Countering Corruption in Indonesia

By Brierley Penn

Red tape, uncertainty and corruption have gone unacknowledged and ignored by high-ranking Indonesian officials until recent times but were highlighted as the greatest challenges to attracting international business to the nation at the recent Indonesia Forum in Auckland.

The Indonesian Government has set an objective to rid the country of corruption in 5-1o years which will assist allow Indonesia to develop further as a premium international trade destination.

New Zealanders attending the recent Indonesia Forum, many of whom had been engaged with Indonesian trade for a considerable period of time, were surprised to hear both of the Indonesian guests, Gusmardi Bustami (Director General for National Export Development of the Ministry of Trade) and Noke Kiroyan (a high profile Indonesian business leader), concede and address the problems experienced by the country with regard to corruption and exploitation.

Both Bustami and Kiroyan highlighted moves towards greater transparency and integrity, and suggested that this progress could be built upon through the establishment of further relations with New Zealand. Our country is viewed by many in Indonesia as a model of good business practice and sound reporting systems. This provides an opportunity for the transfer of knowledge and information on policies for avoiding corruption, which would allow for improved relations between the two nations more generally.

While it was widely acknowledged that the Indonesian political system remains one largely of compromise and consensus, New Zealanders with business links in the country voiced their confidence in the ability of Kiwi businesses to operate successfully in Indonesia without becoming susceptible to bribery, exploitation or abuse of authority. However, the benefits of forming local partnerships with existing companies operating in the region were highlighted for firms seeking to enter the market.

The Indonesian government’s growing focus on abolishing these less transparent practices suggests that the country will continue to become an increasingly desirable nation in which to conduct business, with Bustami highlighting a commitment made by the government to rid the country of corruption in the next five to ten years.

The Indonesian President, Susilo Bambang Yudhoyono, speaking to his Parliament earlier this year, also acknowledged the country’s battle against corruption, with a number of scandals having rocked the country’s ruling Democrat Party throughout the President’s most recent term in office. “I have to admit there are still many perpetrators of corruption even in the government, parliament, regional representatives and among law enforcers,” Yudhoyono said. Cooperation between the government, corruption watchdogs such as the KPK (Komisi Pemberantasan Korupsi) and the judicial system in Indonesia will be imperative over the coming few years.

Central government spending on infrastructural investments, something which economists claim will be vital in leading to long-term growth, has also been hindered in the past due to political inefficiencies and corruption. However, steps such as the imprisonment of the Democratic Party’s former treasurer, Muhammad Nazaruddin for corruption charges highlights the government’s growing commitment to improving the integrity of their political and judicial systems.

Corruption and inefficiency remain prevalent issues, and a cause for consideration for new businesses entering Indonesia. However, a number of steps have been taken which suggest that such practices may become less widespread over the coming decade, and should not serve to deter entry into a country with such rapidly expanding potential for growth.