City Council endorses 1998/99 austerity budget

JAKARTA (JP): The City Council yesterday endorsed the 1998/1999 austerity budget of Rp 2.79 trillion (US$279 million), a ten percent decrease on last year.

With the Council's endorsement, the budget now awaits approval from the Ministry of Home Affairs before it is officially passed in the form of city bylaw.

The bulk of the budget, Rp 1.7 trillion, is allocated for routine expenditure and the remaining Rp 1.09 trillion for development.

Council speaker Edy Waluyo said that the tight budget should prompt the city administration to step up its supervision of spending to make the money go further.

The enactment of a 1997 law cutting the number of local taxes and levies has resulted in a significant revenue loss for the city, he noted. The law cut the number of local taxes from 42 to nine and the number of levies from 192 to 30. Among the sources of revenue affected are parking levies and taxes on foreigners.

The budget projects that revenue collected by the city will fall 15.68 percent to Rp 1.72 trillion this fiscal year.

The rest of the budget will be made up by the central government, non-tax revenue, development revenue, loans worth Rp 990.6 billion, and Rp 81.35 billion carried over from this year's budget.

The budget was prepared assuming zero economic growth and inflation of 25 percent throughout the next fiscal year.

To help cope with the smaller budget, the Golkar faction has suggested the administration merge companies under its control which have similar core business interests.

The faction head, Fatommy Asaari, said that mergers would create more efficient enterprises.

"The step to merge should be taken to improve efficiency. We have too many companies that need lots of support to survive. Merger is necessary to minimize expenditure and maximize benefits," he said.

After merger, the companies would be expected to pay more money in tax because they would become more profitable, he added.

Fatommy said that PD Wisata Niaga Jaya, PT Pulo Mas Jaya and PD Pembangunan Sarana Jaya had similar core interests and were suitable for merger, as did the management boards of Sunter and Pluit which oversee housing, storage and licensing of development projects.

Lukman Mokoginta, chairman of the Indonesian Democratic Party faction told reporters that the new city budget was efficient in all sectors.

He added that the idea was to merge city-owned companies which faced difficulties and were on the verge of bankruptcy.

"Mergers will be very helpful for the city... because we will be able to save a lot of money," he said.

If companies merge, all of their assets, management and corporate planning must be rearranged for their benefit, Lukman said.

"There must be new management with new blood...to boost the businesses," he said.

Meanwhile, head of Commission B on Economic affairs Djafar Badjeber told The Jakarta Post that the tight budget did not necessarily mean that the city could not boost its tax revenues.

"The city can, for instance, increase the amount of taxes and levies collected from hotels and restaurants. Many of them do not yet pay their full taxes."

He cited several types of street restaurants, such as Padang and Tegal, which can earn up to Rp 5 million per day free of taxes.

"I urged the municipality to intensify tax collection and abolish collusion between officials and businessmen who mean to evade taxes," he said. (edt/ind)

Table: 1997/1998 city budget and 1998/1999 city budget (Rp million)b

(No.; LIST REVENUE; 1997/1998; 1998/1999): (1.1; Surplus in the previous year; 136,515; 81,345), (1.2.; Locally Generated Revenue; 2,045,461; 1,721,044), (1.2.1.; Regional Tax; (1,633,910); (1,481,778)), (1.2.2.; Regional Levies; (296,210); (164,492)), (1.2.3.; City-owned company profit; (61,391); (42,046)), (1.2.4.; City's agencies; (6,288); -), (1.2.5.; Other revenues; (47,661); (32,727)), (1.3.; Tax & Non-tax Revenue; 402,470; 475,092), (1.3.1.; Tax Revenue; (366,170); (438,792)), (1.3.2.; Non-tax Revenue; (36,300); (36,300)), (1.4.; Charity & Donation; 442,182; 442,182), (1.4.1.; Donation; (347,154); (347,154)), (1.4.2.; Charity; (95,028); (95,028)), (1.5.; Development Revenue; 91,175; 73,325), (1.5.1.; Loan from World Bank; (91,175); (73,325))

(NET REVENUE; 3,117,805; 2,793,000), (Cash Affairs and Calculation; 137,778; 141,440), (GROSS REVENUE; 3,255,584; 2,934,440).

(No.; LIST EXPENDITURE; 1997/1998; 1998/1999): (2.1.; Deficit in the previous year; -; -), (2.2.; Govermental Public Affairs; 1,176,043; 1,135,283), (2.3.; Public Works; 188,642; 182,001), (2.4.; Land & River Transportation; 24,005; 25,866), (2.5.; Public Health; 69,852; 62,526), (2.6.; Education & Culture; 52,046; 46,400), (2.7.; Social, Housing & Manpower; 17,494; 14,697),

(Development Expenditure; 1,306,935; 1,086,272), (EXPENDITURE (NETTO); 3,117,805; 2,793,000), (Cash Affairs & Calculation; 137,778; 141,440), (EXPENDITURE (BRUTO); 3,255,584; 2,934,440)

Source: Jakarta Municipality