Perda Regulatory Overkill Takes Center Stage Again

Fees, limitations and restrictions — are the words that often follow the infamous regional government reg­ulations (Perda). Now, they are back in the spotlight as President Joko “Jokowi” Widodo pledges to scrap 3,000 Perda this year to attract in­vestors.

Many of the things governed in Perda are unnecessary and contra­vene central government regulations, resulting in a high-cost econ­omy and investor discouragement, said observers and business players.

“A Perda will be an obstacle to economic activities if it results in a high-cost economy,” Regional Autonomy Watch (KPPOD) head P. Agung Pambudhi said Tuesday.

A number of Perda are deemed problematic for businesses, namely one requiring a certain percentage of profits for corporate social re­sponsibility (CSR), local taxes and mandatory requirements for com­panies to hire local workers.

More than half of the 507 Perda that the KPPOD has assessed have proven to be problematic, with them either contravening central govern­ment regulations or having no legal grounds for enforcement. The agen­cy has 5,560 Perda in the pipeline to be assessed.

In Karawang, West Java, where many factories of foreign corporate giants such as Toyota, Nestle, Sharp are located, restrictions are applied on foreign workers.

Companies operating in the vital industrial zone for Southeast Asia’s largest economy are required to em­ploy 60 percent local residents, dis­criminating against foreigners who, according to a prevailing 2013 law on manpower, have equal opportu­nity to get a job in the country.

Besides, the regulation has also made it difficult for the compa­nies to find the competence that they require.

“It is extremely difficult to find workers with the skills set that the companies require there who are lo­cal residents,” said Hariyadi B. Sukamdani, chairman of the nation’s business lobby group, Indonesian Employers Association (Apindo).

Acknowledging these issues sur­rounding thousands of troubled Per­da, President Jokowi has ordered the Home Ministry to scrap 3,000 Perda this year, a move that has been responded to positively by business­es that have experienced the com­plicated process of investing in the country.

“Why make so many regula­tions? We are placing ourselves in a trap. We become insensible, we cannot take quick action,” said Jokowi, a former furniture businessman who was also previously Surakarta mayor.

This will contribute to Jokowi’s vision to raise Indonesia’s com­petitiveness and boost investment, with a target to rank 40^th in the 2017 World Bank’s Doing Business In­dex, from 109^th out of 189 countries this year.

The government’s recently an­nounced 12^th economic stimulus package since September centers on easing the process of setting up a business by slashing many proce­dures and permits required to do so.

“The policy package will boost Indonesia’s rank. But what really needs special attention are proce­dures in the regional governments,” said Chris Kanter, deputy chairman of the Indonesian Chamber of Com­merce and Industry (Kadin).

This is not the first time the gov­ernment has tried to scrap burden­some Perda. In the previous admin­istration, president Susilo Bambang Yudhoyono tried to slash many regional regulations.

However, since the law governs regional autonomy, many regions still have the right to have their re­spective rules, which are also used as means to collect revenues and grow the regions’ economies.

“Perda is the culprit. They have gone off the rails,” said Hariyadi of Apindo. (vny)

--- (Source The Jakarta Post – Wednesday May 4, 2016) ---