Lawmakers criticize lack of stimulus in 2005 budget

Lawmakers criticize lack of stimulus in 2005 budget

Dadan Wijaksana, The Jakarta Post, Jakarta

The 2005 state budget proposed by the government has been seen
as lacking in stimulus measures, badly needed to help stimulate
the economy, some lawmakers said on Tuesday.

Speaking at a House of Representatives Budget Commission
hearing, lawmakers were unanimous in saying that the budget's
ability to provide stimulus was crippled by the huge public debt
servicing, which has eaten up to some 50 percent of central
government expenditure.

"It means we have to seek resources other than the budget to
provide stimulus such as investment. We can provide investors
with other forms of stimulus, for instance; better treatment in
tax issues, which is crucial for them. But the problem is, we are
also lacking in that area.

"So, while we cannot expect much stimulus from the budget
itself, we also do not have clear-cut measures to lure
investment, which could otherwise provide stimulus for the
economy," senior lawmaker Benny Pasaribu.

Under the proposed 2005 state budget, the government earmarks
Rp 63.9 trillion for interest payment of both domestic and
foreign debts. For the payment of principal of foreign and
domestic debts, some Rp 46.8 trillion and Rp 23 trillion have
been allocated, respectively.

The interest and principal debt payments total Rp 132.4
trillion, or close to half of Rp 264.9 trillion of the central
government planned budget next year, or almost twice the amount
set aside for development spending which stands at Rp 69.8
trillion.

Benny added that with the budget being heavily burdened by
debt servicing, the government should have thought of a clearer
way to lure investors, such as in terms of reform in crucial
issues like tax, customs and labor, and also consistency in
policy.

"All will work well to instill confidence in investors. Once
they come and invest here, that could serve as stimulus for our
economy."

Benny also told the forum he was among a small team of House
members who recently paid a visit to Japan, where a seminar on
Indonesia's economy was held.

"Many Japanese businessmen investing here complained about tax
issues, not just their complexity -- they said they even had
problems in filling out the self-assessed tax forms, but also the
lengthy bureaucratic channels," Benny said.

Another legislator, Simon P. Maurin, deplored the lack of
stimulus provided by the 2005 budget, but also urged the
government to be more serious in combating illegal practices --
be it in forestry, mining, maritime or other sectors -- so as to
minimize the potential losses of state funds, which could in turn
be used to strengthen the badly depleted state coffers.

"From illegal logging alone, we lose hundreds of trillions of
rupiah each year, and we've done virtually nothing about it. We
could have used the money to increase the budget's allocation for
development spending and social welfare," he said.

He was referring to the rampant illegal logging, with reports
showing that the country is losing a forest the size of Jakarta
within a week.