Indra Harsaputra, Surabaya – Businesspeople in East Java say there are thousands of burdensome bylaws in place that fail to guarantee security for businesses and are partly to blame for reduced foreign investment in 2009.
Foreign investment in 2009 was US$1.561 billion, down from $2.58 billion the year before.
Ali Affandi, Indonesian Chamber of Commerce and Industry (Kadin) vice chairman in charge of investment affairs in the province, said the decrease in foreign investment should not have happened given the province's investment resources in mining, tourism, agriculture and maritime.
"One of the investment pitfalls is the presence of the bylaws that in fact discourage businesses," he told The Jakarta Post recently.
Benny Sidharta from the Indonesian Tour and Travel Association said several bylaws functioned only to burden businesspeople. He cited the Hindrance Ordinance bylaw, which was enacted to prevent inconveniences for the public as a result of the opening of travel agencies.
"This is not appropriate because opening an office for a travel agency does not require many people, nor does it cause noise as would an auto garage or a factory," he said.
Indonesian Shopping Center Association members have complained about 5-10 percent taxes imposed on the use of power generators.
"That regulation is unreasonable because, while we have already suffered the burden of spending money to purchase and install the generators, we are then obliged to pay taxes," the association's chairman, Didi Woelyadi, said.
Businessman Nur Cahyudi said several bylaws had been issued to provide protection for small and medium businesses, "but their implementation is prone to infringements, in which some state enterprises prefer imported products to local products."
"One such case was a tender for the provision of haj kits held by (state airline) PT Garuda Indonesia. The company chose partners who imported materials from China and who are currently facing lawsuits for monopoly infringements," said Cahyudi, who chairs a forum for small and medium business associations.
The Supreme Court issued a verdict on Sept. 28, 2009, to grant the appeal filed by the Business Competition Controlling Commission and rule that Garuda's corporate partners PT Gaya Bella Diantama and PT Uskarindo Prima had violated Article 22 of bylaw No. 5, 2009, on monopoly practices and unhealthy business competition.
However, Garuda continued to use the partners by extending their contract for providing haj bags to 2011, Cahyudi said.
He said there was a basic need for legal security for businesses and investment and deplored that many of them found bylaws burdening.
East Java has the second-highest number of potentially burdening investment bylaws after North Sumatra, according to the Regional Autonomy Controlling Committee.
The committee has released a list detailing the kinds of obstructions the bylaws cause. They include, over-complicating bureaucracy, imposing illegal levies, requirement of business permits, security threats, conflict settlements and leadership integrity.
Vice Governor Saifullah Yusuf conceded that East Java had issued 291 bylaws that potentially hampered investment efforts. He said the bylaws were currently under review following a recommendation from the finance minister to either cancel or revise them.
"We have revoked 91 bylaws and revised four. We are also reviewing a number of bylaws in 38 regencies and municipalities," Saifullah said.
As of last year, the Finance Ministry recommended the Home Ministry revoke more than 4,885 regional bylaws because they contravened national laws, but only 1,835 were annulled.
Now more than 3,000 regional bylaws that contradict national laws remain.
The Indonesian Forum of Environment has called on the local administration not only to consider investment but heed the public's aspiration, especially in environment management, and to reanalyze and revise the bylaws.
"Businesspeople may suffer from conflicts with the public when proposing permits for building or the environment. Many cases occur in which the government will act only like a referee over a conflict stemming from the permit it issued," said Bambang Catur Nusantara, the director of the forum's East Java chapter.