JAKARTA– An Indonesian mother who was fined, jailed and put on trial after sending an e-mail to friends complaining about her treatment in a private hospital, has become a rallying point for reform of the country's legal system.

Indonesia's unpredictable legal system is one of the main deterrents to much needed investment.

While President Susilo Bambang Yudhoyono, who is seeking re-election next month, has pushed through some reforms and made inroads tackling graft in Southeast Asia's biggest economy, reform of the legal system has lagged.

The defamation case against Prita Mulyasari has sparked a public uproar over a perception that she has been miserably treated by a legal system that often favors the rich and well-connected in the world's fourth-most populous country.

It's a very important case because it has to do with freedom of speech, freedom of expression, said Todung Mulya Lubis, a prominent Indonesian lawyer and rights campaigner.

Concerns over the case have also become entwined in campaigning for a presidential election on July 8.

The application of the law has to be fair and transparent, Yudhoyono, who is currently favorite to win a new term, told a televised presidential debate last week.

A survey by Indonesia's anti-corruption agency in February found the judiciary was the most graft-prone public institution in the country, illustrated by cases where officials have been caught red-handed with suitcases stuffed with cash.

The legal system is also notoriously complex. In addition to codes dating from the Dutch colonial era, Indonesia has passed a blizzard of new local laws to allow greater decentralization.

Foreign companies have frequently become ensnared in controversial legal battles in Indonesia's courts.

A local unit of Canada's Manulife Financial Corp was declared bankrupt by an Indonesian court in 2002, despite being solvent. The Supreme Court later overturned that ruling.

Earlier this year, the Supreme Court reversed a 1 trillion rupiah ($97.13 million) libel ruling against Time magazine over an article alleging that Suharto and his family had amassed a $15 billion fortune.

The lengthy legal battle against the publication, owned by Time Warner Inc, was seen as a key test of the country's legal system and freedom of speech.

FACEBOOK CAMPAIGN

The Mulyasari case has struck a particular chord, with thousands of Indonesians signing pledges of support for her on sites such as Facebook.

The 32-year-old mother, who wears a head veil, comes across as an ordinary, middle-income mom doing her best to raise two young children in mainly Muslim Indonesia. She had accused Omni International Hospital of being unprofessional in its treatment of her, for what turned out to be mumps.

Her private e-mail to friends was later circulated on other internet sites, prompting the hospital to file a defamation case accusing her of damaging its doctors' reputation.

Mulyasari was initially fined $30,000 in a civil case and then jailed for three weeks ahead of a criminal case under a controversial information law passed in 2008 that means she could face up to six years in jail for spreading false news online.

Hadi Furqon, an official in Omni's legal department, declined to comment on the case since a legal process was ongoing.

The Electronic Information and Transactions Law is not the only recently passed law to attract criticism over how it may be applied. An anti-pornography bill, also passed last year, faced opposition over concerns it discriminates against minorities.

The huge public backlash over the Mulyasari case prompted all three presidential candidates to express support for her plight.

Yudhoyono summoned the attorney general to urge her release. Opposition leader Megawati Sukarnoputri visited a tearful Mulyasari in jail, while Vice President Jusuf Kalla, who is also running for president, lobbied the police chief.

Aided by the attention, Mulyasari was freed from jail and put under city arrest, although the criminal case continues.

Robert C. La Mont, Jakarta-based legal reform director at the Asia Foundation, said despite progress, real change in the legal system could perhaps take 10 years, given the amount of corruption, lack of central controls and need for legal reform.

The last few years have seen ongoing improvements but not enough to change the citizen's or industry's perceptions because the problems are so overwhelming, he said.

(Additional reporting by Olivia Rondonuw and Sunanda Creagh; Editing by Bill Tarrant)

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