Business Corruption

The Foreign Capital Investment Law 1967 states that the Government of Indonesia cannot initiate nationalisation of foreign investments except by law and when such action is necessary in the interest of the state. According to the US Commercial Service 2010, a company's right to compensation if its property is expropriated is respected and the government has not expropriated any foreign investment since the passage of the law in 1967. Nevertheless, business executives in the World Economic Forum Global Competitiveness Report 2010-2011 indicate that property rights are neither well-defined nor well-protected by law in Indonesia. Land valuations are often subject to negotiation and property values are systematically undervalued in order to avoid paying taxes.

Political Corruption

Corruption is rampant within the land management sector in Indonesia. According to a 2011 news article by The Jakarta Post, the matter has not been given proper attention until recently. The same source also states that the Judicial Mafia Taskforce, overseen by the National Land Agency, is making it possible to expose corruption in the land management system. The taskforce is said to be reviewing reports from the public in order to identify corruption patterns in the land management sector.

According to a 2007 news article by Deutche Presse-Agentur, in August 2007, the Attorney General's office filed a civil lawsuit against Tommy Suharto, son of the former Indonesian dictator, seeking the return of about USD 53 million that went missing in a major land exchange scam which took place in 1995. The suit targets a supermarket chain in which Suharto was a commissioner and the former chairman of Indonesia's national logistic agency, Bulog. The supermarket chain acquired prime real estate owned by Bulog in return for useless swamp land while his father, Suharto, was still in office. The Suharto family is accused of secretly siphoning off as much as USD 35 billion during Suharto's regime.

Frequency

The World Bank & IFC: Doing Business 2011:
- Registering property requires 6 procedures, takes 22 days and costs 10.9% of the property value on average.

World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give the protection of property rights in Indonesia, including financial assets, a score of 4 on a 7-point scale (1 being 'very weak' and 7 'very strong').

Transparency International: Global Corruption Barometer 2010:
- 9% of the households surveyed reported to have paid a bribe to land services in 2009.