Decree centralizing investment seen as setback

Decree centralizing investment seen as setback

Dadan Wijaksana, The Jakarta Post, Jakarta

The recent presidential decree which centralizes the issuance of
permits for investment under the Investment Coordinating Board
(BKPM) reflects not only a lack of creativity on the part of the
government in streamlining the bureaucracy, but is also
detrimental to the spirit of the long-sought regional autonomy.

While a clear-cut policy is badly needed to improve the
investment climate, scrapping the power of the regions in that
area is the wrong formula, according to the head of the Regency
Administrations' Association (Apkasi) Syaukani HR and senior
legislator Rizal Djalil.

"The government should instead set up a better formula for
coordination between the regions and the investment agency, so
investor' confusion over the long and often contradicting
procedures, can be reduced.

"That's the essence of decentralization, synchronizing things
between the central and regional governments. The decree only
reflects the government's frustration in trying to seek a
solution to this dilemma," Rizal Djalil of the House of
Representatives said on Friday.

President Megawati Soekarnoputri issued a decree early this
week centralizing permits and other investment service facilities
under the BKPM, setting up what it called an investment service
"under one roof".

It abolishes the power of regional administrations --
governors, regents and mayors -- granted by previous rulings, to
determine their own policies on investment in their respective
regions.

The regulations that had granted such powers: Law No. 22/1999
on regional government, and Government Regulation No. 25/2000 on
the authority of the central government and regions -- all led to
the enactment of the Regional Autonomy Law in 2001, giving more
authority to regions to draw up and implement their own policies.

The new decree aims to boost flagging investment in the
country, particularly foreign investment, due largely to the
adverse climate here with concerns over security and political
uncertainty, bureaucratic red tape and confusion over
decentralization.

"In a bid to attract investors more effectively, it is deemed
necessary to streamline the investment service system through a
one-roof investment service facility," the decree said.

However, Syaukani, who is also the regent of Kutai Kartanegara
in East Kalimantan, attacked the decree as the latest sign of the
government's arrogance toward the regions.

"It's a huge setback. The government is no different to what
we had in the New Order era, where everything was centralized.
What's the point of having a decentralization program if these
things continue to happen," he asked.

Moreover, Syaukani questioned the validity of the decree, as
it contradicts earlier regulations on regional autonomy and
regional government laws that are actually a higher instrument in
the legal hierarchy of regulations than a presidential decree.