Financial Crime World

Anti-Corruption Efforts in Finance: Indonesia’s Ongoing Struggle

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Indonesia has been grappling with corruption for decades, despite efforts to combat it. The country’s poor “ease of doing business” ratings have long been a major concern, with foreign investors hesitant to enter the market due to fears of corruption.

Corruption Perception and Ease of Doing Business

According to the World Bank’s 2016 Doing Business report, Indonesia ranked 109th out of 189 economies in terms of ease of doing business. This ranking has remained stagnant, with a slight rise from 88th to 90th place on Transparency International’s Corruption Perceptions Index.

  • Corruption is identified as the most problematic factor for doing business in Indonesia.
  • The problem is particularly acute in infrastructure development, political stability, and labor practices.
  • Corruption often exacerbates these issues, making it difficult to achieve economic growth and stability.

Challenges Faced by Anti-Corruption Efforts

Indonesia’s national agency for fighting corruption, the Komisi Pemberantasan Korupsi (Corruption Eradication Commission), has faced numerous challenges. These include:

  • Arrests of two KPK deputy chairmen on trumped-up charges
  • Declaration of police chief Budi Gunawan as a suspect in a gratification case
  • Hampered efforts due to an antagonistic police force

Mitigating the Risk of Corruption

To mitigate the risk of corruption, Australian companies operating in Indonesia should:

  • Seek professional advice and thoroughly investigate potential business partners and relationships.
  • Establish trust with local organizations and verify legal existence through registration with the Indonesian Chamber of Commerce.

Australian businesses must be aware that under Australian law, they can face criminal prosecution for bribing public officials abroad. Therefore, it is essential to:

  • Seek expert advice from professional advisors, including bankers, lawyers, insurers, and accountants.
  • Understand the anti-corruption efforts in Indonesia and ensure compliance with local laws.

Conclusion

Indonesia’s struggle against corruption is ongoing, with significant challenges still to be addressed. However, by taking proactive steps to mitigate risk and seeking expert advice, Australian businesses can navigate the complex landscape and achieve success in this important market.