JakartaPost-Feb 16
Rampant extortion by rogue civil society organizations (CSOs) has cost industry players operating in Indonesia hundreds of trillions of rupiah, exposing what corporate executives say is a worsening business climate in a nation that aspires to woo massive foreign investment under President Prabowo Subianto. Industrial zones have become prime hunting grounds for extortion by CSOs, commonly referred to as ormas (mass organizations) in Indonesia, including in major hubs like Bekasi and Karawang in West Java, Batam in the Riau Islands and in East Java, according to the Indonesian Industrial Estates Association (HKI). HKI chairman Sanny Iskandar said the financial toll had gone beyond the direct cost of “protection fee” shakedowns to a chilling effect on investment as some businesses pull out and new investments are scrapped. “If the government doesn’t crack down on this, investment will go elsewhere,” Sanny told reporters on Feb. 6. “No one wants to operate in a place where they [CSOs] call the shots.” Those who refuse face intimidation, vandalism or disruption through forced factory shutdowns or demonstrations paralyzing production. Foreign businesses are leery of investing, Sanny said. The situation has deteriorated as authorities have failed to act, Sanny emphasized, prompting many investors to take their concerns straight to the central government, bypassing local officials. Many mass organizations saw their territory as their own and claimed pseudo-legitimacy to exert authority, including charging fees to businesses operating there, either as a so-called “contribution” to the group’s welfare or in response to a threat, said Ian Wilson, principal fellow at Murdoch University’s Indo-Pacific Research Centre. Wilson told The Jakarta Post on Friday that this highlighted weak law enforcement, corruption and overlapping regulations that had crippled market governance and left businesses vulnerable. Corruption had seeped into every level of governance to the extent that it fueled public distrust and encouraged the rise of the private security industry, he added, including transnational security actors “as a response to uncertainty and overlapping protection costs.” Read more at:
