CREATING A CONDUCIVE INVESTMENT CLIMATE IN THE REGIONS

            The autonomy era demanded each regional government to be independent and creative in finding sources of fund and many opportunities to be made as sources of income for regional treasury. There are many regional regulations and policies formulated in the framework of increasing Regional Revenue (PAD). In general, regional regulations and policies applied by the regional government are not far from taxation matters, retribution, licensing, and bureaucracy services which, internationally or unintentionally, could burden the businesses so that investment lure in the region is low.

            Chairman of Indonesian Businessmen Association (APINDO), Djimanto, explained that actually Indonesia is attractive to investors as it has an abundant natural resources and a relatively stable sociopolitical condition. One of the prerequisite for attracting investors, according to Djimanto, is a conducive social-political condition, supported by a government which is pro businesses. With its natural resource richness, Indonesia will be able to attract more investors. The key is that the regions in Indonesia must be able to create a conducive business climate.

            But, Djimanto considers that the regional government not yet fully provides an opportunity to investors to improve their businesses. This is proven by the appearance of a number of regional regulations which are not in favor of the businesses. And, there are many businesses who face problems that hamper business advancement in the regions. “Many investors complain about long process of land clearance that it causes investors to withdraw their plan to make investment”, Djumanto said.

            Djimanto added, looking at the very limited financial resources in the region, the regional government should make investment a key to regional development. Good investment performance in the past few years should be directed and emphasized on quality, and not just quantity. Competition among countries in luring investors is increasingly tight in the era of transparency of global economic system in the globalization era. Therefore, he said, increase of competitiveness is an absolute requirement to be able to compete in the global economic arena at this time.

            Djimanto explained that building a conducive investment climate in the region cannot be released from national and international market information system. Promotion and real support to investment comfort must be created. The regional government and the Regional House of Representatives, according to him, should be aware of the tight competition among regions in luring new investment.

            Quality of regional policies and regulations formulated by regional government highly affect investment climate in addition to the existing resources potentials.  

INTEGRATED TEAM TO PUBLICIZE UNQUALIFIED PRODUCTS

            In the effort to give maximum protection to consumers, the Directorate of Standardization and Consumers Protection (SPK), the Ministry of Trade together with the Board of Drug and Food Inspection (BPOM) had launch a raid in marketplaces and detected goods which were unqualified in terms of labeling, quality standard, mandatory labeling in the Indonesian language etc. By such measures, according to the Deputy Minister of Trade Bayu Krisnamurthi in Jakarta on Monday (12/12) it was expected tat consumers would be treat assured that the products they consumed were safe.

            Meanwhile Head of BPOM Kustantinah in that opportunity announced that since early this year, the illegal food in circulation today were unregistered imported food. From early year till now the total amount of food being confiscated by BPOM as detected by the Integrated Team for Control of Circulated Products (TPPB) were food products 1,133 items, packaging 82,886 packages, to total finding amounting to 1.7 billion. That was the reason why, according to Kustantinah, if consumers were more intelligent and stopped consuming uncertified products, the circulation would automatically end by itself.

            The total number of products detected by the TPPB Integrated Team, which consisted of representatives of related institutions like the Coordinating Ministry of Economy, Ministry of Health, BPOM, Director General of Tax, the Police, the Ministry of Industry, The Ministry of Agriculture and other related institutions were 102 products which were classified into six categories i.e. cosmetics, clothes, garments and footwear, toys and handicrafts, electronics and communication instruments; household appliances and automotive parts. Of that number 28 products were off-standard, 49 products were not using Bahasa Indonesian, 10 products unregistered (MD/ML-P-IRT,CD/CL) and 2 products without import license.

            The Director General of Standardization and Consumers Protection, Ministry of Trade Nus Nuzulia added that the measure was necessary to create a deterrent effect (the “never again” effect) to businesspeople who broke the rules and induce sense of responsibility to other market players. This measure was also meant to educate consumers that they might know what were the essential things required from a product in terms of safety, hygiene, security and environment (K3L) whereby not to disadvantage consumers.

            There would be follow up step to the raid, to impose sanctions according to the type of violation committed. The steps would be nurture, illumination, written notice, product recall, prohibition of distribution or enforcement of criminal law for consumers protection.    

IT IS EXPECTED THAT IN THE FUTURE THERE WILL BE MORE BUSINESSES BECOMING AWARE OF CONSUMER PROTECTION

            It is expected that in the future there will be more businesses who state Consumer Protection Awareness Declaration so it will finally create a balanced position in consumer-business relationship, strengthen businesses’ responsibility in consumer protection, and bulid consumer-business transaction based on fairness. This matter was stated by Vice Minister of Trade, Bayu Krihnamurti, jointly with the National Consumer Protection Board (BPKN) upon witnessing signing of declaration of businesses aware of consumer protection in Jakarta on Tuesday (December 13).

            According to Bayu, consumer protection will not go smoothly only be relying on role of the government through various kinds of regulations and law enforcement in supervision activity. Now, the businesses as government’s partners are able to get involved in enforcing consumer protection through education and self-regulation. “Self-regulation is a from of self-regulating by the businesses that should be based on good faith to improve consumer protection in Indonesia”. he explained.

            Businesses who signed the declaration are representatives of Permanent Committee for Consumer Protection of Indonesian Chamber of Commerce and Industry (KADIN Indonesia), Indonesian Retail Merchants Association (Aprindo), Telecommunication Interconnection Clearing Association (Askitel), Association of the Indonesian Tour and Travel Agencies (ASITA), Indonesian Food and Beverage Association (GAPMMI), and Indonesian Financing Companies Association (APPI).

