July 26, 2005

American envoy urges Jakarta to improve courts

JAKARTA (Reuters) - The U.S. 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

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 U.S. private
sector," Frej told the news conference.