Local govts' port plans cause jitters

Tony Hotland, The Jakarta Post/Jakarta

Local governments have recently triggered a fresh controversy in the business community in the exercise of their powers under the local autonomy law.

This time, a total of 57 regents and mayors -- joined in what they call the Balikpapan Declaration Forum -- plan to take over the management of seaports in their respective jurisdictions from the hands of state-owned seaport operator PT Pelabuhan Indonesia (Pelindo).

Law No. 22/1999 on Regional Autonomy is their sword, something that could become more dangerous as the Supreme Court has also granted a judicial review of Presidential Decree No. 69/2001 on the management of seaports.

Articles 7 and 10 of the Autonomy Law stipulate that local administrations have the right to manage and make plans for the use of economic resources within their jurisdictions.

But officials at the Ministry of Communications, which oversees the seaport sector, are refusing to accept these powers until a final pronouncement on the seaport management decree is handed down by the Supreme Court.

Coordinating Minister for the Economy Dorodjatun Kuntjoro- Jakti and a number of experts also oppose the moves by the local governments to takeover seaports.

They say that local administrations are still incapable of managing major assets like seaports, and they fear that the ports could go bankrupt as a result of bad management.

Others have asserted that the root of the problem lies in the Autonomy Law, and have urged that amending the law be made a priority. Otherwise, they say, investors will shun Indonesia in the future.

Ever since its enactment, the Autonomy Law, with what appears to be many conflicting articles, has been a constant complaint among investors.

Investors are confused as they have to go through knotty red tape all the way from the central government level down to the local administration level.

One example is the reluctance of investors to put their money in industrial forests because securing a license from the central government often turns out to be far from enough.

Investors still have to pass through costly layers of bureaucracy at the local level, with local administrations claiming they have full powers under the Autonomy Law. On top of that, there is also the problem of local communities who claim that they have ancestral rights to forests.

The government has taken action by bringing the Autonomy Law, and Law No. 25/1999 on fiscal balance, back to the House of Representatives for amendment. However, conclusion is still a long way off, and the unfavorable consequences of these laws keep on multiplying.

Chris Kanter, the deputy chairman for investment, transportation and communications at the Indonesian Chamber of Commerce and Industry (Kadin), said the seaport case was yet another example of how the country was being deprived of the new investment it badly needed.

"This kind of thing definitely makes investors wishing to invest in seaports, or whose businesses use seaports, become hesitant. They need to know where the powers lie," Chris told The Jakarta Post over the weekend.

Chris added that the government should also review the operation of seaports in the regions as the demands of the local administrations must also have been triggered by dissatisfaction.

"And by the way, a group of 57 local administrations trying to expropriate seaports? That's bad news for investment," he affirmed.