Levies rampant in provinces
Levies rampant in provinces
JAKARTA (JP): If you want to do business in East Java, be prepared to pay 22 different levies. If you plan to enter the lucrative forestry industry, it is 32 levies and in the sugar industry the number is 14.
These are just the official levies. On top of that you still have to pay various unofficial levies.
These were just a few of the startling revelations made during a meeting between business leaders and seven cabinet members yesterday as the two sides discussed ways of phasing out unnecessary levies and make the country's business community more globally competitive.
Yesterday's was the second round of talks organized jointly by Minister of Manpower Abdul Latief and the Indonesian Chamber of Commerce and Industry (Kadin) over the past month.
With pressure mounting for Indonesian manufacturers to compete with foreign producers at home and abroad, the business community has been pressing the government to start dismantling many of the official, as well as unofficial, levies that have burdened them for many years.
Present at the meeting were representatives from Kadin's 23 provincial chapters and 70 business associations. Nine people raised some of their complaints in the two-hour meeting at Latief's office.
The government was represented by Coordinating Minister for Production and Distribution Hartarto, State Minister of National Development Planning Ginandjar Kartasasmita, Minister of Industry and Trade Tunky Ariwibowo, Minister of Tourism, Post and Telecommunications Joop Ave, Minister of Transportation Haryanto Dhanutirto, Minister of Agriculture Sjarifudin Baharsjah and Latief. Kadin Chairman Aburizal Bakrie and his Advisory Board chief A. Baramuli were also present.
Latief, a former businessman, has led the campaign to phase out as many levies as possible.
His interest however goes beyond just helping old friends. He has argued that the huge "invisible" costs that companies have been paying come at the expense of depressing wages of their workers, a complaint he repeatedly heard every time he raised the minimum wage levels since 1993.
Muchayat, chairman of Kadin East Java, said anyone intending to do business in his province must be prepared to pay 22 different kinds of levies.
A manufacturing company, he said, must fork up to Rp 50 million just to draw up an environmental impact analysis report.
Some of the worst levies are found in Tanjungperak port, such as paying to use a crane to lift goods, to use containers, the 60% premium for electricity use, and parking charges and getting goods in and out of the port.
"How can we compete with foreign producers if we are faced with such problems in the distribution. The problem is generally found in every port," Muchayat said.
He said there are also levies charged by the Agrarian Affairs Office in East Java for manufacturers in setting up their plants, the size of which varies according to the size of land they occupy.
Sukardi, a representative of the Association of Forestry Concession Holders, counted no less than 32 official and unofficial levies in the forestry sector, imposed on virtually every stage of the process, from cutting trees, transporting the logs and even to the payment of local police and prosecution officers.
He also questioned the Rp 500,000 to Rp 1 million fee a company has to pay the local office of the Ministry of Manpower each time it renews its collective labor agreement with workers.
Said Umar Husin, representing the Association of Indonesian Hotels and Restaurants, said companies in the leisure and tourism industry are not spared from business levies.
He cited as an example the Rp 350,000 a hotel has to pay each month to the local Highway Traffic Agency just for putting up sign boards on main roads indicating the way to its hotel.
A representative of the Association of the Sugar Producers said if the 14 levies his member had to pay were abolished, Indonesia could be well on its way to become self-sufficient in sugar.
Hartarto promised to look into the complaints and study them with other members of the cabinet.
He said the government's team which has prepared the deregulation packages in recent years will take up the matter.
The team is headed by Coordinating Minister for Economy and Finance Saleh Afiff and its members include Hartarto and Tunky. (rms)