Tunky meets exporters

Minister of Industry and Trade Tunky Ariwibowo, already preoccupied with the preparations for the defense of Indonesia's national car policy against complaints lodged by Japan, the United States and European Union under the World Trade Organization, has resumed what we see as fact-finding, free- wheeling talks with exporters in Jakarta and the provinces.

The way Tunky conducted the open, frank discourses and the honest manner in which he put himself in the shoes of the exporters succeeded in encouraging them to speak their minds -- something which most businesspeople still avoid. The result was that Tunky obtained accurate information on how the political resolve on bureaucratic reform, including the reduction of red tape, is in many cases still far from the point of bureaucratic resolve.

At a meeting with small and medium-scale exporters, which coincided with the export product exhibition in Jakarta last week, Tunky was treated to a barrage of complaints from businesspeople about red tape and uncertainty regarding tax and import duty refunds, customs services and various other regulatory requirements as well as irregularities in the distribution of textile export quotas.

A similar meeting held by Tunky with local exporters in Surabaya in the middle of this month also heard a chorus of complaints about poor bureaucratic performance which hindered exports. Mango exporters complained about the denial of value- added tax refunds. Birds' nests exporters expressed frustration over the requirement to obtain a letter of recommendation from the Ministry of Forestry in Jakarta each time they wanted to export a shipment. Exporters of furniture and teak products attacked the policy of PT Perhutani, the state teak monopoly, which inflated the prices of their wood.

The exporters' complaints indicated the lateness of various government services and the arrogance demonstrated over the poor service as though government funds originated from their own pockets rather than from taxpayers.

The complaints are not completely new. Worrisome, though, is the fact that despite the series of massive deregulation measures and bureaucratic reform, most businesses continue to encounter a capricious and vague regulatory environment. Needless to say, that kind of environment is one of the most irksome sources of uncertainty in business calculations.

Under such a situation, businesses have no way to anticipate the resulting uncertainty, delays and unforeseen expenditures caused by the executors of such a vague regulatory method because bureaucrats seem to become specialists in the multiplication of nuisances that only they can contain.

Businesspeople are often apprehensive because they never know where the next demand for payments will come from, or how much will be asked for. The problem is exacerbated by the absence of an effective mechanism for businesses to redress or appeal their grievances.

The bureaucratic problems are especially detrimental to the efficiency and, consequently, competitiveness of small and medium-scale exporters because they, unlike conglomerates, simply do have not the staff, financial resources or the clout to deal with the various bureaucratic levels.

At a time when the rate of export growth has been declining due mainly to the increasingly eroded competitiveness of domestic products, the effectiveness and efficiency as well as the capacity of the bureaucratic institutions needs addressing in a far more serious, resolute manner. The exporters' complaints clearly show that the deregulation packages and bureaucratic reform will not be effective in improving the overall efficiency of the economy unless they are supported by competent and highly accountable executing agencies.