Mixed reactions to deregulation package

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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