fact, priority must be given to the interests of the
community at large. Besides, private companies which have pursued
offshore loans, have the obligation to shoulder the risks of
their own debts by themselves. It is assumed that these companies
know their own business capacities and prospects and therefore
make their own preparations for the repayment of their debts when
they are due.

As Indonesia is about to go through difficult years, all
parties should cut down on expenses with the aim of improving the
competitiveness of their products. All levies that increase costs
must be systematically trimmed. It will be enough to oblige
businessmen and traders to pay taxes and there must no longer be
price mark-ups or illegal levies in the form of bribes,
contribution fees and commissions.

The government must be free from all kinds of bribery, kick-
backs and corruption which have made Indonesia less attractive
for foreign investments. Furthermore, tolerating corruption in
Indonesia might justify foreign investors being put on trial in
their own countries.

So, corruption will become a crime which has extra-territorial
legal scope and this will obviously be uncomfortable to
businessmen.

A recent decision reached in Paris by the Organization for
Economic Cooperation and Development that its member countries
will impose criminal penalties against corruption committed
outside their respective territories will obviously pose as a
constraint to the development of their businesses in many
developing countries, including Indonesia. Such a decision must
also be noted as a very important and strategic decision for the
economic future of all countries.

The eradication of corruption, therefore, is very important
for Indonesia to help accelerate the recovery of its economy from
the current crisis.

Legally speaking, Indonesia already has Law No. 3/1971 on the
eradication of corruption, which gives a broad definition of
corruption. In addition, in various legal products, including the
Criminal Code (KUHP), there are articles on deeds such as
bribery. There is also jurisprudence, which may be used as a
reference. In short, Indonesia has adequate equipment to fight
against corruption.

It is high time that the government made concerted efforts to
enforce the law on the eradication of corruption.