Jakarta,(ANTARA News) - As many as 21 foreign and domestic investor plans to set up oil refineries in Indonesia worth a total of 39.36 billion US dollars plus Rp 18.3 trillion and approved by the government in the period 1994-2000 were not realized and therefore canceled, a capital investment official said.
The oil refineries were to have been built in Java, Sumatra (Aceh and Riau), Kalimantan, Sulawesi dan West Nusa Tenggara (NTB), Muhammad Nadjib, deputy chief for investment development at the Capital Investment Board (BKPM), said here Wednesday.
"The projects were automatically canceled as that is the rule when an investment project is not realized within three years since being officially approved," Nadjib said after a discussion themed "Drawing Up a Capital Investment Roadmap."
The investors obtained the government`s approval for their plans in 1994-2000 but they shelved them because the government did not meet their requests for tax holidays, tax exemption for capital good imports, and investment guarantees.
"I heard from them they had asked for tax incentives and investment guarantees. But at the time, our regulations did not yet provide for such facilities. Tax holidays were scrapped in 1983, income tax (PPh) was only lowered a little (from 30 percent to 28 percent)," he said.
Moreover, there was a decline in exploraion activity to find new oil reserves in Indonesia making the oil refining business less attractive than before, Nadjib said.
Setbacks had also happened in the realization of investor`s plans to engage in the production of biodiesel from Crude Palm Oil (CPO). "Most of the plans have remained unrealized," Nadjib said.
Among the causes of the stagnation were complicated investment procedures, especially to obtain the vast tracts of land needed. Another adversity was that the marketing prospects had remained unclear as the use of biofuel by the public had yet to become mandatory.
"The industrial feedstock is expensive. When the CPO price goes up in the market, people prefer to export it rather than process it into biofuel. The investment cost of biofuel making is also high," he said.(*)