Hamzah wades into Autonomy Law debate

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.