Gaps have narrowed as talks on extradition and counter-terrorism agreements continue

SINGAPORE and Indonesia have made significant progress in recent months in negotiations on bilateral agreements on extradition, defence cooperation and counter-terrorism.

Visiting Indonesian President Susilo Bambang Yudhoyono and Prime Minister Lee Hsien Loong, who met at the Istana yesterday afternoon, agreed that differences on outstanding issues "have narrowed".

Both leaders asked officials to continue with further talks to bridge the gaps, and for an update when Dr Yudhoyono and Mr Lee meet in Hanoi in November for the annual Apec summit meeting of Asia-Pacific leaders.

A statement from the Prime Minister's Office after the talks said the leaders had been briefed earlier on the progress of ongoing talks on the three pacts, which are being negotiated in parallel with each other.

They also discussed the implementation of the Special Economic Zones (SEZs) in Batam, Bintan and Karimun, and emphasised the need to continue working together to achieve a successful project as a model for Indonesia.

Both countries are working together to develop the SEZs, so as to draw more investment and boost economic growth in the three Riau islands just south of Singapore.

Dr Yudhoyono was here with an Indonesian delegation that included seven ministers to attend the 6th Forbes Global CEO Conference at the Shangri-la Hotel.

During a luncheon speech to more than 400 business and political leaders, he made a strong pitch for more foreign investment into his country, and assured them that his administration's campaign against corruption was yielding results.

He cited a study last year by the World Bank and the University of Indonesia's Institute for Economic and Social Research, which found that between 2001 and 2004, the share of production costs that went to bribes for government officials fell from 10.8 per cent in 2001 to 6.4 per cent in 2004.

He also stressed that his government's anti-corruption measures "spared no one from the arm of the law", pointing out that those investigated and prosecuted included former ministers, governors, senior officials, military officers and corporate figures.

Asked later about the sustainability of the anti-corruption drive, he said: "The fear (of being) corrupt is emerging now in Indonesia. We have to continue to safeguard this ongoing change."

Dr Yudhoyono, who was on his second trip here in as many months to woo investors, also pledged to push ahead with regulatory and banking-sector reforms to improve the investment climate.

He came armed with facts and figures attesting to the robustness of Indonesia's economic recovery under his watch, citing the country's rising exports, higher reserves and improved credit rating as evidence.

At the same time, he acknowledged that his Government faced a huge challenge of creating enough jobs for a 220-million strong population and reducing poverty. He also said that with the change from a top-down regime to a democratic government, reforms now took longer to implement.

This is because the government needs time to win the support of Parliament and the public. But it will work out for the good of the country in the long term, he predicted.

"Because there will be wider ownership, our record will be more sustainable," he said.