JAKARTA - INDONESIA'S government has recommended the cancellation of about 2,000 regional by-laws on tax and retribution, in an attempt to simplify the management of the local economy and create a conducive investment climate, said Finance Minister Sri Mulyani Indrawati.

Ms Sri Mulyani said the Finance Ministry has also evaluated about 1,800 draft by-laws on tax and retribution and 66 per cent of them, or about 1,200, were recommended either to be revised or not to be ratified.

This came just a day after the Indonesian Justice and Human Rights Ministry launched a book of guidelines to help regional administrations draft ordinances.

The moves come amid concerns over a series of by-laws that 'run counter to higher regulations' and 'disrupt the investment climate'.

The government has revoked 974 by-laws since the introduction of regional autonomy in 1999, Justice and Human Rights Minister Andi Mattalata said.

'If the process of drafting a by-law costs, let's say, 20 million rupiah (S$3,000), then the country has squandered at least 18 billion rupiah,' he said at the book launch on Monday.

He said the central government would revoke another 804 'problematic' by-laws.

The publication of the book, Practical Guidelines To Understand The Drafting Of Local Regulations, was supported by the United Nations Development Programme under its Enhancing Communication, Advocacy and Public Participation for Legal Reforms project.

Its project director Wahiduddin Adam, who is also a director at the Justice Ministry, said most of the revoked by-laws were not business-friendly and had created an unfavourable climate for economic activities.

The reference book explains the technical and legal aspects of making regulations, including human rights, gender equality, sustainable development and good governance.

The Home Ministry's head of law examination and evaluation, Mr Janiruddin, said last week that many by-laws had been made solely for the regions to raise their revenue.

As many as 3,000 of the 8,000 by-laws across the country's 500 regions are potentially problematic because they enact redundant taxes that deterred investment in the regions, he added.

Revocation of the by-laws could have been avoided had the regions known how to draft them, Mr Andi said.

'(But) the government will not arbitrarily revoke a by-law just for the sake of landing some huge foreign investment without considering what really happens on the ground,' he added.

THE JAKARTA POST/ASIA NEWS NETWORK