            Bases on data presented by Bayu, this year, Indonesian national revenue reaches Rp 8,000 trillions where more than Rp 5,500 trillions are household spending. Out of the total household spending, more than Rp 3,500 trillions are consumption spending. Every year, there is a 7-8 percent growth which value reaches Rp 300 trillions.

            According to him, with total Indonesian population potential to reach 340 million people, Indonesia is deemed as a luring, prospective, and profitable market, and the main accelerator is consumers. This makes many businesses interested to open business in Indonesia, and Indonesia has a higher number of productive-age population if compared to the non-productive age (children and old people).

            “In this case, consumer protection becomes a responsibility as consumers are frequently cheated. While, in fact, if consumers are satisfied, economic activities will increase. The President also advises of the need to strengthen domestic market. Domestic market must be resistant to all shocks, whether national or international; growth of domestic market should be dominated by local products; and there is a need for domestic market protection.

            There are three steps in the framework of consumer protection attempt. Firstly, promoting consumer protection. BPKN has chosen Tasya Kamila as Smart Consumer Ambassador (Duta Konsumen Cerdas) who will socialize about the importance of Consumer Protection from elementary education up to teenager and adult levels. The next is preventive step where it is expected that each production line should have a system of monitoring over circulating products. And, the last is protective step where if there is indication of violation by the businesses, it should be settled based on the laws.

            It is expected that in next year, the attempt of strengthening domestic market will be more actualized in various fields, including attempt to absorb Indonesian origin products and local products as well as promoting of consumer protection.

GUIDELINE AND PROCEDURE FOR OBTAINING TAX HOLIDAY

            Head of Investment Coordinating Board (BKPM) has issued policy on guideline and procedure for submitting request for Income Tax exemption or reduction (Tax Holiday). To obtain tax facility, taxpayer shall submit an application to Head of BKPM or the Industry Ministry. So, investors may choose to submit the application for tax holiday to the BKPM or the Industry Ministry.

            The policy of Head of BKPM stipulates a period of 14 working days since Applicant/Taxpayer submits application until issuance of recommendation of Head of BKPM concerning grant of holiday facility to the Finance Minister. The stages are as follows:

            Complete application shall be received at the BKPM’s One-Roof Integrated Service (PTSP) and addressed to Head of BKPM within 1 day.

            If Head of BKPM is absent for 2 days, BKPM’s Deputy for Investment Services shall start performing review and verification within 2 days.

            The team shall perform preliminary review and verification and ask the applicant to do presentation in 1 day.

            Applicant shall perform presentation and the Team shall review the result of presentation within 5 days.

            The Team shall make details of verification and submits result of review and verification and submits result of review and verification to the Deputy for Investment Services within 3 days.

            The Deputy for Investment Services shall present the result of review and verification to Head of BKPM. If the application is approved, the Deputy for Investment Services shall make a proposal letter of Head of BKPM to the Finance Minister. If application is rejected, the Deputy for Investment Services shall submit a letter of rejection to the applicant. This shall be done within 2 working days.

            After Head of BKPM issues policy on guideline and procedure for submitting application for tax holiday, the investment company concerned whose business activities are classified as “pioneer industry” that has meet the stipulated requirements, may submit a tax holiday application through BKPM. With grant of tax holiday facility for 5-10 years, it is expected that the companies whose field of business is in pioneer industry such as oil refinery, steel industry, and renewable energy sources will grow and develop in Indonesia. This field of business is highly required to strengthen the deepening of Indonesia’s industry structure and economy.

            Pioneer industries that can be given tax holiday facility are basic metal industry, oil refinery industry, and/or organic chemicals derived from natural oil and gas, machinery industry, and renewable energy and/or telecommunication devices industry. There industries shall have a minimum investment of Rp 1 trillions. Yet, however, by considering competitiveness of national industry and strategic value of certain businesses, the Finance Minister may grant tax holiday facility to other industries in addition to the pioneer industries.    

LOW FINANCES ENABLE FOREIGN CAPITAL TO INVEST IN AIRPORT SECTOR

            Development of airport infrastructure in Indonesia has been implemented quite significantly, but now the problem is in finances. Therefore, it enables foreign investment to co-support airport development. Recently, PT Angkasa Pura I and II are accelerating development of airports under their management, and the number of airport services users has exceeded its capacity. Lack of capacity is still a problem in international airports that should immediately be tackled. Very rapid growth in number of passengers and increase of number of fleets operated by air transport companies ib not balanced with increase of airport capacity.

            If this is not responded, it will be difficult for airport management to anticipate number of passengers which increases every year. For some main airports, there should be a development of new airport with larger capacity as it impossible to develop the existing airport due to land availability. Now, there are 14 airport projects worth Rp 32 trillions which will be constructed or developed in supporting Masterplan for Acceleration and Expansion of Indonesia’s Economic Development (MP3EI).

            Airport which should urgently be developed is Soekarno-Hatta airport whose passenger number has reached 44.3 millions. It means that the number has reached two times of its capacity at 22 million passengers. This does not close the possibility for partnership with foreign investors, whether in airport development, management, or infrastructure. Concerning Soekarno-Hatta airport, there are already three foreign companies, i.e. two Indian investors and one South Korean investor, namely GMR Airport, GVK Group, and Incheon International Airport, who are interested to invest their capital on the development of Soekarno-Hatta airport even though there is no agreement yet from PT Angkasa Pura II, said Tri S. Soenoko, President Director of PT Angkasa Pura II.