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Local Response to Decentralization and Its Impact on the Business Environment

Edy Priyono
Diterbitkan Juli 2003

Abstrak

The main objective of the study is to find out the impact of implementation of regional autonomy policy in Indomesia. The study is a combination between desk study (secondary data analysis) with small field survey in three districts (Yogyakarta, Bantul and Makassar). One of the main findings is that the central government clearly has not completed its big works to issue many regulations to make the policy effective and to avoid possible negative impact of the implementation of the policy. At district level, there are two contradictory responses by local governments. First, there is a spirit to release tight regulations on the business activities through (especially) one stop service office. But, on the other hand, the other spirit is to gain more local revenue from business activities. Meanwhile, the private sector (especially small medium enterprises) is in the “wait and see” position. Their main concern is whether the government (either at central level or local level) has an intention to “disturb” their market (rather than to levy them without disturbing the market). The big question to balance the interest of all agents is how to increase (local) revenue of local government without burdening the private sector. One of the possible answers to the question is to re-formulate the balancing fund allocation, particularly related to the distribution of corporate income tax. That is needed to make a clear link between enabling business environment with local government interest.

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