Sat, 10 Mar 2007
From: The Jakarta Post
By Andi Haswidi, The Jakarta Post
The passage of the investment bill is set to miss the March 13 deadline as the government and House of Representatives still find themselves at odds over the issue of incentives for investors.

"There is one final chapter that we haven't agreed upon, but it is the one with the most difficulties -- the incentives chapter," House Commission VI deputy chairman Lili Asudiredja told The Jakarta Post after chairing closed-door talks on the bill with the government Thursday.

According to minutes of the meeting obtained by the Post, the government is opposed to most of the provisions set out in the incentives chapter drawn up by the committee, which covers such topics as the types of businesses that can be granted incentives, and the types of incentives that can be granted.

Legislator Hasto Kristianto blamed the government for the prolonged debate, saying it had failed to present an acceptable alternative to the House-drafted incentives chapter at the meeting.

"The government has not initiated any breakthrough to address the stalemate in the incentives debate," he claimed.

Speaking to reporters after the meeting, Hatanto Reksodipuro, the Trade Ministry's secretary-general, who lead the government team at the meeting, said that the government's stance should be clear from the incentives it was already granting to business under various government regulations, such as Regulation No. 1 of 2007, which allows taxes to be deferred for longer periods.

The government currently offers a wide variety of incentives to business through tax breaks and relief for designated industries, especially for export-orientated firms and firms that import certain types of textile products.

In response to Hatanto's statement, Hasto said that a government regulation had to be based on a law.

"This is exactly what we are talking about. On what law is the government basing its incentives regulations?"

Despite the disagreement over incentives, the meeting managed to resolve the debate on the chapter granting power to the government to renegotiate contracts with foreign investors should they be found guilty by a court of committing corporate crimes, such as tax evasion and marking up cost-recovery estimates.

"The government has agreed on the main principles of the proposed chapter, but wants some rewording," he said.

With a date for the finalization of the incentives debate still unclear, and with further work to be done on the details of the corporate crimes chapter, Hasto said that the bill would be delayed yet again, despite being before the House for almost two years.

However, he said that the committee would fast track its discussions so that all of the chapters could be finalized by the end of this month.

Once passed into law, the investment bill will provide for non-discriminatory treatment as between local and foreign investors, competitive investment incentives, two-year stay permits for foreign investors, corporate social and environmental responsibilities, the extension of land use rights (titles) to 95 years, the establishment of special economic zones and various other aspects designed to improve the country's investment climate.



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