Economists hail campaign against levies
Economists hail campaign against levies
JAKARTA (JP): Economists hailed the government's plan to further cut legal levies but also suggested that it fight against illegal "levies" to help boost Indonesia's economic competitiveness.
I Nyoman Moena, chairman of the Supervisory Board of the Local Private Banks Association, said on Saturday that the government was heading in the right direction by taking steps to eliminate levies which have no direct consequence on output.
However, Moena emphasized that the aim of this initiative would not be met if the government neglected the fight against corruption, which burdens businesses more than legal levies.
"On top of the legal levies, you have bribery and corruption; This can be found on roads, in offices or banks. And they irritate businesses more than the legal ones," Moena told The Jakarta Post.
He made the remarks after President Soeharto made a second call on the local administrations last Friday to revoke all rulings on levies which hamper economic growth. Soeharto warned that he would issue a presidential decree to enforce the reductions if moves were too slow.
"I totally agree with such a presidential decree as long as it is issued to slash levies not directly related to production and distribution," Moena said.
He suggested that the government maintain "important" levies such as those introduced to protect the environment, protect consumers, improve human resources development and raise local revenues.
Concurring with Moena's view, economist Mari E. Pangestu suggested that the government revoke obsolete or unclear levies and maintain necessary ones only.
"Don't eliminate levies for the sake of elimination only. Some levies exist for certain reasons," Mari told the Post on Saturday.
Mari, an executive at the Center for Strategic and International Studies, said local administrations often issue rules which require levies on certain business activities or commodity trading in order to collect the greatest possible revenues from local economic activities.
While apparently sympathetic to administrations' need to raise funds, Mari said that many of such official levies become burdensome to the businesses as they are often followed by unofficial levies.
"It is necessary to find the balance so that local administrations can raise funds without creating a high cost economy," Mari said.
According to some critics, the amount of funds levied locally on various goods is significant enough that it is causing market distortions and a high-cost economy.
Mari suggested that existing regulations on levies be made clear in themselves and, if necessary, completed with necessary explanations. Therefore, there will be no loopholes for officials to misinterpret and use them for their own end, and business people will know exactly what to do and how much they have to pay to comply with the regulations.
She noted that different interpretations of regulations on levies are an impediment to trade and investment in Indonesia as they create uncertainty in doing businesses here.
In fighting against corruption, Moena suggested that the government overhaul its administrative infrastructure so that corruption among officials and collusion between officials and business people can be minimized.
He said that making such fundamental changes in a system would require a comprehensive study. He suggested that the office of the state minister of administrative reforms carry out such a study. (rid)