Indonesia’s Image as Corrupt Worsens

Indonesia has overtaken Cambodia as the most corrupt country in the Asia-Pacific region in the eyes of business executives, according to an annual survey by Political & Economic Risk Consultancy, a Hong Kong-based risk analysis firm.

“The perception that corruption is especially bad in Indonesia will make it more difficult for the country to attract foreign direct investment,” the PERC report said.

“The absolute level of corruption in Indonesia might not be any worse than in any other Asian country,” it said.

Indonesia was seen as the second-most corrupt country in the survey last year.

Executives saw Singapore as the least corrupt country this year, according to the poll that covered 14 countries as well as Hong Kong and Macau.

Indonesia’s ranking may have fallen because “corruption has been more politicized than perhaps in any other country in the region,” PERC’s report said. “Corruption has become a charge being used by corrupt people to protect themselves and to stifle reform.”

The House of Representatives vo ted last week for a criminal probe of Vice President Boediono and Finance Minister Sri Mulyani Indrawati for their roles in the bailout of PT Bank Century. The move may set back the agenda of President Susilo Bambang Yudhoyono, who won a second five-year term last year partly on the strength of his drive to eliminate graft.

The report surveyed 2,174 “middle and senior business executives” in Asia, the United States and Australia.

Responding to the survey, Sri Mulyani vowed the government would continue to push its ongoing reforms.

“To improve our reputation and the performance of public institutions is not an easy job,” she said. “But we remain committed to bureaucratic reform and will try to fill the news with positive news about Indonesia, about reform, about the improvement of public services and about our commitment to integrity in carrying out reform.”

However, Djimanto, the secretary general of the Indonesian Employers Association (Apindo), claimed the PERC survey was too “subjective” because it only surveyed business executives. “Therefore the survey is only a perception of certain people,” he said.

After Indonesia and Cambodia, the Philippines, India, Thailand and Vietnam were seen as the most corrupt by PERC, and Australia, Hong Kong, the United States and Japan were seen as the least corrupt countries following Singapore.

Indonesia’s Investment Coordinating Board (BKPM) is targeting an increase in foreign direct investment of up to 15 percent this year from about $10.7 billion last year.