Ridwan Max Sijabat, Jakarta – Overlapping policies blamed for severely hurting competitiveness will remain effective until the end of 2011 unless annulled by a proposed revision to the country's current tax law.
The country has been left with thousands of such policies as the Home Ministry said the authority to drop local bylaws lies with President Susilo Bambang Yudhoyono.
Home Minister Gamawan Fauzi said his office was preparing a "more efficient" single draft government regulation to annul all overlapping bylaws and regulations because a single presidential regulation takes up to six months to process.
The Finance Ministry previously identified 3,735 overlapping bylaws, regulations and circulars issued by governors, mayors and regents issued in the past decade on the subjects of taxation and retribution alone.
The ministry has proposed that the regulations be annulled immediately as they violated the 2009 Tax and Retribution Law. However, the Home Ministry, which has the authority to supervise and evaluate the regulations, yet to make a final decision. The law lists 16 taxes and retributions to be imposed only by the central government.
This year the Finance Ministry increased that figure to 4,885 overlapping policies, of which only 1,843 were dropped, according to the independent Regional Autonomy Watch (KPPOD).
Gamawan said he did not know how many overlapping regulations had been issued by provincial, regency and municipal administrations because the ministry could only directly monitor bylaws issued by provinces. Governors have also proposed the annulment of dozens of overlapping regulations issued by regency and municipal authorities.
Regulations can be annulled within 85 days after they are approved by local administrations. However government offices such as the Finance Ministry say regencies, townships and provinces often fail to report new policies.
The Indonesian Chamber of Commerce and Industry (Kadin) and the Indonesian Employers' Association (Apindo) have criticized overlapping policies in numerous sectors that have led to illegal levies.
"If our products are more expensive than imports, it's barely possible for us to compete," Apindo deputy secretary-general Franky Sibarani said Saturday.
Regional Autonomy Watch executive director Agung Pambudhi said he questioned the government's political will to help create a positive business climate in the regions, adding that many domestic and foreign investors have declined to invest in regions imposing overlapping taxes and retributions.
Gamawan said he would propose a cut of general and special allocation funds (DAU and DAK) to penalize local administrations that declined to voluntarily annul overlapping bylaws and circulars.
Agung said regional autonomy should no longer be in transition 10 years after its introduction in 1999.
Autonomy should "move further from power decentralization and local elections to accelerate economic development and develop infrastructures to improve people's welfare."