BPKP assigned to audit impact of deregulation

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)