Jakarta – While noting an improvement in the Indonesian investment climate, the government still has a long way to go to provide a sense of policy certainty to firms doing business here, a US business delegation says.

"Our concerns are similar to those of businesses everywhere – that there is stability, transparency, absence of corruption, and predictability in policies," US-ASEAN Business Council president Matthew Daley told a media briefing on Thursday.

"The government should avoid endorsing policies that will only create distortions in the market," he said, mentioning the government's decision last year to hike fuel prices as a positive step forward in eliminating such market distortions and strengthening the overall economy.

US-Indonesia Business Council chairman Robert Haines further said that the government should always ensure transparency in its policies as abrupt policy changes could have adverse effects on investment.

"What is important is that any policy adjustment and its reasons be explained clearly so that investors can assess its impact on their business plans," he said.

The US-ASEAN Business Council delegation is concluding a five-day mission here, having met with several ministers, including chief economics minister Boediono and finance minister Sri Mulyani Indrawati.

The 46-strong delegation also visited Batam Island to get a first-hand look at the effects of local autonomy on the investment climate there.

In its recommendations to the government, the delegation highlighted the importance of a predictable and efficient regulatory structure to avoid confusion and delays that could hamper investment and threaten the viability of contracts.

For this, it recommended that the government always engage in public discussion before the adoption of any policy. It also stressed that need for the government to strengthen the capacity of the judicial system so as to improve law enforcement and uphold contractual rights.

Meanwhile, regarding the government's fiscal policy, the delegation pointed out that Indonesia's current tax system still contained major disincentives to investment, and recommended that the government address the problems of burdensome value-added tax (VAT) and tax refund procedures.