Official fees seen as burden to industry

Official fees seen as burden to industry

JAKARTA (JP): Industries in East Kalimantan currently have to
pay at least 24 official fees, including taxes, imposed by the
central and local administrations.

The Antara news agency yesterday quoted an anonymous source in
Samarinda as saying that the fees and levies varied in amount,
"but when totaled in a period of months or years could reach
millions of rupiahs".

The source said that businessmen in East Kalimantan have
already filed both unofficial and official complaints to the
central and local administrations because the fees had become
extremely burdensome.

An example of such a fee, the source said, was the 10 percent
value-added tax imposed on logs. The tax caused the Association
of Indonesian Wood Panel Producers (Apkindo) to file an official
protest, claiming they were already burdened by other mandatory
payments, such as reforestation funds and forest royalties.

Another fee which sparked complaints was one that was recently
imposed by the Ministry of Manpower for safety and health control
at factory machineries.

"In the beginning, the fees were only imposed on boilers and
other important plant equipment. Now they cover all types of
machinery, with amounts varying according to the capacity of the
machines," the source said.

Last month, similar complaints were issued by plantation
companies, who said official fees were so burdensome that they
had become a major barrier to the development of agribusiness
companies.

According to Antara, the head of the Ministry of Industry and
Trade's East Kalimantan office, Himanuddin Nasution, has
confirmed the complaints, saying that his office has already
informed the Ministry's head office in Jakarta of the situation
and asked for a review.

Nasution said the Minister of Industry and Trade recently
ordered all heads of local offices to monitor the fees imposed on
industries, to be used as an input to formulate the next
deregulatory package.

The government lastly issued a deregulatory package last May,
which promised tariff reductions across the board until the year
2003, setting maximum rates on most goods at between five and ten
percent down from 40 percent.

The package also accelerated plans to eliminate tariff
surcharges in 153 categories.

Nasution said the fees imposed on industries should be
reviewed because they could erode the competitiveness of
Indonesian industrial products.

Nasution, who took up his post four months ago, said his
office was closely monitoring illegal fees imposed by certain
officials on industries, but admitted he had yet to find strong
evidence of such practices.

Presently there are about 12,500 industries in Kalimantan, of
which 12,000 are categorized as small industries. The industries
have a total investment of Rp 4 trillion (US$1.75 billion) and
employ some 106,000 workers.

Until the end of 1995, the industrial sector contributed the
single largest share, or almost 24 percent, of East Kalimantan's
Gross Regional Domestic Product, Nasution said. (pwn)