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)