Indonesia remains the top destination in the Southeast Asian region for corporate expansion, according to a survey released on Thursday, despite the many challenges companies cited in conducting business here.

The survey, carried out by the American Chamber of Commerce in Singapore (AmCham Singapore) and the US Chamber of Commerce, said corruption was "overwhelmingly" identified as the greatest drawback in Indonesia.

In a poll of 475 senior executives from US companies operating across Southeast Asia, 79 percent of respondents reported that their companies' level of trade and investment in the region has increased over the past two years, and an overwhelming 91 percent expect it to increase over the next five years.

Simultaneously, the survey found substantial concerns and impediments to growth in the region.

Corruption was the top issue across the region, with the majority of respondents in all countries, except Brunei and Singapore, expressing dissatisfaction.

Coincidentally, the graft scandal involving the suspended oil and gas regulator SKKMigas chief, Rudi Rubiandini, sent cautionary signals of the nation's legal uncertainty to oil and gas companies operating in the archipelago.

The University of Indonesia's Center for the Study of Governance executive director Natalia Soebagjo said she remained optimistic that Indonesia was going in the right direction by addressing issues head on and trying to find solutions.

"Recent scandals, like the SKKMigas chief graft scandal, are examples of where the challenges are," she said. "Surely it can only get better."

Business leaders also cited burdensome laws and regulations as obstacles to greater investment, as well as the poor quality of infrastructure, and the difficulty in moving products through customs in some countries.

The survey also revealed that regional economic integration efforts, such as ASEAN's agreements on trade in goods and services, are important to US companies' investment plans in the region.

Nearly half of the US manufacturing companies surveyed said they utilized ASEAN's free trade agreements with major trading partners to export from the region.

"This survey shows that US companies are thinking regionally, and as ASEAN continues to integrate, US companies will need to increasingly focus on strategies to realize ASEAN's potential," said Tami Overby, the US Chamber's vice president for Asia at the US Chamber of Commerce.

In addition, economic woes are also affecting currency and stocks in the region's largest economy, as well as those in neighboring countries.

Investors are wary of the negative fallout for Asia if the US central bank begins to cut back its massive asset purchase program, ending an era of cheap global financing as a result of the improved situation in the world's largest economy.

But China might be offering an antidote to the ongoing rout in Asia's emerging markets, with Beijing recently launching a series of measures to push the economy, including scrapping taxes for small firms.

"For both Indonesia and Australia, I guess that's an indicator that China is still growing strong, and markets should do well in the coming months," said Melbourne Business School economist and associate professor Mark Crosby, who was visiting Jakarta. (asw)

By The Jakarta Post, Jakarta(thejakartapost.com)

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