Rendi Akhmad Witular and Mustaqim, Jakarta – The government will push through a number of crucial policies this year to promote robust economic activity for the private sector and help spur growth, with most efforts centered on providing certainty and stability for the business community.
The efforts will include reform in the bureaucracy, revisions to the labor law, rearrangement of the management of provincial taxation and improved integrity in the capital market sector.
Vice President Jusuf Kalla said on Monday the government would try to reinvigorate the real sector by ensuring the maintenance of economic and social stability as well as better security.
"What investors buy here is an expectation. We can assure them that expectations are running high this year for an improvement in the economy," Kalla told industry players after opening this year's first trading day at the Jakarta Stock Exchange (JSX).
Kalla was accompanied by Coordinating Minister for the Economy Boediono, Minister of Finance Sri Mulyani, chairman of the Capital Market Supervisory Agency Darmin Nasution and JSX president director Erry Firmansyah.
Kalla said the business community should start taking into account such expectations immediately as the government had already disbursed some Rp 204 trillion (US$20.8 billion) worth of projects from the state budget to provincial governments.
With the disbursement, the government expects to help revive the slowdown in the activity of the real sector, as a result of the 2005 economic slowdown.
To support the activities, the government plans to issue in the next two or three months an official guide book for the bureaucracy in providing public services, which will include a timeframe for processing a document and its exact price.
"Kickbacks within the civil service are mostly caused by the uncertainty set out by the government bureaucrats on the ground. If there is a time target and clear price guidance, such practices will definitely be reduced," said Kalla.
In the labor sector, the government expects a draft revision of the labor law could be delivered to the legislators for deliberation in February or March. Several articles in the law, which require a company to pay compensation for workers filing for resignation are likely to be amended to encourage companies to hire more workers.
"There will be a new philosophy in the revised labor law. It will not only prioritize those who already have a job, but also those currently unemployed. With a law that is more conducive to hiring new workers, the private sector will help alleviate unemployment," said Kalla.
The business community will also be protected from uncertainty created by the administrations in the provinces and regencies, especially on the problem related to regional fees and taxes, which contribute unnecessarily to the higher cost of doing business across the archipelago.
"Several central government regulations will be issued soon to prevent local administrations from issuing the fees and taxes that are merely a burden on the business community. This will not only reduce the cost of doing business, but will also create more business certainty," said Sri Mulyani.
The government will also start reviewing several capital market regulations that provide windows of opportunity for irregularities. "The integrity of the capital market should be upgraded. Loopholes in regulations will be reviewed, and players should also start showing a good attitude in improving the integrity," said Sri Mulyani.
The Jakarta stock market ended the day higher by 9.07 points, or 0.8 percent, to 1,171.71. It was the largest gain in two weeks