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)