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For anyone interested in the state of democracy in Indonesia, a look at recent headlines is instructive: a lawmaker caught watching porn in the legislature, 15 politicians indicted for graft and parties more interested in overseas jaunts than passing laws.       

Indonesia is an ambitious emerging market on the cusp of securing an investment-grade sovereign rating, but the slow pace of policy-making and the related problem of poor infrastructure need fixing, investors say.

"You'd rather have that decisions are taken more expeditiously, and that is something that would help growth prospects and also be a good help to strengthen the investment environment," said Leif Eskesen, chief economist for ASEAN at HSBC in Singapore.

After the toppling of authoritarian ex-president Suharto in 1998, the House of Representatives (DPR) was transformed from a rubber-stamping body into an assembly with a say in the appointment of top officials such as the central bank governor and military chiefs, in addition to its role of passing laws and government oversight.

So the quality of lawmakers and the ability of the legislature to do its job are of concern to investors. The current legislators took office in 2009 amid hopes of greater reform of Indonesia's sometimes ramshackle institutions, but nearly two years on much legislation seen as a priority is still waiting to be passed.

"When they were sworn in, we had high hopes. We hoped they'd be better than the last lot, but even one year on it became clear that this was just a false hope," said Ronald Rofiandri of the Center for Indonesian Law and Policy Studies.

A law to provide land for infrastructure, for example, was delayed last year and is now set for September at the earliest, says Taufik Hidayat of Golkar Party, part of the ruling coalition. A bill to set up a new financial services authority is in limbo.

In the first year, only seven bills out of a target of 70 were passed and that included ratification of four international conventions, said Sebastian Salang, coordinator for parliamentary watchdog Formappi.      

Lawmakers -- nearly 60 percent of whom new to the house in 2009 -- have passed about 20 bills as they approach two years of service, so the target of 248 in the five-year life of the legislature looks well out of reach.       

Salang said they were doing a reasonable job monitoring the government but little to push through change.

New Building

Instead, many lawmakers seem more interested in pushing for a new building, specifically one shaped like an upturned "U" that will cost at least Rp 1.2 trillion ($138 million).

"They need support systems to work, but they come up with a solution to get themselves a new building. That's a mistake, and it only grinds public trust further," Salang said.

The Forum for Budget Transparency, or FITRA, has condemned the plan, saying the money could be better spent on houses for the poor. Indonesia Corruption Watch says it could go towards building 32,000 basic schools.

Outrage over the plan, with a dose of mockery, is fuelling dissent on social media, even if its reach is limited so far. On Facebook, the "One million facebookers reject new parliament building movement" has 20,730 supporters; the more sarcastic "Support the tilted parliament building as one of the world's wonders" has 14,000 fans.

Since the proposed new building was announced, the popularity of the House has slumped. Some 68.8 percent of people felt the 560 lawmakers were doing a bad job, the worst showing since they were sworn in, a Kompas poll showed in April.      

Speaker Marzuki Alie, from President Susilo Bambang Yudhoyono's ruling party, sniffily dismissed the complaints. 

"Only the elites can understand and discuss (the new building plan), not ordinary people," he told Tribunnews. 

"If we involve ordinary people in discussing how to fix the system, they could get a headache ... For commoners, if there's a road, food, a job, a house, education, that's enough for them. This is a matter for smart people, ask the campuses to talk about it," he said.

Belly Dance Show

Unabashed, lawmakers are pressing ahead with a bid to double their travel budget for next year, so they don't have to travel coach class, for example. 

Lawmakers get a salary of Rp 50-55 million ($5,800 to $6,400) a month, which compares with the minimum wage in the capital of around Rp 1.2 million rupiah, Rofiandri said.   

On top of that, FITRA says, lawmakers want to spend Rp 12 billion rupiah of taxpayers' money on junkets around the world, including Rp 1.4 billion for trips to China and Australia to conduct research on a social services bill.

In October, the Ethics Council went on a field trip to Greece to examine how ancient philosophers there developed the concept. Critics said "Google it up," but the council still went, stopping off in Turkey to catch a belly dance show.

The reputation of House took another dive this month when Arifinto, a lawmaker from the Prosperous Justice Party (PKS), was caught by a photojournalist watching porn on his tablet computer during a plenary session.

Arifinto said he would resign, but a week later he hasn't. 

The Islamist PKS was the promoter of of an anti-pornography law passed in 2008 in the predominantly Muslim yet secular state. Communication Minister Tifatul Sembiring, another party member, got Blackberry maker Research in Motion to filter access to porn this year. 

Last week, the anti-graft court kicked off a case against 15 politicians relating to the appointment of Miranda Goeltom as the central bank's senior deputy governor in 2004.

Despite the dysfunctional legislature, Indonesia remains popular with emerging market investors for now, thanks to a consumer demand-led economy seen growing at a rate of more than 6 percent this year.

Jakarta's stock market hit a record high on Thursday and has risen 2.4 percent so far this year, helped by a net inflow of $1.4 billion of foreign money. 

There was a sell-off in the bond market early this year as investors worried about inflation and the benchmark 10-year yield hit 9.5 percent in January. But the market calmed down after the central bank raised interest rates in February and the yield has now fallen to 7.82 percent.       

"Notwithstanding some of this political rigidity, I still think Indonesia is perceived as a promising place both for the short- and medium-term perspective," said HSBC's Eskesen.  

But a businessman who declined to be named was more worried about the future. 

"Whether or not there is good policy, the private sector can still make money in Indonesia. What's happening now is that investments tend to be exploitative and are thinking about the short-term," he said.

"But for longer-term investment, if we want to survive sustainably, we need certainty and good governance."


Reuters