RI shaping up, but graft remains a major problem

RI shaping up, but graft remains a major problem

Associated Press, Kuala Lumpur

Indonesia's battered economy is rebounding and the government is shoring up its finances, a top minister said Tuesday in Kuala Lumpur, but critics charged that problems in the courts and with corruption must be cleaned up to encourage more investment.

"Corruption is permeating every sector of life and we have not been able to overcome that," said Jusuf Wanandi of the Centre for Strategic and International Studies in Indonesia. It must be stopped, or "otherwise nobody is going to trust us," he said.

Finance Minister Boediono acknowledged Indonesia needs to reform its commercial legal system to give investors more confidence but he held out an array of statistics that he called proof of Indonesia's bounce back from its collapse in the Asian financial crisis of 1997-98.

Indonesia grew by 3 percent last year, "a relatively good performance given the slowdown in the world economy," Boediono said. He projected 4 percent growth for all of 2002 and up to 5 percent for 2003.

Inflation and debts are coming down and Indonesia is working to improve regulation of its financial system, Boediono said on the last day of the East Asia Economic Summit, organized by the World Economic Forum.

One Western expert said it remains to be seen how Indonesia will fare.

"It's by no means beyond repair," said Adam Schwarz, a senior consultant with McKinsey & Co. "It's by no means off the radar screen entirely."