BPKP assigned to audit impact of deregulation
JAKARTA (JP): Vice President Try Sutrisno has asked the Development and Finance Comptroller (BPKP) to audit the implementation of deregulatory measures in investment activities, Minister for Investment Sanyoto Sastrowardoyo said here yesterday.
He said that the audit was designed to help ensure that the packages of deregulation policies are implemented properly.
"BPKP is now auditing the October 1993 deregulatory package and we hope the comptroller will soon report the findings," Sanyoto, who is also the chairman of the Investment Coordinating Board (BKPM), said in a hearing with members of the House of Representatives.
The government issued a deregulatory package in October 1993 which simplified the licensing procedures for investment. The measure, which significantly cut red tape on provincial and regency levels, was aimed at reducing the time needed for obtaining licenses to 17 days from 42.
Before the introduction of the so-called Pakto deregulatory measure, investors were required to obtain a number of recommendation letters from the provincial and regency administrations in order to get permits for land appropriation and clearance for their projects. Investors also had to obtain permits related to public nuisance and environmental impact analyses before starting their projects, even if the investment board had already awarded them a license.
Investors were henceforth only required to obtain permits for the construction of their factory and for the location of the projects.
However, the deregulation measure has not had the desired effect, as many government agencies on both provincial and regency levels are still making various demands on investors.
Sanyoto said his office, in cooperation with other related government agencies, such as the office of the coordinating minister for production and distribution and the ministry of home affairs, is also conducting a field study into the shortcomings of the 1993 deregulatory package.
"The field survey is designed to find out what is really happening in the provinces with regard to licensing procedures," he said.
The BKPM, he added, is also studying the possibility of providing a one-stop investment service for local permits in provincial capitals, in order to stimulate investment outside Java.
No panacea
Sanyoto said a one-stop system could save investors a lot of time and trouble in acquiring local permits for their investment ventures.
But he conceded that streamlined licensing procedures are no panacea for stimulation of investment in the provinces, especially in the eastern part of the country.
"Other incentives such as those related to taxes and bank loans are much more useful to attract investors to those remote areas," he said.
Tax incentives for investors who have to put in basic infrastructure to support their projects in the least developed eastern provinces would help spur investment in those islands, he said.
The realization of foreign investment projects (outside those in the mining sector) in the least developed parts of eastern Indonesia between 1967 and August, 1996, reached a total of US$5.72 billion, 75 percent of the cumulative investment approvals of $7.64 billion. In terms of the number of projects, the implementation rate in the same period was 67.76 percent.
The realization of domestic investment projects was 31 percent of the cumulative investment commitments of Rp 48.16 trillion and 84 percent in terms of the number of projects. (hen)