Top economist proposes changes to law on levies
Top economist proposes changes to law on levies
JAKARTA (JP): Senior economist Sumitro Djojohadikusumo, 78,
said yesterday that local administrations need to freeze levies
which generate market distortions and hamper national economic
growth.
Sumitro told reporters that various levies at the local level
should be temporarily "frozen" to allow the Ministry of Home
Affairs to select and approve "only those which are important and
do not endanger the national economy."
"Some provinces, for example, regulate the trade of certain
commodities. This should not be allowed because what we want is a
perfectly market-oriented economy," Sumitro said.
Businesses have been increasingly vocal in criticizing levies
-- both legal and illegal -- which are imposed by local
administrations across the country. According to some critics,
the volume of funds levied locally on various goods is
significant enough that it is causing market distortions and a
high-cost economy.
Sumitro said that local administrations often issue rules
which require levies on certain business activities or commodity
trading in order to collect the greatest possible revenue from
their regions.
While apparently sympathetic to administrations' need to raise
funds, Sumitro said that the local levies would harm the national
atmosphere business, given that most businesspeople conduct their
activities in more than one region of the country.
"Imagine how much entrepreneurs would have to pay if they did
business in the regencies of all the 27 provinces," he said.
"I understand that decentralization and local autonomy are
important, but the benchmark should be the national, not the
local, market," he said.
Sumitro, who recently received an honorary doctoral decree
from the Erasmus University in Rotterdam, said that many
improvements still need to be made to the country's
infrastructure facilities.
"It's time Indonesia 'overhauled' its physical, institutional
and administrative infrastructure," he said.
Sumitro said that administrative infrastructure, in
particular, was needed within the government.
"Times have changed. What we once considered appropriate, at
the beginning of the first Five-Year Development Plan period in
the 1970s may no longer be relevant at the present time," he
said.
Sumitro, whose book The Evolution of Economic Thoughts wads
published last year, held two ministerial posts in the government
of the late president Sukarno -- as minister of industry and
trade and minister of finance -- and two ministerial posts under
Soeharto -- as minister of trade and state minister of research
and technology.
"How should we deal with the administrative system now? Should
we maintain the present ministries or do we need a review, a
centralization or a division of them?" Sumitro asked.
He said that making such fundamental changes needed sound
studies and thorough assessments. He said it would take more than
a year or two to make such changes.
"It will be a tough job, but hopefully (administrative
changes) can be made in the seventh Five-Year Plan period or the
Eighth," he said. The seventh Five-Year Plan period will begin on
April 1, 1999.
Sumitro declined to explain the basis of his remarks, merely
emphasizing that such changes are needed to keep up with new
trends, such as the opening up of the global market, the
formation of the Asia Pacific Economic Cooperation (APEC) forum
and the emergence of new international trade rules.
He emphasized that his comments not been suggested by other
people. "I am only observing the developing situation," he said.
(pwn)