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)