Kadin Asks Govt To Cut Subsidy By Rp150 Trillion

Jakarta, April 17 (Antara) - The Indonesian Chamber of Commerce and Industry (Kadin) has suggested that the government cut energy subsidy by about Rp150 trillion so that a bigger fund for regional development could be set aside. "To create effective and efficient monetary and fiscal polices and to increase the competitive edge of Indonesian businesses, we suggest that the government should cut energy subsidy by Rp150 trillion so that a bigger budget for regional development could be set aside," Kadin Deputy Chairman for Fiscal, Monetary and Public Affairs Haryadi B Sukamdani said on the sidelines of the National Congress of Kadin here on Wednesday. He said that by setting aside a fund of that amount, each provinces could get some Rp4-5 trillion so that a big boost for regional development would be created. "We hope that the cutting of the subsidy would be carried out fairly where only the poor group of people will get subsidized energy," he said. The other suggestion raised by the Kadin was the creation of efficient and effective fiscal policies, namely improving the budget management system and shortening unnecessary bureaucratic chains so that the absorption of capital expenditure would increase. Kadin also hoped that the central and regional governments would build synergy in adopting policies so that companies in the region would be able to develop their business effectively. "The government bureaucracy should also be effective in providing services for the middle-class people as the main generator of development," he said. Haryadi said that the government should also make public a clear calculation on the burden that should be borne based on the National Social Insurance System (SJSN). It could be in the form of projection in the government`s balance of payment or in the form of a burden borne by the state and by the private businesses. Unclear division of roles between the government and the private business in improving the people`s welfare and increasing economic growth has served as a source of uncertainty for the private sector in calculating their production cost. "In many countries, fixed benefit-based social insurance system poses fiscal risks in the future. Therefore, the government should consider changing the fixed benefit-based system to fixed dues-based system, or lowering the value of the benefit-based system," he said. He said that the government and Bank Indonesia (BI/the central bank) needed to cooperate in controlling banks` lending rates which were now still relatively high and posed difficulties to businessmen in developing their business. "Kadin supports the government`s efforts to improve the quality and transparency of financial governance for businesses in the country," he said. Finance Minister Agus Martowardojo said the government at present was focusing on preserving the fiscal affairs so that it would remain sound but on the other hand the prosperity of the people should also be maintained. "The strategic step in the 2013 state budget in supporting the soundness of the fiscal affairs is formulated in the form of optimizing income, expenditure efficiency, efficiency in official trips and other steps," he said. Agus also considered the importance of remaining on alert against big inflow of funds because such funds could return soon when their owners withdrew it.