The eastern region<\/p>\n
More than five years after President Soeharto's call for a
\nmore concerted, comprehensive development program for the eastern
\nregion, the least developed part of the country, the government
\nhas finally come up with a concrete scheme. The program, as
\nannounced by State Minister for Research and Technology B.J.
\nHabibie in his capacity as the chairman of the Eastern Indonesian
\nDevelopment Council, two weeks ago, will be implemented through
\nan integrated economic development center. Biak town in Irian
\nJaya, the easternmost province, was chosen as the pilot project.<\/p>\n
The town and the surrounding area will be treated as a bonded
\nzone where import tariffs are deferred or waived, income tax
\nsharply reduced, value added tax waived, deductions from taxable
\nincome eased and licensing procedures and the number of permits
\nneeded for establishing businesses sharply reduced. The town will
\nthen serve as a growth pole for its surrounding areas from which
\neconomic activities will spill over to other districts in the
\nprovince.<\/p>\n
The tax incentives and looser regulatory procedures are
\nobviously granted to woo domestic and foreign private investors
\nto tap the rich natural resources in the remote, least-developed
\nprovinces. The extreme lack of basic infrastructure and the small
\nmarket have made the eastern region -- the provinces in Sulawesi,
\nNusa Tenggara, Maluku and Irian Jaya -- less attractive to
\ninvestors because the capital costs and the costs of doing
\nbusiness in these provinces are much higher than those in the
\nmore advanced western region.<\/p>\n
The new package of incentives and measures is encouraging in
\nthat it will not be implemented as a standard program for all the
\neastern provinces. One of the mistakes often made by policy
\nmakers under so centralized an administration system as
\nIndonesia's is the tendency to apply a standard package of
\nmeasures indiscriminately to all areas. The appointment of Biak
\nas a pilot project reflects the recognition of the wide diversity
\nwithin the eastern region itself. This awareness will hopefully
\nresult in the formulation of both a standard set of incentives
\nand also province-specific packages of policy measure.<\/p>\n
Another factor which the central government has long been
\nfully aware of, but which remains a major missing link within its
\ndevelopment policy, is the decentralization of decision-making.
\nThe incentives as described above will not be that effective as
\nlong as almost major decisions regarding business permits and
\npolicy implementation are taken in Jakarta or even in the
\nprovincial capital.<\/p>\n
But decentralization requires something which not many in the
\ngovernment are willing to do -- the divestiture of power. The
\ncentral government should share its power and authority with the
\nlocal autonomous administrations and institutions to solve
\nproblems as close to their roots as possible.<\/p>\n
There is another caveat whenever the government offers
\nincentives or tax breaks. It is often overly concerned about the
\npotential for abuses that it tends to make procedures for
\nobtaining the incentives so arduous and complex that the benefits
\nof the offered incentives are nullified.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/the-eastern-region-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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