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 40th in the 2017 World Bank’s Doing Business Index, from 109th out of 189 countries this year.

The government’s recently announced 12th 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)
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