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)