Mixed reactions to deregulation package

JAKARTA (JP): Businesspeople and legislators highly welcomed yesterday the new reform package which slashes local taxes and levies and import tariffs in a substantial effort to reduce the cost of doing business.

But they criticized the exclusion of the automotive sector from the tariff reduction measure and the ban of new loans for land acquisition and land development.

Indonesian Chamber of Commerce and Industry chairman Aburizal Bakrie praised the package as "relatively more progressive" than the previous one since it also covered the basic issues of local taxes and fees.

"We are happy that the government further cut import tariffs and local taxes and levies," said Aburizal on the sidelines of the Asia-Europe Business Conference.

The package cut the number of local taxes from 42 to nine and local fees or levies from 192 categories to 30 categories and reduced tariff rates on 1,461 industrial goods, 136 agricultural products and three health products.

Aburizal, however, warned against new levies which might be created by local administrations to replace the ones revoked.

"We sincerely hope that local administrations will not create new levies to replace the old ones as they have in the past," said Aburizal, adding that Indonesians were quite innovative in creating illegal levies.

In announcing the package of deregulation Monday, Coordinating Minister for Economy and Finance Saleh Afiff said local taxes and levies/fees would be levied only with the approval of the Ministry of Home Affairs after consultation with the Ministry of Finance.

An economist from Ujungpandang's University WIM Poli, said the deregulation package should be supported with a strong drive to improve the corrupt mentality of government officials who were partly responsible for the high-cost economy.

Poli said the lower tariffs would mean little in reducing costs if officials continued exhorting illegal payments from businesses.

Legislator Imam Churmen welcomed the liberalization of imports of used fishing and cargo vessels, saying this would help develop the country's freighter services, support trade and the fisheries industry.

Minister of Industry and Trade Tunky Ariwibowo said the government had given enough time for domestic shipbuilders to meet market demand (by banning the importation of used ships) but they had failed to use that opportunity.

The measure which allows sugar mill owners to import raw sugar, which was previously monopolized by the National Logistics Agency, for refining was also hailed by analysts.

Aburizal greeted the simplification of export tax on palm oil and the reduction of export tax rates to a range of 2 percent to 5 percent from a 10 percent to 20 percent previously as a boon to the palm oil industry. (jsk/pwn/31)

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