A new survey of foreign executives has ranked Indonesia the most corrupt country in the Asia Pacific region.

Presenter/Interviewer: Emily Bourke

Speakers: Robert Broadfoot, managing director of Political and Economic Risk Consultancy, Hong Kong

Broadfoot: It was pretty poor throughout the range of variables, the worst grade however was for the police – when you get the police and the legal system which get a poor grade for corruption – it's awfully hard to fight the problem when you encounter it because the institutions responsible for fighting corruption are in fact a central part of the problem. In the private sector and this was really throughout the Asian region, but in Indonesia, the customers were the biggest problem that companies were having problems with corruption. It wasn't with suppliers or competitors or internal staff, it was with customers, – what we see is major buyers and individuals within companies that are purchasing something and those individuals say "if I am going to give you business, what are you going to give me in return?".

Bourke: Compared with other countries what is Indonesia doing, or not doing that could bring itself into a better rating?

Broadfoot: In terms of the trend of corruption – the trend in Indonesia is improving. I think one of the more encouraging signs is that people are very impressed with President Susilo. He seems to be quite committed to fighting the problem. He has set up his own independent anti-corruption force and for the first time in modern history they have had senior officials who have actually been prosecuted for corruption so we are seeing some cases being dealt with. But he is dealing in a very weak institutional structure and at the same time you've got a de-centralisation of political and economic power in Indonesia so that you have a whole new level of corruption at the local level which possibly wasn't as apparent during the more authoritarian days of President Suharto when everything was very bubbled near the top.

Bourke: Can you put a dollar figure of how much revenue, or how much growth is being lost as a result of the corruption?

Broadfoot: It's very very difficult to do. We try to measure the perceptions of people working in the system. We don't try to quantify the dollar value. Our own personal view is that although countries like Indonesia get a bad grade for corruption, actually countries like the United States, Italy and France – in dollar values, have a bigger problem with corruption than countries in Asia. Asia doesn't have many examples of an Enron, or a WorldCom you can really point to some multi, multi-billion dollar examples of losses in countries like the US and I'd arguable say that problem of corruption – in dollar terms – is just as bad but I think what you can say in the Indonesian case, in the Philippines case is that corruption has interfered with these economies' abilities to develop. It's scared away foreign investors, it's intimidated them, it's added to costs for people and because they haven't grown as rapidly as countries as they should the real cost of corruption is the lack of opportunity cost of the lack of development.

Bourke: What about the future? Where do countries like Indonesia go from here to improve their business opportunities?

Broadfoot: In those countries where you have the biggest problems it really is the political will to change the system – There may an assumption that more democratic countries are less corrupt but when we looked at India and the Philippines which have democracies, the problem of corruption is just as bad as Vietnam and China which don't have those systems. whereas if you look at Singapore and Hong Kong – neither of which as great democracies – they have the least perceived corruption in the region so I think there are some assumption to be revisited, as to what contributes to a clean system.