Soeharto urges levy reduction
Soeharto urges levy reduction
JAKARTA (JP): President Soeharto has again urged local administrations to revoke all regulations on levies which create market distortions and hamper economic growth.
"If necessary, a Presidential decree will be issued (to eliminate levies imposed by local administration)," Soeharto was quoted by Minister of Manpower Abdul Latief as saying yesterday.
Latief met Soeharto at the latter's residence in Jakarta to report on a meeting between government officials and business people to be held at the Ministry of Manpower next month to address the problems of levies.
The meeting, to be chaired by Coordinating Minister for Production and Distribution Hartarto, is a follow-up to the previous meeting between Latief and leaders of the Indonesian Chamber of Commerce and Industry (Kadin) earlier this month.
"The President has ordered me to continue dialogs with Kadin's representatives to discuss ways of reducing levies in the provinces," Latief told reporters after meeting Soeharto.
The minister is leading the government campaign against levies by pledging to stop 37 kinds of levies currently imposed in the manpower administration.
Businesses have been increasingly vocal in criticizing levies -- both legal and illegal -- which are imposed by various ministries and local administrations across the country.
Their concerns, however, did not come to the government's attention until senior economist Sumitro Djojohadikusumo, 78, aired his views on the matter last December.
He suggested that levies at the local level should be temporarily "frozen" to allow the Ministry of Home Affairs to select and maintain "only those which are important and do not endanger the national economy."
His comments snowballed into a vocal campaign because soon after he expressed his opinion many businessmen cried out over the various levies which have been inflating their production costs.
The Indonesian Textile Association listed 35 levies, ranging from Rp 10,000 (US$4.3) to Rp 800,000, imposed on the textile and textile-related industries.
The Association of Indonesian Plantation Companies disclosed recently that the central government and local administrations had imposed at least 29 levies or fees on agribusiness companies.
Industry sources in East Kalimantan said last month that they had to pay at least 24 official fees, including taxes, imposed by the central government and local administrations.
The battle against levies escalated last month when the domestic beer companies stopped supplies to Bali in a strong protest against the Rp 600/bottle levy collected by PT Arbamass Multi Invesco on behalf of the Bali administration.
The dispute only ended after President Soeharto ordered Minister of Industry and Trade Tunky Ariwibowo to stop Arbamass from collecting the beer levies.
Latief said yesterday that the business community should also support the government's drive against illegal levies by refusing to pay any fees they see as illegitimate.
"Businessmen should not simply sit down and let the government fight the problems of levies. They should have the courage to say 'no' to any levies they consider illegal."
Latief earlier acknowledged that the burdens caused by the numerous levies often forced companies to squeeze the wages of their workers.
The manpower ministry's survey of companies in various provinces recently show that legal and illegal levies or fees, including bribes, accounted for between 20 and 30 percent of their production costs.
Business analysts estimate that the levies, dubbed "invisible costs", make up 30 to 40 percent of production costs, compared to a mere 8 to 12 percent for wages.
Latief yesterday also reported that 99.8 percent of 160,041 companies with 10 employees or more registered with his office had paid this year's Idul Fitri allowances to their employees.
"President Soeharto expressed his gratitude to the companies who complied with this traditional practice," Latief said. (rid)