Government may back down on Batam status plan<\/p>\n
Tantri Yuliandini, The Jakarta Post, Jakarta<\/p>\n
The government may back down on its plan to pronounce Batam
\nand its surrounding islands as a free trade area next year as
\npressure mounts to collect more domestic tax revenue for the 2002
\nstate budget.<\/p>\n
A source from the Ministry of Finance told The Jakarta Post on
\nWednesday that the government has three alternatives with regard
\nto Batam.<\/p>\n
One option involves maintaining the area as a bonded zone,
\naccording to the 1995 law on tax and customs. The second involves
\nproclaiming only Batam island as free trade zone, while the third
\nalternative would see the Batam-Rempang-Galang (Barelang) areas
\nbecome a free trade zone.<\/p>\n
\"The government seems to be leaning toward retaining the
\nbonded zone alternative,\" he told the Post, adding that the
\nmatter was still being discussed in Cabinet meetings.<\/p>\n
Separately, Director-General of Taxation Hadi Poernomo said
\nthat the 2002 tax ratio of 13.03 percent agreed to by the House
\nof Representatives on Tuesday has also taken into account value
\nadded tax (VAT) contributions from Batam.<\/p>\n
He said that VAT contributions from Batam would amount to
\napproximately Rp 322 billion (about US$32.2 million) within the
\nRp 184.7 trillion tax revenue estimate for the 2002 state budget.<\/p>\n
Free trade area status would enable companies on Batam to
\nimport goods without paying customs duties and taxes, pending
\ntheir eventual processing, transshipment or re-exportation.<\/p>\n
Batam was initially declared an industrial bonded zone in 1978
\nto attract foreign investment and bolster export competitiveness.
\nThe same status was later given to the nearby islands of Rempang
\nand Galang, forming a total bonded area of 715 square kilometers.<\/p>\n
However, the islands have technically acted as a free trade
\nzone since 10 to 15 years ago, and tax incentives originally
\nintended for industry have also been enjoyed by all residents of
\nBatam, including Indonesian companies there providing products
\nand services not destined for export. This freedom has led to
\nresentment among companies based outside the island.<\/p>\n
Earlier, Batam Industrial Development Authority (BIDA)
\nchairman Ismeth Abdullah said that the government was preparing a
\nnew law to implement free trade area status for Batam and that it
\nwas expected to be finalized by the end of the year.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-may-back-down-on-batam-status-plan-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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