Officials Monday vowed to fight investor perceptions that Indonesia is a haven for corruption and terrorism as a high-level business summit got under way in Bali almost a year after deadly terror bombings on the resort island.
Painful reforms have been achieved and the economy is on the right track, State Enterprises Minister Laksamana Sukardi and Theo Tumion, chairman of the investment coordinating board, told hundreds of Southeast Asian business people.
The ASEAN Business and Investment Summit is being held in conjunction with the Association of Southeast Asian Nations (ASEAN) summit. The island's tourism-based economy is still struggling to recover from the bombing of two nightclubs which killed 202 people, mostly Western tourists, last October 12.
The business summit aims to boost investment region-wide in the face of threats such as terrorism and competition from other nations.
Southeast Asia's "miracle" economies suffered a body blow from the 1997/98 financial crisis and they are now struggling to compete for foreign investment with a booming China.
Tumion said the Bali blasts and a Jakarta hotel bombing in August were a blow to the economy. Both are blamed on the al Qaeda-linked Jemaah Islamiyah terror group.
"Let us keep in mind that if terror attacks in the US do not stop investment there, then terror attacks in Indonesia should also not be a reason to stop investment in our nation," he said.
He said Indonesia's response to the bombings had been swift – three Bali bombers have been sentenced to death – and "we should not allow the barbaric actions of small minorities to damage our mutual economic interests." Sukardi said his country is in much better shape than in the mid-1990s under the autocratic Suharto, whose resignation in 1998 began a transition to democracy.
"At that time there was no transparency. The government was just a rubber stamp and everything was according to the whims of one person but now we have a strong civil society and public scrutiny." Sukardi said Indonesia had also restructured its banks after the financial crisis and embarked on privatisation to fight deep-seated corruption.
"When you want to combat corruption you have to privatise and bring in the practices of good governance." The minister said Indonesia had gone through a very difficult political transition "and there are many problems ahead of us but don't look at Indonesia in a snapshot – we are moving forward on the right track." In the past two year "huge" steps to reform the economy and banking system had been taken.
"I can guarantee that the crisis in 1997 will not happen again in this country." Tumion said he had been "bombarded with negative remarks on increased corruption at all levels, inefficient bureaucracy, complex decentralisation procedures, inadequate legal certainty and complex political process, and recently (as) a terrorist haven." He said the country was not "burying its head in the sand" but was tackling these problems.
Tumion accused the media of playing up problems rather than efforts to tackle them and said this had painted a negative picture of Indonesia's investment climate.
He said officials would improve this climate by streamlining the regulatory framework and improving competitiveness.
Foreign investment approvals in Indonesia last year plunged 35 percent, with officials blaming the fall on legal uncertainty and labor disputes, while the figures have improved this year.