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Investors skittish on Indonesia over Murdaya bribery scandal

Publication Date : 25-09-2012


The arrest of one of Asia's richest women Siti Hartati Murdaya earlier this month has made investors less confident in backing businesses in Indonesia, according to several members of the country's Chamber of Commerce and Industry (Kadin).

Despite strong connections to President Susilo Bambang Yudhoyono personally and to his Democratic Party, Murdaya was detained by investigators from the Corruption Eradication Commission (KPK) on Sept. 12.

The tycoon, who was named the 14th wealthiest person in Indonesia in 2011 and among 50 most powerful Asian businesswomen in 2012 by Forbes, allegedly paid 3 billion rupiah (US$318,000) to Buol Regent Amran Batalipu to issue permits to her companies PT Hardaya Inti Plantations (HIP) and PT Cipta Cakra Murdaya (CCM) in Bukal subdistrict in the Central Sulawesi regency.

Following her detention, Murdaya resigned from the Democratic Party's patron board and from the prestigious National Economic Committee.

Biben Akbar, Kadin's head of inter-committee relations, told attendees at a Kadin conference yesterday that Murdaya's case was a clear example of the business challenges that must be dealt with by investors in corrupt regions.

"We are concerned about rampant bribery cases dragging down entrepreneurs," Akbar said.

Meanwhile, an executive with the East Java chapter of Kadin, Ma'ruf Syah, acknowledged that many investors were involved in fraud, which he attributed to pervasive official corruption.

"Existing conditions will only cost businesses more while it does not simultaneously guarantee that their projects will proceed as planned," Syah said. "There is a need for the law enforcers to work harder."

An executive with Kadin's West Sumatra chapter, Rahim Mardanis, said that the law enforcement agencies, including the National Police and the KPK, had to protect executives who were solicited by regional officials to pay bribes for businesses permits.

The Regional Autonomy Watch executive director, Robert Endi Jaweng, who also presented at the discussion, said the accountability of the local administrations in the country remained in question even after regional autonomy was introduced 10 years ago.

Jaweng said although most local administrations have introduced one-stop integrated license service centres, or PSTP, to improve the business climate in Indonesia, their implementation has not been fully effective, despite a push from the central government.

"Of the 524 existing local administrations in the country, around 420 of them, or 80 per cent, comprising regencies and municipalities, have established PSTPs. Yes, the quantity is fantastic, but whether they have done their job well is another story," Jaweng said.


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