U.S. businesses say corruption a hurdle

JAKARTA (JP): American businesses remain committed to investing and doing business in the country, but said corruption and policy inconsistency could be possible hurdles.

Louis A. Clinton, president of the American Chamber of Commerce-Indonesia, said here Saturday that American investors would continue to come here because of the sustained political stability and large market potentials offered by the country.

Clinton quoted U.S. Ambassador to Indonesia J. Stapleton Roy as saying that Indonesia would become the fifth largest economy in the world and a developed country by 2020.

"It will occur faster if inefficiencies created by corruption can be eliminated. It is one of the issues Indonesia is difficult in dealing with because of budgetary constraint in improving government employees' salaries," Clinton said.

He added that American businesses would prefer pursuing a constructive engagement to reduce corruption practices here rather going to a confrontational approach.

"We are going to work on it with a constructive engagement, work with the country and explain why it is important to have transparency in your business venture, and it will make Indonesia more competitive," Clinton said after the closing of the 53rd conference of the Asia-Pacific Council of American Chambers of Commerce (APCAC) here.

The conference was attended by 21 delegates from American Chambers in the Asia-Pacific countries. The conference listed common issues to be brought before the annual meeting of American Chambers in Washington next June.

A statement issued by the council following its two-day meeting said; "APCAC supports efforts by the U.S. government to promote transparency in international procurement and to deal with governments throughout the world to adopt and to enforce measures against bribery and corruption in all business transactions."

The newly-appointed APCAC chairperson, Ken Richeson, said: "There is a feeling within the business community that if companies from all countries operate in the same category, it will be beneficial for businesses as a whole."

He said corruption was not an issue limited to one particular country as it was found in almost every country, even in the United States. "It is something everyone worldwide needs to work against."

The U.S. State Department's annual human rights survey of 194 countries and territories, announced earlier this year, found that the fruits of Indonesia's booming economy are widely dispersed but that "pervasive corruption remains a problem."

And last month, Hong Kong-based Political and Economic Risk Consultancy Ltd. rated Indonesia as the most corrupt country in Asia.

To reduce the level of corruption here, Clinton suggested, the Indonesian government must improve the well-being of civil servants by increasing their salaries.

"I think the main thing is that you have a very large number of civil servants, but they do not get paid very well. In Singapore, some government officials get some US$100,000 a year; here, you have director generals that make less than $1,000 a month," Clinton said.

He said U.S. businesses have also been concerned about Indonesia's policy inconsistency. He cited the national car policy, which grants only PT Timor Putra Nasional with tax and duty breaks to develop a national car, as an example of policy inconsistency.

"American companies are very compliance-oriented. If the rules are clear, they obey the rules. So, when you have changes and the rules are not applied consistently, it creates problems for American businesses," Clinton said.

Similarly, he said, the American Chamber of Commerce-Indonesia also got concerned when U.S. policies affect Indonesian matters, like the linkage between trade and human rights issues.

"We try to educate Americans on all positive things about Indonesia because Americans are largely ignorant about Indonesia," Clinton said.

Ken agreed and said: "We do not believe that economic and trade sanctions are the proper way to approach issues like human rights. Human rights issues should be approached using other venues rather than using trade sanctions."

In its statement, APCAC condemned the U.S. government's unilateral trade sanctions and boycotts as a means of attempting to influence policies of foreign governments and suggested that it discontinue the use of such sanctions and boycotts.

The council also supported the unconditional permanent renewal of most favored nation status for China and China's entry into the World Trade Organization (WTO).

"China's entry into the WTO must be on a sound commercial basis that both reflects its status as a major trading power and serves to strengthen the rules-based trading system established by the WTO," the statement read.

It supported a strong American business presence in Vietnam as it will generate jobs for U.S. exporters and will improve opportunities for broad-based economic development and Vietnam's participation in the community of nations. (rid)