Spatial battle still being fought by city

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repealed.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on Friday that since the decree had yet to be repealed, it was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.