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.