Govt urged to fix high-cost economy ahead of AFTA
Govt urged to fix high-cost economy ahead of AFTA
Adianto P. Simamora
The Jakarta Post
Jakarta
The Indonesian government must act swiftly to eliminate the
obstacles that have created a high-cost economy for local
businesses hoping to survive competition amid the looming
regional free trade area, experts said on Friday.
"This is a critical problem, the government must work all out
to help local businesses ... to save them from bankruptcy,"
Gadjah Mada University (UGM) economist Sri Adiningsih told The
Jakarta Post.
Several business associations have repeatedly called on the
Jakarta to take action -- in particular to curb illegal levies
and rampant extortions against businesses here.
Business owners and managers have also complained about the
high taxes imposed by newly empowered regional governments.
Sri said that both the legitimate and the illegal levies will
only exert upward pressure on production costs, rendering exports
less competitive against imports by the time the ASEAN Free Trade
Area is implemented in January 2002.
Thomas Darmawan, chairman of the Indonesian Food and Beverages
Association (GAPMI) said earlier that the number of levies had
been on the rise following implementation of the regional
autonomy law last year.
If this problem continues, he added, it would be difficult for
local businesses to compete with regional ones.
Thomas illustrated pointed to the example of truck drivers who
transport oranges from Medan to Jakarta.
A driver could pass at least 14 "check points" where he must
pay a levy of Rp 20,000 (about $2) at each point, he said, along
with another 28 subdistrict check points.
In addition, the driver must pay bribes to various groups
along the route to avoid trouble and further, a huge sum of money
at the ferry port in Bakauheni, Lampung, he added.
"Don't be surprised, upon arrival in Jakarta, to find that a
kilogram of oranges from Medan will be more expensive than those
imported from other countries," he said.
Meanwhile, Pande Raja Silalahi, an economist at the Centre for
Strategic and International Studies (CSIS), urged Jakarta to
review the regional autonomy law to keep regional governments
from taking unilateral action which could seriously hurt the
business sector.
The high cost of doing business here, he added, could be a
serious hindrance for local entrepreneurs hoping to compete in
the AFTA era.