Figure 3.3.7. SME Exporter Problems in 8 Cities

Makassar

Denpasar

Discrimination

Surabaya

Yogyakarta

Uncertainty of

authority

Bandung

Jakarta

Increase cost of

Lampung

doing business

Medan

0%

10%

20%

30%

40%

50%

60%

Propensity of Local Government Prior to Implementation of OTDA 

The already small local government revenue (pendapatan asli daerah or PAD) in 

the local government budget compared to the budget allocated from the central 

government were the main reason that local government setup new PERDA. For 

the regional government as a consequence of the small PAD they have to 

maximize their local earnings through available resource in the region, and the 

easiest way is to setup new PERDA and place local taxes or levies for the use of 

local utilities and facilities. The direct impact of this new PERDA is the increases 

of cost for doing business and at the same time the business will pass the costs to 

the consumer. Figure 3.3.8 below, shows 46 percent of the SME exporters have 

no knowledge of either the local government were more focused on increasing 

income from PAD or more focused on establishing better business climate. 

However, approximately 40 % of the SME exporters indicated the local 

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