City's economic growth minus 2.74%

JAKARTA (JP): With a solution to the devastating economic crisis still out of sight, the city government reported yesterday that growth in Jakarta's economy had fallen to negative 2.74 percent.

Deputy Governor for Economic and Financial Affairs Harun Al Rasyid said the economic turmoil had crippled business activities and slashed tax revenues.

Revenue from taxes on vehicle sales and the entertainments business, the city's largest sources of income, have dropped sharply.

"Unlike other provinces, we don't have natural resources to augment locally generated income. In times of crisis, vehicle and entertainments revenues are badly affected.

"To cope with the crisis, the five mayoralties should do their best to shore up tax revenues. They should not hesitate to collect even small change to finance development," he said.

The city's locally generated revenues are expected to fall 15.86 percent to Rp 1.72 trillion (about US$215 million) in the 1998/1999 city budget, down from Rp 2.03 trillion.

The drop in revenue is also partially due to the enforcement of Law No. 18/1997 on tax and regional levies, which stops the city collecting a number of taxes and levies, including parking fees and a tax on foreigners.

Under the law passed by the House of Representatives (DPR) in April last year, the central government has cut categories for local taxes from 42 to nine and categories for levies from 192 to 30.

Next financial year's budget has been prepared assuming zero economic growth and 25 percent inflation in Jakarta.

Harun said that the zero percent growth was set "so that business in the city can still operate", although it cannot expand.

In fact, the city should not have a big problem financing development, provided the budget was used optimally and leakages controlled, Antara reported the official as having said.

He asked city officials to end corrupt practices so that the city revenues could be used for the purposes they were intended and not end up in officials' back pockets.

"I know that corrupt activities take place, but let us in this time of crisis work hard for the administration," he said.

Subdistricts heads have also been asked to inform the city administration of potential sources of income in their respective areas.

Harun said that 10 percent of taxpayers had failed to pay their dues this month.

Meanwhile, Bambang Sungkono, chief of the city's inspectorate office, said that the administration would intensify supervision of development projects to minimize corruption.

The supervision, he said, would focus on preventing collusion between project managers and contractors.

"Contractors on city development projects often have to pay illegal levies", he said. (ind)