Local govts told to drop planned tax on waste
Moch. N. Kurniawan, The Jakarta Post, Jakarta
The central government has asked a number of provincial administrations to drop their plan to impose taxes on industrial waste, unless they built a waste treatment plant.
The local governments include Riau, East Kalimantan, West Nusa Tenggara and North Sulawesi, where big mining companies are located.
"As the regional administrations have not yet built waste treatment facilities, they can't just impose industrial waste tax on firms," Yanuardi Rasudin, deputy assistant in charge of Mining, Energy, Oil and Gas at the Office of State Minister for the Environment, said on Friday.
If they go ahead with the planned tax, they will violate the government regulation No. 82/2001 on water quality management and water pollution control that only allows the imposition of taxes on industrial waste when firms use waste treatment provided by the regional administration, he added.
According to Yanuardi, as far as he knew, Riau, East Kalimantan, West Nusa Tenggara and North Sulawesi administrations had held talks with several companies to implement their industrial waste tax plan.
He said, for example, West Nusa Tenggara administration had talked with gold mining company Newmont Nusa Tenggara on the planned industrial waste tax.
The central government introduced the regional autonomy law in 2001 to give more power to local governments in managing their economy.
But the regional autonomy has become one of the major causes of the stalled investments in the country as many regional administrations have issued various decrees for a wide variety of abstruse taxes to collect revenue from firms.
Red tape imposed by the newly empowered local administrations, and illegal fees charged by corrupt officials have reportedly also exacerbated problems for further investment.
Bambang Brojonegoro, an economist at the University of Indonesia, said early this year the additional cost of doing business outside Java had reached 11 percent (of total production costs), while in Java, except for Jakarta, it had reached 10 percent.
"In the past, businesses only had to cope with central government bureaucracy. But now they also have to deal with the local bureaucrats.
"This double billing could make investors pack their bags," he warned.
Foreign direct investment (FDI) approvals plummeted by 35 percent to US$9.7 billion last year from $15.06 billion in 2001.
A grimmer picture is revealed by the 57 percent drop in domestic investment approvals to Rp 25.26 trillion (US$2.8 billion) compared with Rp 58.62 trillion in 2001.
The government is now in the process looking into possible revisions of the regional autonomy law.