Powel urges RI to redouble reform efforts
Powel urges RI to redouble reform efforts
Dadan Wijaksana, Jakarta Post, Jakarta
Joining calls for a better business climate, visiting U.S.
Secretary of State Colin Powell urged the government to
accelerate its efforts to clean up the corruption-prone courts
and legal system so as to help restore foreign investor
confidence.
Powell stressed on Friday that the current state of the
Indonesian judicial system discouraged investment, including
American investment, and reforming it would be critical for
economic recovery.
"I urge that Indonesia redouble the reform efforts in order to
put the economy on a more sustainable long-term footing," Powell
told reporters after a meeting with the country's Coordinating
Minister for the Economy Dorodjatun Kuntjoro-Jakti.
"American businesses recognize the (potential) of investment
in Indonesia but remain concerned about transparency in business
and, of course, judicial reform," said Powell, who is on a one-
day visit to Indonesia as part of his tour through Asia.
The statement was the latest warning to come from the
international community about how the poor performance of the
judicial system had put the country off the radar screen as
regards investment.
Corruption has long been flourishing in the country's
judiciary, right from the top to the bottom.
Relentless and ongoing reform in these area would be highly
regarded, Powell added. "Fighting corruption, strengthening the
rule of law, all of these are crucial."
The slow pace of judicial reform in Indonesia is one of the
reason why investors have been turning their backs on the
country.
Instead, they have been shifting their investments to other
countries in the region whose legal systems are more predictable,
such as China and Vietnam.
Foreign Direct Investment (FDI) approvals for the first
semester of the year fell by 42 percent to US$2.5 billion from
$4.3 billion in same period last year, data reveals.
Even the United Nations (UN) has expressed concern over the
legal uncertainty in the country. Param Cumaraswamy, a UN
official, paid a visit last month to conduct an investigation
into Indonesia's legal system.
The investigation concluded that widespread corruption had
undermined both local and foreign confidence in the judiciary.
Still fresh in the memory is the case of the local unit of
Canada-based insurance firm Manulife Financial Corp., which was
declared bankrupt by the commercial court on what were widely
seen as spurious grounds. This was only the latest in a series of
bizarre court rulings.
The Manulife bankruptcy ruling was later overturned and now
the government is investigating the three judges who heard the
case over whether they had been bribed.
Nevertheless, the damage has been done as the ruling created
jitters among foreign investors in the country.
Even President Megawati Soekarnoputri admitted that the
country had so far failed to lure investment partly due to
uncertainty in the legal system.
Meanwhile, Dorodjatun also indicated that he still wanted to
extend the current loan program with the International Monetary
Fund (IMF) when it expired in 2003.
"We would very much like to have something for 2004," he said.