Decentralization hurts business activities: Kadin
Decentralization hurts business activities: Kadin
JAKARTA (JP): The government's step toward financial
decentralization has encouraged regional administrations to use
their enhanced power to generate revenues rather than creating a
conducive environment for business activity, according to the
Indonesian Chamber of Commerce and Industry (Kadin).
Soy M. Pardede, the chamber's senior executive, said here on
Wednesday that the regional government's hunger for cash was
unhealthy for business activity.
He acknowledged that the regional administrations needed more
sources of revenue to finance their budget, but warned that the
overzealous actions aimed at imposing local taxes would backfire
on them.
"The autonomy should not only be used to raise revenue, but
more importantly it should be used to stimulate overall business
activity," he told The Jakarta Post on the sidelines of the
chamber's dialog with the government.
Minister of Industry and Trade Luhut Panjaitan and
Coordinating Minister for the Economy Rizal Ramli briefed the
businessmen about the government's economic policy during the
dialog, which was officially opened by Vice President Megawati
Soekarnoputri.
Deddy Suhajadi E.K., a senior executive of the chamber's East
Java chapter, said that many regency administrations in the
province had imposed a number of distribution taxes on goods
moving in and out of the regions to finance their budget.
The imposition of such local taxes had severely hurt the local
businessmen, especially those who carry out trade activities
throughout different regencies, he added.
"If every regency imposes distribution taxes for all goods
crossing their border, how much will traders have to pay for the
extra costs?" he said.
According to him, the chamber's East Java chapter has urged
the provincial administration to coordinate such tax collections
so that the local administrations' efforts to raise funds for
their budgets would not hamper trade activities.
Businessmen outside Java have also expressed similar concerns.
Indonesian Palm Oil Association (Gapki) chief Derom Bangun
said that some regency administrations had also imposed local
duties on palm oil crossing their borders.
An official from the chamber's Lampung chapter said that the
local administrations had introduced distribution taxes on all
goods entering from other provinces and those to be shipped or
delivered out of the provinces.
The products which are subject to the tax include coffee,
ginger and logs, he added.
According to him, the local Kadin chapter had asked the
Lampung administration revoke the tax payment, but the request
was rejected.
He added that the imposition of such taxes made the local
products unable to compete with the same products from other
provinces.
Kadin's Vice Chairman for Investment Affairs Bambang Sujagad
said that the regional administration's overzealous attempts to
boost their tax bases was normal.
"It's understandable as we just started (regional autonomy)
three months ago, but after that they must stop issuing new taxes
or they will be abandoned by investors," he added. (05)