Snags in bonded zones deter investment

Snags in bonded zones deter investment

Eva C. Komandjaja, The Jakarta Post, Jakarta

Several bonded zone operators complained on Monday about the
difficulties they faced in obtaining permits and the various
regional levies and taxes imposed by local administrations.

The bonded zone operators that attended a hearing with the
House of Representatives Commission V are: PT Jakarta Industrial
Estate Pulogadung (JIEP), PT Kawasan Berikat Nusantara (KBN), PT
Surabaya Industrial Estate Rungkut (SIER), PT Kawasan Industri
Medan (KIM), PT Kawasan Industri Wijaya Kusuma (KIW) and PT
Kawasan Industri Makassar (Kima).

Each zone is subject to the individual regulations of its
respective regency, established in accordance with Law No.
22/1999 on regional autonomy. The regental administrations thus
collect levies and taxes from businesses for permits and
licenses, such as building permits (IMBs), investment permits and
building use permits (HGB).

The operators suggested that it would be more efficient and
streamlined for the central government to provide a one-stop
service for processing all requisite permits and licenses.
Besides cutting out unnecessary fees and levies, it would save
time and eliminate all complications facing investors.

They also complained about the 8 to 10 percent rise in value
added tax (VAT) on purchasing or renting lots in industrial
estates, which had scared off investors.

PT SIER claimed they had lost 18 investors due to the obscure
levies, rising tax and difficulties in obtaining permits.

The value of taxable property (NJOP) in industrial estates was
also higher than in other locations, so many companies preferred
to set up their factories outside the estates.

However, this may increase the possibility of water or air
pollution, particularly for companies without their own waste
treatment facilities. In industrial estates, the operators
provide waste management services to their tenants, so pollution
is checked.

One of the hearing's main concerns dealt with the lack of
infrastructure, such as roads and other means of access to the
industrial estates. The operators said local administrations
should provide such key facilities, instead of the owners or
tenants of the industrial estates.

In addition, they said insufficient electricity supplies would
negatively affect the businesses. It was predicted that in 2004,
the area spanning Java to Bali would suffer an electricity
shortage.

The operators said they had to provide their own generators to
overcome the lack of electricity, while PT KIM reported that
their electricity line was often cut off temporarily, which
hampered operations.

Such difficulties would likely lead to a decline in new
investor interest, which would in turn slow the economy. Many
foreign investors have already withdrawn their investments from
Indonesia and moved to other Asian countries, such as Vietnam or
China, due to the frustrations and inefficiencies they
experienced here.

Bonded zones are specially delineated areas that have been
given certain privileges under Indonesia's customs regulations.
All goods imported into these zones -- whether international or
domestic -- are exempt from excise fees until the goods are
exported or re-exported.