Jakarta – The US ambassador to Indonesia on Tuesday called on Jakarta to improve its judicial system, saying many foreign investors still questioned the fairness of the courts.

B. Lynn Pascoe said many American businesses had been deterred from investing in the world's fourth most populous country due to what he described as a lack of transparency and "weakened judicial institutions."

His comments come at a time when foreign investment has begun to revive in Indonesia, partly on promises by President Susilo Bambang Yudhoyono, who took power last October, to make the country an easier and cleaner place to do business.

"The question about fairness is a real one and if you are going to invest hundreds of millions of dollars, whether you are a local investor or foreign investor... you want to make sure that in the end the court system is going to be very fair," Pascoe told a news conference in Jakarta.

"The government and the court system are in serious reform... so at this point the outlook is so much brighter than it has been before but it's still not there, not totally everybody is confident," he added.

Pascoe was speaking after the United States announced a plan to provide $20 million in aid to Jakarta over four years to improve the country's commercial and anti-corruption courts.

Indonesia has pledged to revamp its judicial system, the target of constant criticism from foreign businessmen who point to lack of transparency and unpredictable court decisions.

A World Bank report late in 2003 said many lawyers were "apparently often the conduits for bribes to judges, prosecutors and the police." Other critics say poorly trained judges and confusing statutes also lead to odd and inconsistent decisions.

Indonesia is also rated one of the world's most corrupt countries by global graft watchdog Transparency International.

In the first six months of the year, foreign direct investment approvals jumped 71 percent to $5.93 billion from the same period last year.

But William Frej, Indonesia mission director for the United States Agency for International Development (USAID), said more American businesses would have invested in the Southeast Asian country if there was a better court system.

"Indonesia is an extraordinary country to do business but again the capacity of the court system at this point of time does preclude the total involvement of the US private sector," Frej told the news conference.