RI told to deal with high cost economy

RI told to deal with high cost economy

Rendi A. Witular, The Jakarta Post, Sydney

Almost six months after President Susilo Bambang Yudhoyono was
sworn in, the Australian business community still sees
Indonesia's investment climate as little improved with corruption
is still rampant, although a senior minister argued that it was
on a "declining trend".

Speaking during Susilo's three-day visit to Australia, Andrew
Wilson, president director of BHP Billiton Indonesia -- a local
unit of Australian mining giant BHP Billiton -- urged the
Indonesian President on Tuesday to be more serious in tackling
corruption within the bureaucracy.

"Reports and the facts in the field show how difficult it is
to do business in Indonesia. One of the disturbing factor is that
we have to deal with the so-called oknum, who ask for kickbacks
when we deal with the bureaucracy," he said during a meeting
between Susilo and Australian business leaders.

The word oknum refers to government officials committing
corruption on an individual basis, sometimes with the knowledge
of their supervisors.

Wilson said Australian businessmen were willing to put their
money into Indonesia on condition that the government seriously
address the causes of the high cost economy here, which has long
undermined the appetite of both local and foreign investors for
starting or expanding their businesses in the country.

"We are delighted to invest in Indonesia, but please take the
oknum factor out of business," he said, adding that there were
abundant opportunities in Indonesia which remained untapped by
Australian firms.

Corruption within the bureaucracy, a lack of legal certainty
and uncompetitive labor regulations have long been partly blamed
for foreign investors reluctance to do business here.

During Susilo's six-month tenure, corruption has remained a
major problem with no sign of abating so far, even though the
President named fighting corruption as one of his priorities in
the short term. International surveys have confirmed the
country's position as one of the most corrupt country in the
world.

In response to the speech, Susilo said Indonesia was
attempting to transform itself into a corruption-free country and
declared war on the practice.

"I acknowledge that corruption is still a problem, but the
government is in the process of addressing it. I am here today to
convince you that your investment will be in good hands as we are
at war against corruption," he said.

Susilo also called on Australian business leaders to invest in
Indonesia, which is seeking to enter into a new business
relationship with the neighboring country following recent
improvements in their relationship.

Indonesia is in dire need of direct foreign investment if its
economy is to grow by 6.6 percent over the next five years and if
it is to be able to reduce soaring unemployment -- which is now
estimated at over 45 million people, including the open
unemployment and underemployment.

Coordinating Minister for the Economy Aburizal Bakrie,
meanwhile, claimed that corruption in Indonesia was starting to
decline and that the practice was driven primarily by the
mentality of government officials rather than the prevailing
system.

"There is a declining trend in corruption. It is not easy to
eradicate corruption entirely, but we are heading in that
direction," he said.

Aburizal -- a former businessmen and chairman of the powerful
Indonesian Chamber of Commerce and Industry (Kadin) -- predicted
that it would take at least 15 years to eliminate corruption
completely in Indonesia.