High Bureaucratic Costs Obstruct Local Industry Competitiveness for 2015 AEC

Fitri Novia Heriani, Robert Sidauruk

Indonesia’s participation in the 2015 ASEAN Economic Community (AEC) is raising concerns about potential impacts on domestic industries. The high bureaucratic costs in almost every sector in Indonesia has become an important reason to doubt Indonesia’s preparation for welcoming AEC in 2015.

Sofjan Wanandi, Chairperson of the Indonesian Employers Association (APINDO), contends that the competitiveness of local industry is highly influenced by the level of operational costs that must be spent to run a business. Unfortunately, bureaucratic costs remain an obstacle for local industries.

“It appears to me that everynew regulation means another bureaucratic cost. Such circumstances are surely not in line with efforts to stimulate local industry competitiveness,” Sofian said during a seminar on the upcoming 2015 AEC integration in Jakarta on Tuesday.

To address this issue, Sofian suggests the Government start reviewing existing regulations that impose burdensome bureaucratic costs on local industries, such as taxation for small andmedium sized enterprises (SMEs).

“The tax on this group of businesses must not demote the development of competitiveness amongst them,” added Sofian.

Sofian further argued that the high cost of bureaucratic compliance also arises in relation to infrastructure development. This situation, Sofian continued, has caused many parties to be reluctant to be involved in long term national infrastructure projects.

Based on these considerations, Sofian suggests that in the case of Indonesia e several industry sectors be excluded from AEC in 2015 due to a lack of preparedness. One of these sectors is the service industry. Sofian asserts that the Government must not only rely on the commodity sector but must also prepare human resources in the service industries.

Likewise, Zaldy Masita, Chairman of the Indonesian Logistics Association, believes that Indonesia is not well prepared for AEC for 2015, especially in the logistics sector. Zaldy argues that in addressing this issue, the Government still needs to strengthen the maritime logistics sector by allowing more private and foreign investment.

“The Government must facilitate access for Indonesia’s maritime logistics businesses so that they can penetrate ASEAN countries’ markets,” said Zaldy.

(hot/kc)

 

Fitri Novia Heriani, Robert Sidauruk

Indonesia’s participation in the 2015 ASEAN Economic Community (AEC) is raising concerns about potential impacts on domestic industries. The high bureaucratic costs in almost every sector in Indonesia has become an important reason to doubt Indonesia’s preparation for welcoming AEC in 2015.

Sofjan Wanandi, Chairperson of the Indonesian Employers Association (APINDO), contends that the competitiveness of local industry is highly influenced by the level of operational costs that must be spent to run a business. Unfortunately, bureaucratic costs remain an obstacle for local industries.

“It appears to me that everynew regulation means another bureaucratic cost. Such circumstances are surely not in line with efforts to stimulate local industry competitiveness,” Sofian said during a seminar on the upcoming 2015 AEC integration in Jakarta on Tuesday.

To address this issue, Sofian suggests the Government start reviewing existing regulations that impose burdensome bureaucratic costs on local industries, such as taxation for small andmedium sized enterprises (SMEs).

“The tax on this group of businesses must not demote the development of competitiveness amongst them,” added Sofian.

Sofian further argued that the high cost of bureaucratic compliance also arises in relation to infrastructure development. This situation, Sofian continued, has caused many parties to be reluctant to be involved in long term national infrastructure projects.

Based on these considerations, Sofian suggests that in the case of Indonesia e several industry sectors be excluded from AEC in 2015 due to a lack of preparedness. One of these sectors is the service industry. Sofian asserts that the Government must not only rely on the commodity sector but must also prepare human resources in the service industries.

Likewise, Zaldy Masita, Chairman of the Indonesian Logistics Association, believes that Indonesia is not well prepared for AEC for 2015, especially in the logistics sector. Zaldy argues that in addressing this issue, the Government still needs to strengthen the maritime logistics sector by allowing more private and foreign investment.

“The Government must facilitate access for Indonesia’s maritime logistics businesses so that they can penetrate ASEAN countries’ markets,” said Zaldy.

(hot/kc)

 

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