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Indonesia Tops Asian Corruption Survey - 2004-03-03

For the third year running, Indonesia has come out at the top of a survey of perceived corruption in 12 Asian countries. The survey is further evidence of why so few foreign investors are putting money into the country.

On the face of it, Indonesia should be one of the most attractive destinations in Asia for foreign investors: huge natural resources, a large and developed domestic market, and ample room for expansion.

But potential foreign investors say that corruption makes it all but impossible to do business in the country. One exasperated American businessman has described Indonesia as "so corrupt that it violated even the norms of corruption."

In the recent survey carried out by the Hong Kong-based Political and Economic Risk Consultancy, Indonesia scored 9.25 points out of a possible 10. By comparison, Singapore was at the other end of the scale, with a score of 0.5.

Joel Hellman is an advisor to the World Bank in Jakarta. He says that politicians in Indonesia have acknowledged that the problem needs to be tackled.

"It is widely recognized that issues about legal uncertainty, policy uncertainty, concerns about corruption and governance are among the leading factors that shape the decisions of business people whether or not to invest, not only here but in all countries, and these things have had a very, very strong effect on Indonesia's foreign direct investment profile," he said.

Other countries in the region, such as Vietnam, are tackling their corruption problems, and are attracting much needed foreign investment.

The Indonesian economy is growing, driven by domestic demand, but it is not growing fast enough to absorb the millions of people who join the workforce each year. Economists say that without foreign money the economy is unlikely to recover any time soon.

Countries such as Burma and Bangladesh, which are consistently rated as more corrupt than Indonesia by the anti-corruption body Transparency International, were not included in the latest survey.