Barrier to exports<\/p>\n
Anyone intending to exploit the huge potentials of the export
\nbusiness in Indonesia may want to ask themselves if they have the
\nstrength and stamina to overcome the frustration they will
\nencounter from mounting bureaucracy.<\/p>\n
They should take their cue from the Ministry of Industry and
\nTrade's Director General of International Trade Anang Fuad Rivai.
\nDuring a hearing with the House of Representatives on Tuesday,
\nAnang disclosed that an exporter in Indonesia currently has to
\npay at least 4,396 different levies, imposed at various levels,
\nfrom the mayoralty and regency administrations to central
\ngovernment agencies in Jakarta. These are official levies for
\nwhich official receipts are issued. There are also illegal
\nlevies, the number and total amount of which are close to
\nimpossible to ascertain.<\/p>\n
Anang's disclosure is still astonishing, if not disturbing,
\nalthough everyone in the business knows very well that levies,
\nofficial or otherwise, are rampant in Indonesia. Anang did not
\ndisclose how these nearly 4,400 levies affect the competitiveness
\nof our exporters. The Indonesian Chamber of Commerce and Industry
\nsaid earlier this year that the amount of levies -- both legal
\nand illegal -- could add up to 27 percent of production costs.<\/p>\n
Those already in the export business, or any business for that
\nmatter, have managed to live with these thousands of levies by
\nincorporating them as part of the cost of doing business, and
\npassing the extra expense onto consumers. But this reality is
\ncertainly a major deterrent to newcomers to the export business.<\/p>\n
Until early this year at least, exporters as well as other
\nentrepreneurs largely kept silent about the problems of business
\nlevies. The deregulatory packages, including debureaucratization
\nmeasures, introduced by the government since 1983, have managed
\nto bolster the economy and boost non-oil exports, giving
\nbusinesses hardly any grounds for complaint. The local and
\ncentral government agencies continued to charge the levies, which
\nproved to be major sources of revenue, and businesses continued
\nto pay them. It was a win-win situation where everyone gained and
\nno one lost.<\/p>\n
Conditions, however, have changed. In the last two years,
\nIndonesian exports have slowed down and the growth of imports are
\noutpacing exports, slashing the huge trade surplus that once
\nacted as a cushion in our balance of payments. This is occurring
\nwhile Indonesia has barely caught up with the newly
\nindustrialized countries like Malaysia and Thailand, yet it is
\nfast losing its competitive edge to newcomers in the world market
\nlike China, Vietnam and India. The closing down of many textile
\nand garment plants this year is one indication of Indonesia's
\ndeclining competitiveness in industries traditionally reserved
\nfor developing countries that rely on cheap labor.<\/p>\n
Ironically, entrepreneurs only began making noises about
\nrampant business levies early this year after the government
\ninstructed them to raise their employees' wages. They argue that
\ngiven the fierce competition in the export market, raising the
\nsalaries of their workers would raise costs which in turn would
\nrender them uncompetitive. However, if the government does
\nsomething about the levies, then they could grant the pay hikes
\ndemanded by the government. No wonder it was Minister of Manpower
\nAbdul Latief who took the initiative in February and campaigned
\nfor the scrapping of business levies. Coordinating Minister for
\nProduction and Distribution Hartarto later picked up the cause.<\/p>\n
Sadly, after many promises to look into the matter, the
\nslashing of levies was not included in the deregulation package
\nannounced last month. This probably indicates just how deeply
\nrooted the problem of levies has become: that various government
\nagencies have become dependent on them for revenue and there is
\nno clear prospect of replacing them if they are scrapped.<\/p>\n
Given the worrying trend of our export and import figures,
\nsomething must be done soon. The biggest barrier to export growth
\nnow is no longer the lack of skilled labor or lack of
\nentrepreneurship. It is now apparent that the government is the
\nproblem. After so many trade liberalization measures, including
\nslashing tariffs, Indonesia's options to stay competitive in the
\nworld markets have become fewer. The next package of economic
\nderegulations should target business levies which have largely
\nremained untouched and tolerated to this day.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/barrier-to-exports-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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