Civil servants to get 50 percent salary hike

Civil servants to get 50 percent salary hike

JAKARTA (JP): The government and the House of Representatives
agreed on Tuesday to revise the draft 1999/2000 state budget to
allow for a 15 percent to 50 percent salary increase for civil
servants and changes in other expenditures.

Johny Alwi Banyo of the Golkar faction, who heads the working
committee on the draft budget, said the proposed changes would
increase the budget for the next fiscal year starting in April to
a balanced total of Rp 219.6 trillion (US$24.67 billion) from the
Rp 218.2 trillion initially proposed by the government in
January.

Johny said the salary hike of up to 50 percent was a drastic
change from the 10 percent to 20 percent raises earlier proposed
by the government.

He said the lowest ranking government officials would enjoy a
50 percent pay raise, while the highest ranked ones would only
receive a 15 percent increase.

Johny claimed the dominant Golkar faction influenced most of
the amendments to the draft budget.

During the 32-year authoritarian rule of former president
Soeharto, the House never changed the annual budget proposal and
always approved it after a few weeks of perfunctory debates.

"In the past, Golkar had always rubber-stamped the
government's state budget proposal. However, we have initiated
several significant changes in this draft budget."

The working committee -- consisting of House members and
senior officials of the finance ministry -- passed the revised
draft to be deliberated in the final debates at the House's
Commission VIII, in charge of state finances, on Wednesday.

The budget bill will then be passed for approval in a plenary
House session on Friday.

The government agreed to decrease planned expenditures by Rp
1.5 trillion, but to raise revenue targets by Rp 1.4 trillion,
Johny said.

This would allow for a Rp 2.6 trillion increase in routine
spending to Rp 137.15 trillion, which includes salaries and
retirement pay of civil servants and Armed Forces personnel,
Johny said.

"These changes will also result in a Rp 300 billion increase
to the Rp 147.5 billion initially appropriated for the
development of small and medium-scale enterprises and
cooperatives."

Johny said the working committee succeeded in lobbying the
government to decrease by Rp 1 trillion to Rp 17 trillion the
budget appropriation for the bank recapitalization program.

The Rp 17 trillion will be used to pay half of the Rp 34
trillion in interest on the bonds to be sold by the central bank
to recapitalize banks. The other half will be funded by proceeds
from the sale of assets seized from liquidated banks.

On the revenue side, the revised draft budget raises the
receipt target from the cigarette excise duty by Rp 800 billion
to Rp 10.16 trillion, as a result of planned changes in the duty
rates, Johny said.

Currently, hand-rolled clove cigarettes are taxed higher than
machine-made non-clove cigarettes, sparking complaints of
discrimination from small scale producers.

Johny said the nontax revenue target -- mainly dividends from
state companies -- would also be raised by Rp 700 billion to Rp
26.49 trillion.

However, the target of the value-added tax revenue will be
lowered by Rp 100 billion to Rp 34.59 trillion due to continuing
bleak business prospects.

Changes in several revenue items will increase the target of
total internal receipts by Rp 1.5 trillion to Rp 142.20 trillion,
Johny added.

Fundamental elements of the budget remain unchanged. They
include an average rupiah rate of Rp 7,500 to the dollar,
inflation of 17 percent and zero growth for the economy. (das)