Regional administrations asked to revoke restrictive regulations

The Jakarta Post, Jakarta

Minister of Home Affairs Hari Sabarno said on Monday that he had officially asked regional administrations to revoke a total of 71 regional regulations on tax and levies considered to be inhibiting investment and economic development.

Hari said he had decided to allow the regions to revoke the regulations themselves rather than use the central government's power to annul them.

"We can't simply annul the regulations, because we don't want to return to the old paradigm. Therefore, it is better to let (the regions) do that themselves," Hari said.

The ministry's move followed a request from the Ministry of Finance.

Director general of decentralization Machfud Sidik said last week that revocation of the rulings was requested by the International Monetary Fund (IMF) during recent meetings with the government regarding its the fourth Letter of Intent (LoI).

As a matter of fact, Machfud said, the IMF identified 100 regional regulations that it considered to be hampering business and investment and, therefore, should be revoked.

The ministry is still reviewing the remaining 29 regulations included on the IMF list, Machfud said.

"We can't simply revoke the regulations. We have to review them one by one and must be careful (in doing so) because, at the same time, we must motivate the regional governments to boost the utilization of their resources," he said.

Machfud pointed out that, based on the Law No. 34/2000 on taxation, the central government could annul any rulings issued by the regions that conflicted with higher regulations or statutes.

The number of rulings on the IMF list is still much smaller than those suggested by the Indonesian Chamber of Commerce and Industry (Kadin), which stated last month that there were more than 1,000 regulations impeding business.