New deregulation package receives mixed reactions
New deregulation package receives mixed reactions
JAKARTA (JP): The new package of deregulation measures
announced by the government yesterday received a mixed reaction
from businessmen, analysts and legislators.
The Association of Indonesian Textile Manufacturers and the
Federation of All Indonesian Importers said that the package of
deregulatory measures failed to touch the key problem of the
country's export-oriented activities.
Benny Soetrisno, secretary-general of the textile association,
said that the measures, which include the elimination of
restrictions, tariffs, duties, levies and taxes on imports of
goods for export-oriented companies, benefited only certain
business sectors.
"It will have no major impact in improving the competitiveness
of the country's high-cost textile industry," he told Antara when
asked to comment on the newly issued deregulation package, which
also includes the reduction of value added taxes on imports of
fishing, commercial and commuter vessels.
But Benny acknowledged that the textile industry would be able
to save at least Rp 6 billion (US$2.6 million) per annum from the
elimination of the stipulated levies.
But he said that such a measure would not be able to make the
country's textile industry strong enough to compete in foreign
markets.
Amiruddin Saud, chairman of the Association of All Indonesian
Importers, shared Benny's view on the likely impact of the
deregulation.
He said that the reduction of value added tax on imports of
raw materials, for example, did not extend to items needed for
large-scale industries.
"The cut of the import taxes, for example, does not include
the raw materials for chemical-related products," he noted.
Shipping
Unlike Benny and Amiruddin, businessmen in the shipping
industry warmly welcomed the economic measure, which also
included the cut in tax on imports of fishing and commuter ships.
Barens T. Saragih, the secretary general of the Association of
National Shipping Companies (INSA), said that the association has
fought for a long time for the elimination of the value added tax
on imports of fishing and passenger ships.
The immediate impact of the deregulation move, according to
Barens, will be the homecoming of Indonesian ships which are now
registered overseas to escape high levies at home, Benny said.
"We hope the deregulation will make Indonesia the real host to
the local shipping companies," he said.
Firdaus Wadjadi, president of shipping firm PT Pakarti Tata,
said that the new deregulation would not only encourage shipping
business at home but would also create job opportunities in the
shipping service.
He hoped the government would also scrap the tax imposed on
ships' crews in the future in order to strengthen the competitive
advantage of the domestic shipping industry.
"In other countries, crews receive special tax treatment," he
noted.
He said an improvement in the business climate would boost the
overall shipping activities and, as a consequence, the country
would be able to receive more foreign exchange from the increased
activities.
Legislators also have expressed varying reactions to the
deregulation announcement.
Tadjuddin Noer Said, of the Budgetary Commission of the House
of Representatives (DPR), said that the government should also
adopt similar policies on other business activities such as
agriculture and employment.
He said the low minimum-wage policy adopted by the government
to improve the comparative edge of the country's industries
should be reviewed.
"Companies should, for example, be encouraged to improve labor
skills rather than imposing low wages in their efforts to improve
their competitiveness," he said.
Such a measure is important because low-skilled labor is often
used to justify the government's policy in allowing expatriates
to work in the country.
He said he was concerned about the upward trends in the
recruitment of expatriates. "Local workers should actually be
able to take the position of the expatriates if they are given
chances to upgrade their skills," he pointed out.
Iskandar Mandji of the House's Commission VI questioned the
government's policy, as stipulated in the new deregulation
measures, of allowing foreign investors to own 100 percent of
shares in companies operating in export trading services.
"The policy would certainly hurt local trading firms. Unless
they are given special tax treatment to enable them to compete,"
he said.
He warned that the government's previous policy of allowing
wholly-owned foreign firms to operate in large scale business
activities has brought more harm rather than benefits to local
firms. (hen/kod)