Hamzah wades into Autonomy Law debate
Fabiola Desy Unidjaja, The Jakarta Post, Jakarta
Vice President Hamzah Haz called for immediate action on Wednesday to speed up investments in the mining sector so as to help the country break out of the prolonged economic crisis.
Speaking to journalists after meeting Hamzah, Minister of Energy and Mineral Resource Purnomo Yusgiantoro said the Vice President expressed concern over the delay of many contracts due to the confusing regulations applied after the implementation of the Regional Autonomy Law.
"The Vice President said there should be a compromise with the regional administrations as we already delegate the authority over mining to them, but on the other side investors still need guarantees from the central government," Purnomo said.
This is the first time Hamzah has commented on Regional Autonomy, considered by some recently, to be one of the major factors that hinders economic recovery.
The Autonomy Law, which went into effect 13 months ago, has become a thorny issue because several regencies have issued their own regulations without guidance from Jakarta.
Instead of luring new investors, the conflicting regulations between the regional administrations and the central government discourage investors.
One regional ruling has been annulled by the central government and another 14 are being reviewed as the rulings are said to have produced unacceptable tax burdens for mining companies.
The rulings were considered in conflict with the contracts of work awarded by the government to the companies and with the existing regulations issued by the central government.
The revoked regional ruling was Decree No. 5/2000 on coal tax issued by Tapin regency in South Kalimantan.
The ruling was declared invalid by the Ministry of Home Affairs, which is authorized to do so under the existing law, at the request of the Ministry of Energy and Mineral Resources.
Hamzah noticed that many investors wanted the central government and regional administrations to jointly sign all business deals because of the lack of confidence in the regional governments.
"Mining investors currently do not have enough confidence in the regional administration so they still need the central government as the guarantor of the deals," Purnomo remarked.
President Megawati Soekarnoputri repeated her displeasure with the law, saying that it had gone too far and endangered national unity.
The government is currently revising Law No.22/1999 on regional autonomy, despite protests by most regions on grounds that such a move would put too much power in Jakarta.
Law No. 22/1999 on Regional Autonomy is revised because the law contains rulings which allow regional administrations to become overly independent to the point that it threatens to produce national disintegration.