Local autonomy creating high-cost economy<\/p>\n
Arya Abhiseka, The Jakarta Post, Jakarta<\/p>\n
The chaotic implementation of local autonomy policies could
\nbecome a threat to the nation's economy as they are creating a
\nhigh cost economy and deterring new investment, an expert has
\nargued.<\/p>\n
Bambang Brojonegoro, an economist at the University of
\nIndonesia, said on Thursday that the higher cost of doing
\nbusiness was mainly the result of red tape imposed by the newly-
\nempowered local administrations, and illegal fees charged by
\ncorrupt officials.<\/p>\n
He said that according to a survey conducted by his
\nuniversity, the extra cost of doing business was more evident in
\nareas outside the capital.<\/p>\n
"The additional cost of doing business outside Java has
\nreached 11 percent (of total production costs), while in Java,
\nwith the exception of Jakarta, it has reached 10 percent," he
\nsaid.<\/p>\n
Bambang explained that the extra costs mainly arose from
\npayments for bureaucratic services and illegal fees.<\/p>\n
"In the past, businesses had only to cope with the central
\ngovernment bureaucracy. But now they also have to deal with the
\nlocal bureaucrats," he said.<\/p>\n
"This double billing could make investors pack their bags," he
\nwarned.<\/p>\n
The central government introduced the autonomy policy in 2000
\nto allow local governments to manage their own economic affairs.
\nThe move was part of an effort to accelerate economic development
\nin the regions and to help cope with the disintegration threat
\nfrom rich provinces.<\/p>\n
But the implementation of local autonomy has shocked many
\ninvestors as local governments have been excessively aggressive
\nin exercising their new administrative powers, particularly as
\nregards collecting local taxes.<\/p>\n
This problem is seen as one of the major factors scaring
\ninvestors away.<\/p>\n
Foreign direct investment (FDI) approvals plummeted by 35
\npercent to US$9.7 billion last year from $15.06 billion in 2001.
\nA grimmer picture is revealed by the 57 percent drop in domestic
\ninvestment approvals to Rp 25.26 trillion compared with Rp 58.62
\ntrillion in 2001.<\/p>\n
The government is now in the process of revising the existing
\nlocal autonomy law.<\/p>\n
Bambang said that the higher cost of doing business in the
\nregions was hurting small and medium enterprises in particular as
\nthey had less bargaining power in dealing with the bureaucrats.<\/p>\n
"Aside from that, manufacturing industry also suffers the most
\nfrom the levying of illegal fees," he said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/local-autonomy-creating-high-cost-economy-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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