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.