KPEN proposes list of must-do actions to govt
KPEN proposes list of must-do actions to govt
The Jakarta Post, Jakarta
The National Economic Recovery Committee (KPEN), an influential
business lobby, has recently sent to the government a list of
actions the latter must do to speed up the pace of the country's
economic recovery.
The proposed actions are basically aimed at improving the
investment and business climate at home, which in turn should
help push economic growth.
"The priorities in the economic recovery agenda are
maintaining macroeconomic stability, reducing business
uncertainties and risks, as well as improving the investment
climate," said the KPEN letter, which was signed by its chairman
Sofyan Wanandi. This paper obtained the copy of the letter on
Wednesday.
It added that the business community was hopeful that the
government could take the recommendations into consideration in
drawing-up the country's post-IMF economic reform program to be
unveiled by President Megawati Soekarnoputri on Friday.
KPEN said a revival of the banking sector's intermediary role
was crucial to allow the corporate sector to benefit from the
current stability in macroeconomic indicators.
One way to do that was to push interest rates on bank loans
down to between 12 percent and 15 percent, so that the loans
would become more affordable to the business sector.
The macroeconomic picture has been relatively stable since
early this year as evident in the rapid appreciation of the
rupiah and benign inflation, but this positive development has
failed to translate into higher investment activities due to a
number of lingering problems and uncertainties.
As for ways to reduce uncertainties and risks for the business
sector, KPEN urged the government to accelerate the legal reform
program, cut red tape, eliminate illegal fees imposed on
businesses, improve security conditions, improve implementation
of regional autonomy, and resolve labor conflicts.
Those factors have created the high-cost economy, and further
eroded the country's business climate with investors and
businesspeople not receiving any incentives and even being
discouraged to do business here, the KPEN letter said.
Another important factor that can help improve the investment
and business climate is the reform of the country's taxation
system.
KPEN has also urged the government to provide tax amnesty to
encourage people to start paying their taxes in full.
Tax amnesty could serve as a motivation for tax-payers to
report all their assets, which could in turn boost state tax
revenue, KPEN added. "This can be done by introducing a one-shot
tax amnesty for assets collected until 2002."
KPEN also stressed the importance of providing sufficient
business infrastructure and to support economic activities, while
also highlighting the alarming level of smuggling activities in
the country.