Provinces want more contributions from state firms

By Berni K. Moestafa

DENPASAR, Bali (JP): Minister of Finance Bambang Sudibyo said here on Thursday the government was considering requiring state companies to contribute more to the regions in response to demands by local residents and administrations.

The minister said he agreed with the locals about the need to enhance the role of state companies in empowering the local economy.

"We're considering a program which would allow state firms to make more contributions to provinces aside from taxes," Bambang said here during a road show to promote a regulation draft for the implementation of the law on intergovernmental fiscal balance.

During his visit in Bali, Bambang also met with representatives of local governments from East Nusa Tenggara, West Nusa Tenggara and Irian Jaya.

"Almost every province has questioned the contributions of state firms to their regions," he said in reference to his previous visits in other provinces. He said local governments in Sumatra had questioned him about the contributions of state port operators, plantation firms and forestry firms.

In Java, he said, the local administrations demanded state telecommunications company PT Telkom and state electricity company PT PLN contribute more to their budgets.

Bambang, however, declined to say how state companies might be made to contribute more to local governments, saying this required more thought.

According to him, some provinces took pride that companies had chosen them as their bases of operation. "It is because of the provinces' efforts that investors are willing to enter their regions."

He warned that imposing various taxes on firms would frighten off state companies and foreign investors. Furthermore, he said, if local governments asked for an increase in tax payments from the companies, the regions could benefit very little. "Since many companies are registered in Jakarta, their tax payments will go straight to Jakarta."

Nevertheless, he said, at least 25 percent of tax payments would return to the provinces in the form of general fund allocations from the central government to the local governments. "It is through the general fund allocations that companies contribute to local governments."

He also reminded local governments that companies in their regions boosted employment levels, which in turn had a multiplier effect on local economic activity.

The minister said many local communities expected state companies not only to create job opportunities for locals, but also to share their profits with them.

"This request is not simple and we in Jakarta must give ample thought to this, including asking the opinion of the state minister of investment and state enterprises development," he said.

However, he said, the government was open to any request, adding that the meeting here with representatives from a number of provinces was partly to hear out their demands.

Bali's deputy governor for economic affairs, I Ketut Widjana, said his province should derive greater benefit from Ngurah Rai International Airport, which is operated by state-owned airport management company PT Angkasa Pura I. "If there was a mutual understanding between the company and us, we could discuss its offer," he told The Jakarta Post.

According to him, Bali lacked many facilities that Angkasa Pura could help provide. Asked what he expected from the company, Ketut said it should share some of its profits with the province.

"How much of their revenue can they give as a contribution to the province?" he asked.(bkm)