Agus Maryono, Purwokerto – The presence of more than 5,000 bylaws and draft bylaws is a major hindrance for potential investment in provinces across the country, says an Investment Coordinating Board (BKPM) official.
BKPM has urged every administration, at both provincial and regency level, to prioritize public interests when drafting the ordinances.
"Many of the provincial or regency administrations have drafted bylaws for the sake of business to append the local generated revenue (PAD). This tends to scares investors away," said committee member of Investment Climate Affairs at BKPM Mochammad Najib, on the sidelines of a dialogue and meeting with the local business circle in Banyumas regency recently.
"Evidently, the PAD has not improved, but public interests are sacrificed."
Based on data gathered by BKPM, 3,455 bylaws that have been passed and 1,727 draft bylaws are detrimental to the investment climate in the provinces.
"Frankly, we refuse to accept the thousands of bylaws and draft bylaws. We are currently making efforts to draw as many investors to the provinces as possible," Najib said.
He said BKPM had evaluated the contentious bylaws and recommended that the provincial administration annul every bylaw on tax and retribution that had been imposed by it.
Najib said the bylaws have likely discouraged investors as they would have been required to make a number of burdensome payments.
"In the present free trade era, it is no longer appropriate to issue tax bylaws to the disadvantage of businessmen," he said. "With such spirit, the local administrations will eventually lose out. Investments would not work and the unemployment rate would remain high."
He said besides the troublesome tax ordinances and levies that encumber investors, a number of other factors would also discourage investors from doing business in the regions, such as the lack of supporting infrastructure and facilities, like power, gas and transportation modes.
"Another problem is issues on manpower, among which are the working contract system, productivity, licensing procedures and legal consistency offered by the regency administration that are often against the interests of investors," Najib said.
"So the problems are not only faced by those who have intended to invest but also those who have already run their businesses. Many have fled due to the manpower issues," he said.
"Many of the investors have said their workers' productivity had dwindled, but every year they are required to raise their workers' salaries which is regulated in the minimum regional wage bylaw."
Local officials at the Banyumas regency administration have expressed their desire to draw investors in the regency to raise the local PAD and alleviate the unemployment rate.
The Banyumas regency, which is inhabited by around 1.7 million people, 700,000 of whom are jobless and live below the poverty line, are considerably pinning its hopes on investors to further develop and alleviate poverty in the regency, Najib said.