Spatial battle still being fought by city
Damar Harsanto, Jakarta
The Jakarta administration will file an appeal over its loss in a case concerning the legality of Gubernatorial Decree No.44/2003.
The administration said it would appeal to the Jakarta State Administrative High Court after the lower court ruled in favor of property and retail businesses and ordered that the decree be repealed.
The decree was issued last year to lend strength to Bylaw No. 2/2002, which requires shopping centers to allocate 20 percent of their commercial space to small and medium enterprises (SMEs).
Jakarta Legal Bureau head Deded Sukandar told The Jakarta Post on Friday that since the decree had yet to be repealed, it was still valid.
He also said that the administration would continue the legal battle, but he did not mention when the appeal would be filed.
Both the decree and the bylaw state that shopping centers cannot escape the 20 percent space allocation requirement by paying compensation to the administration. However, the bylaw lacked authority and the administration often accepted payments in lieu of space allocations for SMEs.
The issuance of both regulations have been strongly opposed by the Association of Indonesian Real Estate Companies, the Indonesian Retailers Association and the Association of Indonesian Shopping Center Managements.
They complained that by obeying the regulations, they would lose control of their properties. They also feared the regulations would deter investment in the business.
In a ruling on April 21, the Jakarta State Administrative Court ordered Governor Sutiyoso to revoke the decree. The court said the decree was against the Autonomy Law, which stipulates that policies related to property tax must be regulated by law.
The City Economic Administration Office, which issues business permits for retailers in the city, asserts that it will continue to uphold the decree and bylaw, pending the outcome of the appeal.
"We will still require retailers and owners of malls, in which spaces are allocated to SMEs, to meet the 20 percent space obligation," office head Sukri Bey said.
If retailers and mall owners refuse to comply with the regulations, the office will withhold permits until they meet the requirement.
"The two regulations are only a few of the regulations that clearly take the side of the SMEs over big players in the business," Sukri said.
Since the issuance of the bylaw in 2002, the office has issued 22 business permits, mostly for retailers.
He said that most of the objections the office received came from mall owners, even though they had previously agreed to comply with the 20 percent space allocation requirement.
Earlier, City Council Commission B for economic affairs criticized the administration for its failure to defend the decree in the legal battle.
Commission chairman Syarif Zulkarnaen alleged that the administration was behind its defeat in court, saying that revocation of the decree would enable officials to benefit from compensation paid by shopping centers.
In the past, although the bylaw did not allow it, a payment to the administration was accepted in place of allocating space for SMEs. Payments were meant to be channeled to empower the SMEs. However, such a scheme was prone to corruption due to a lack monitoring.