'Regional autonomy worsens investment climate'

'Regional autonomy worsens investment climate'

A'an Suryana, The Jakarta Post, Jakarta

The regional autonomy drive, launched more than two years ago,
has failed to improve the investment climate in the country's
provinces and regencies, according to a survey.

In some cases, the autonomy policy had even worsened the
investment climate, the survey said.

The survey, carried out jointly by the Regional Economic
Development Institute, the United States Agency for International
Development (USAID) and the Asia Foundation, interviewed some
1,014 business executives in 23 regencies and municipalities.

Many have criticized the poor implementation of the regional
autonomy policy, which gives regions greater power in managing
their economic affairs, because, in many cases, regional
governments have been too aggressive in squeezing investors for
local taxes and also have often issued policies that are
unfriendly to investors.

Last year's sharp decline in both foreign direct and domestic
investment was partly attributed to poor implementation of
regional autonomy.

The survey said that some 42 percent of respondents claimed to
have paid a larger amount in taxes and levies after the
implementation.

In terms of public service, the business players said they had
not enjoyed improved service quality since the autonomy drive.
Some respondents said the service had even worsened.

Some 25.5 percent of respondents also said that they had to
pay a greater amount in illegal fees to do business in the
regions.

The respondents largely came from small-scale enterprises
(57.4 percent), medium-sized businesses (35.6 percent) and large
companies (7 percent).

The respondents run businesses mainly within the fields of
trading, agribusiness, services, manufacturing and
transportation.

The government is planning to revise the regional autonomy
policy, following criticism from various quarters, and to help
push investment higher, which is crucial to ensure sustainable
economic growth and create employment for the millions of jobless
people.

David Ray of USAID said that a strong political will from
regional governments to get the regional autonomy drive back on
the right track was very important to improve the investment
climate in the regions.

"If there were the political will, it would be very easy to
eliminate the bureaucratic constraints that have discouraged
business players," he said.