Regencies reject calls to drop rulings on businesses

Regencies reject calls to drop rulings on businesses

JAKARTA (JP): Top executives of the Indonesian Regencies'
Association (APKASI) rejected on Thursday calls to drop various
regional rulings, particularly on taxes and local government
charges, which were disadvantageous to business.

APKASI chairman Syaukani HR said that the regional rulings
were needed to protect the interests of the respective regions,
long ignored by Jakarta in the past.

"If local regulations disturb investors, they can always leave
the region in question," he told The Jakarta Post on the
sidelines of a gathering of regents and mayors whose
administrative areas produce oil and gas.

Syaukani's remarks are the latest evidence of growing conflict
over the implementation of the 1999 regional autonomy law, which
gives the authority to provinces, regencies and municipalities to
manage their own economic affairs.

Chairman of the Indonesian Chamber of Commerce and Industry
(Kadin) Aburizal Bakrie said earlier on Wednesday that there were
over 1,000 rulings issued by regional administrations concerning
in particular local taxes and charges which were placing a heavy
burden on businesses.

Speaking to reporters following a meeting with President
Megawati Soekarnoputri, Aburizal said that Kadin had called on
the regional administrations to repeal such rulings.

Indonesia has 32 provinces, and about 400 regencies and
municipalities.

The current Megawati administration is planning to revise the
regional autonomy law, which was introduced during the
administration of B.J. Habibie.

Several foreign investors have already left certain regions
partly due to concerns over excesses in the implementation of
regional autonomy, and partly due also to security problems in a
number of areas.

"Many regencies are taking excessive measures to boost their
revenues. They often issue regulations that violate the rights of
other regencies and businesspeople," Minister of Home Affairs
Hari Sabarno said on Thursday.

"We really need to revise such regulations, especially the
ones that have negative effects on the business community," he
added.

Elsewhere, Syaukani said that the regional governments had
been acting in accordance with the existing mechanisms when
issuing the various new rulings on taxes and charges.

He pointed out that based on the prevailing Law No. 34/2000 on
taxation, Jakarta could annul any rulings that conflicted with
higher regulations or statutes provided that the such annulment
was effected within 30 days of the central government receiving
the regional ruling in question.

Syaukani said that if no objections were made by Jakarta, the
regional rulings would automatically enter into effect.

"Investors should blame the central government," he said.

Syaukani also played down the concerns expressed by Aburizal,
citing the growing flows of foreign and domestic investment being
enjoyed by some regencies.

Meanwhile, Aburizal said on Thursday during a discussion on
investment in Bandung that the government should annul the
controversial regional rulings.

He added that Kadin planned to issue ratings for the regencies
and municipalities in the country that provided conducive
business climates.

"This will map the respective regions' business environments,
from the best to the worst," he said.(iwa/25/dja)