One in three bylaws bad for investment: survey

Zakki P. Hakim, The Jakarta Post/Jakarta

No less than a third of all the bylaws issued by the regional governments in the past years have discouraged trade and investment, according to a survey conducted by a committee under the Indonesian Chamber of Commerce and Industry (Kadin).

The committee, called Regional Autonomy Watch (KPPOD), said it had conducted a survey of a total of 881 bylaws issued by 225 cities and regencies across the country, and found out that 297 of them could be classified as disruptive or detrimental to a healthy business climate.

The result was presented during a meeting on Tuesday between Mari and the heads of the regional industry and trade agencies from across the country.

The committee recommended those regulations be amended or even revoked.

Minister of Trade Mari E. Pangestu welcomed the result and agreed that amending or revoking such rules could be a good start for the government's efforts to boost the competitiveness of the nation's businesses and exports.

"But, first of all, we have to make a list of all the rulings that are counter-productive to business and trade," she said.

In its reports, the committee said that some of the bylaws have created tariff barriers for certain goods and even acted as protectionist measures.

One such rulings is the bylaw No. 16/2000 issued by the Bima regency in West Nusa Tenggara. The ruling on taxation on transferring natural resource-based products stipulates that businessmen must pay extra taxes for moving the commodity into or out of the regency.

Another bylaw issued by Tolitoli regency in Central Sulawesi ruled that outsiders must pay additional tariffs of 5 percent when purchasing seafood products originating from the area.

Some regencies and municipalities, such as Pekanbaru, Serang in Banten and Bekasi in West Java impose additional taxes on businesses for hiring workers from outside those areas. The tax is Rp 500,000 (US$55) per worker.

Mari said the current government would make it a priority to scrap such regulations in order improve the business climate.

"We need to talk first to all stakeholders, before issuing policies so they can facilitate the development of the private sector," she told the head of the agencies, while urging them not to repeat the same mistakes in the future.

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Number of bylaws

Category Total Bylaws Percentage ------------------------------------------------- Supportive 276 31.5 Acceptable 302 34.5 Disruptive 237 27.1 Very Disruptive 60 6.9 ------------------------------------------------- Total 881 100

Source: KPPOD survey/Ministry of Trade