Jonathan Thatcher, Jakarta – A senior Indonesian official said the government wanted to change controversial laws giving greater autonomy to its provinces, warning that hurried legislation which took effect in January threatened the country's unity. The laws, created in the aftermath of the collapse of autocratic former President Suharto's rule are vague and have been blamed by analysts for adding yet another deterrent to investment in the troubled country.

State Secretary Bambang Kesowo, a close aide of taciturn new President Megawati Sukarnoputri, conceded it would be no easy matter to convince parliament and newly empowered regions to agree to revisions. But he told Reuters in an interview late on Tuesday that there were fundamental flaws in the new laws, which remain thin on detail about how they will work.

"This is a real problem which could endanger the principal of a unitary state," he said. "The best thing is to talk openly [about the issue] but not in an offensive manner," he said.

Investors in the country's huge array of natural resources have been particularly critical of the new laws which they complain have created so much confusion over who has rights to what that it would be foolhardy to put in substantial funds now.

Any revisions to the laws are certain to touch a raw nerve in many provinces which will see them as an attempt by the central government to snatch back their powers and wealth after years of watching Jakarta loot their wealth and give little in return.

Kesowo dismissed suggestions the government was slipping back to the bad old ways of Suharto who ruled for 32 years until he was finally forced to step down in 1998 amid revolt and economic crisis from which the country is still trying to recover. "We don't wish to take away the power [of the regions] ... there must be decentralisation and autonomy," he said. But he warned that in their current form the regional autonomy laws failed to do their job.

He pointed as an example to the division among local governments over the sea which defines the giant Indonesian archipelago. On a recent trip to one area, he said Megawati was confronted by a fisherman who complained of being detained by a neighbouring region when he fished in its waters. "That's crazy. The president sees that there is something wrong with the concept of the law," he said. "We don't need to reject the law. We need to improve and correct the law. Lawmakers have got to be persuaded. The principle is correct. The only thing we need is interpretation. A unitary state is better than federalism."

Federalism has long been a dirty word in the politics of Indonesia, a country made up of dozens of ethnic groups and hundreds of languages and whose fragile unity is the relic of centuries of Dutch colonial rule which was only finally shaken off in the late 1940s.

Kesowo said he preferred a "staircase" approach under which the central government is responsible for a unified state, moving down to the provinces and then districts in order. Currently districts can ignore the local governments of the provinces they are in.

The issue of regional autonomy has plagued Indonesia throughout its history and two major provinces – Aceh and Irian Jaya – remain home to armed separatist movements.

The government, Kesowo said, would have to take time to win over the public to its view. One of the key issues remains how to spread wealth around the largely impoverished nation from some of those provinces which have abundant natural resources while others have to scratch a meagre living from thin soil and poor fishing grounds. "We have got to start thinking about our problems as a nation...if certain areas develop very fast and others do not, there will be unfairness," Kesowo said.