City recovery program funds too small, say councillors

City recovery program funds too small, say councillors

Ahmad Junaidi, The Jakarta Post, Jakarta

The allocation of Rp 456.59 billion for the economic sector in
the 2003 draft city budget was too small and would not help to
revive the Jakarta economy, councillors said on Wednesday.

"The amount is not proportional. It will not support the
city's priority plans for this year's economic recovery program,"
councillor A. Rahman of the council's Commission D for
development affairs said.

With revenues standing at Rp 8.89 trillion, mostly contributed
by taxpayers, Rahman of the United Development Party (PPP) viewed
the Rp 456.59 billion allocation as being too small.

He questioned what he described as the inadequate allocation
for small and medium enterprises (SMEs), which amounted to about
Rp 26 billion compared to an allocation of Rp 136 billion for
public order officers.

"Our faction will demand that the city allocate more funds to
encourage economic activities," said Rahman, who is a former
executive of city-owned developer PT Pembangunan Jaya Ancol.

City Governor Sutiyoso officially submitted the draft budget,
which amounts to Rp 11.05 trillion, to the City Council on
Tuesday evening.

According to the draft, Rp 456.59 billion will be used to
finance the development of fish market facilities in Muara Angke,
North Jakarta, the management of street traders and SMEs, and
domestic and international tourist, industry, trade and
investment promotions.

The 2003 Annual Jakarta Development Plan (Repetada) did not
mention any incentives for encouraging business, besides programs
such as the renovation of industry and trade offices and the
construction of a trade promotion building in Klender, East
Jakarta.

Councillor Dani Anwar of the Justice Party supported Rahman,
saying that the city was not serious about the economic recovery
program.

"What can you expect regarding economic recovery with this
type of money," asked Dani, who is the secretary of the council's
Commission C for economic affairs.

He said his faction would urge the administration to allocate
more money for recovery programs.

But Ritola Tasmaya, the city secretary, said that the funds
for the recovery program amounted to more than the Rp 456.59
billion as there were other development funds allocated to each
of the agencies involved in helping restore the city's economy.

The Rp 11.05 trillion budget was made up of vehicle tax of Rp
2.7 trillion, hotel and restaurant tax of Rp 528 billion and
entertainment tax of Rp 20 billion.

The budget was also aided by revenue-sharing with the central
government with Rp 3 trillion coming from property and income
taxes and Rp 901 billion from the General Allocation Fund (DAU).

As this year's forecast revenue will only amount to Rp 8.89
trillion out of the overall budget of Rp 11.05 trillion, the
deficit would be financed by unspent funds amounting to Rp 2.2
trillion from last year's budget.

Many observers criticized the administration for raising the
budget to Rp 11.05 trillion from last year's Rp 9.7 trillion
given that it had not been able to use Rp 2.2 trillion from last
year's budget.

In order to reach it's revenue target, the administration
increased vehicle tax from 1 percent to 1.5 percent of vehicle
sale value.

It also increased the property tax last year by between 100
percent and 300 percent, depending on the location of the
property.

The administration has repeatedly said that the tax increases
were necessary under central government regulations. It earlier
said that vehicle and property tax formulae were applied
uniformly across the country.