How to Deal with Corruption in Indonesia?

Indonesia is one of the biggest emerging markets in Southeast Asia with a very promising and bright economic environment. However, the country is still harmed by widespread and prevalent corruption, bribery and money laundering throughout the nation’s government and business sectors.

The president of Indonesia, Joko Widodo, declared the country to be open for business with reform initiatives in an effort to fight the country’s corruption. It is believed that this issue will still take the center stage in this coming election in 2019.

In this article, we will take a look at the corruption trends, how corruption has been tackled and why Indonesia remains an investment heaven for both local and foreign investors.

Anti-Corruption Law of Indonesia

The government of Indonesia has made a commitment in combating the country’s corruption for a long time. Its Anti-Corruption Law states that bribery is considered one of the corruption acts. It is the act of receiving or taking something (in the form of money, gifts, meals, assets, etc.) with the purpose of influencing the recipient doing something that relates to public interest in favor of the party providing the bribe.

According to the law, any hospitality expense with gifts and meals given to public officers, governmental servants, or anyone with an authoritative position over the matter of public interest, is potentially a bribe.

Once found guilty, the public officials receiving a bribe will have to face one or more of the following penalties under the Indonesian Criminal Code. In addition, these penalties apply to all briberies performed in Indonesia and outside Indonesia:

• 4 to 20 years of imprisonment
• Life imprisonment is likely for serious circumstances
• Severe fine of IDR 200 million to IDR 1 billion

Based on Article 12C of the Indonesian Anti-Corruption Law, recipients of gratifications can avoid prosecution if he or she reports such potential bribery to KPK (Indonesian Corruption Eradication Commission) immediately.

Corporate Liability and KPK (Indonesian Corruption Eradication Commission)

The reform initiatives include the international cooperation of Indonesia with many foreign regulators, with the introduction of corporate liability and a robust support of Indonesia’s primary anti-bribery and corruption body KPK. All these efforts have indicated the country’s strong intention to battle corruption and to keep up the international standards of being one of the most potential places globally to do business.

The Improvement of Corruption Index

It is obvious that the reform initiatives have been working – as of 2017, Indonesia has climbed 18 places in four years in the Transparency International Corruption Perceptions Index (CPI). This is definitely a great sign that Indonesia is making great strides in the fight against corruption and bribery of their civil servants and public officials.

The improvement can be seen by several investigations conducted by KPK. For the most recent case of corruption involving the procurement arrangements for the electronic national identity card (e-KTP) project, Setya Novanto, the former speaker of the House of Representatives and the past chairman of Golkar Party, was sentenced to 15 years’ of jail time with a US$7.3 million fine for his corruption act in the e-KTP scandal.

Of course, although the results have been encouraging, there remains a lot to be done on the anti-corruption legislations and their enforcement in order to lower the risks of foreigners and local nationals investing in Indonesia.

Good News for Investors and Companies

The online process for investment and business applications that have been implemented recently in Indonesia has lowered the guard of most companies and investors. This allows most processes to be done online through a secure system without the involvement of corrupt personnel.

In addition to that, KPK launched a new initiative in 2016 known as Professional with Integrity Movement (Profit Movement). This initiative was designed to help businesses get rid of corruptive practices and improve the compliance systems in organizations – especially in the private sector that accounts for 80% of the corruption cases investigated by KPK.

How can Cekindo Help?

As investors or business owners in Indonesia, you don’t ever need to worry about corruption and bribery through the services provided by Cekindo. We help you assess and identify the risks that you may expose your business and investment to, and act with confidence around those risks with prevention and solutions. Contact Cekindo for more information on doing business in Indonesia.