Overlapping levies upset developers

JAKARTA (JP): Industrial estate developers complained on Tuesday of overlapping levies by local administrations and other parties, saying the charges would discourage investors.

Chairman of the Indonesian Industrial Park Association Halim Shahab, said high costs resulting from the levies on industrial parks had made industrial parks less competitive than facilities in other countries, especially those in Malaysia.

"Investors operating in industrial parks should instead be provided with incentives to minimize the costs of their investment," he said at a seminar on the role of industrial parks in generating foreign exchange.

Halim's complaints were echoed by Gunawan Hadisusilo, the ministry of home affairs' inspector general for the development of industrial parks, integrated economic development zones and special projects.

Gunawan acknowledged that many regulations imposed by local administrations contradicted a government bid to encourage local and foreign investors to develop their businesses.

Local administrations imposed local levies on investors operating in industrial parks in order to collect more revenue, he said.

He cited investors in Jatiluhur Dam industrial park having to pay water fees both to local administrations and to the operator of the dam, the state-run Jatiluhur Authority.

"(The charges) contradict the government's spirit to offer incentives such as tax reductions which minimize investors' operational costs."

Occupants of industrial parks have also been forced to pay security fees and other levies to village heads or other authorities at the subdistrict level, he said.

Halim said the economic and political turmoil had brought the industrial parks to the verge of bankruptcy.

Over ninety percent of parks had been unable to attract occupants since the crisis began, he said.

"Some industrial parks in Medan, North Sumatra and Sulawesi are still able to attract new occupants whose operations related to agribusiness, but the number is too small," he said.

Halim said currently 172 developers had obtained approval to develop 52,882 hectares, but so far only 46 of the parks were conducting operations.

Gunawan said the reduction in flight routes by domestic airlines had posed another blow to industrial parks, especially those located in eastern provinces, discouraging investors from opening businesses. (gis)