Incentives needed to push investment in eastern regions<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
State Minister for Eastern Indonesian Development Manuel Kaisiepo
\nsaid on Wednesday tax incentives were badly needed to attract
\ninvestors to eastern Indonesia and accelerate economic
\ndevelopment in the region.<\/p>\n
He said incentives must be offered particularly for the
\nfishery and agribusiness sectors.<\/p>\n
\"Do not expect an acceleration of economic development in the
\nregion if we cannot accommodate the needs of investors,\" he told
\nlawmakers during a hearing with House of Representatives
\nCommission IV for transportation and communications.<\/p>\n
Manuel said the investment incentives should include a tax
\nholiday and soft loans from the banking industry.<\/p>\n
He said his office had proposed the incentives but that other
\nrelated ministers had so far rejected the plan.<\/p>\n
President Abdurrahman Wahid signed a decree in 2000 to provide
\ntax incentives for investment in eastern Indonesia, but then
\ncanceled the policy in response to strong opposition from
\nMinistry of Finance. The ministry said the decree would violate
\nexisting law, which stipulates that no region can be granted
\nexclusive tax breaks.<\/p>\n
The decree contained exemptions on value added taxes, income
\ntaxes and import duties for foreign investors for a duration of
\neight years.<\/p>\n
The eastern part of the country is widely regarded as lagging
\nfar behind western Indonesia, particularly Java, in economic
\ndevelopment.<\/p>\n
Accelerating economic development in eastern Indonesia is seen
\nas crucial in helping to ease rising separatist demands in the
\nregion.<\/p>\n
Manuel said there should be a consensus on the part of banks,
\nbusinesspeople and government officials to accelerate development
\nin eastern Indonesia.<\/p>\n
Elsewhere, Manuel explained that small and medium-scale
\ncompanies in the region were having difficulties expanding their
\nbusinesses because bank loans were hard to get.<\/p>\n
In September last year, leading banks made an agreement with
\nthe minister to give full authority to their local branches to
\nextend loans to businesses in eastern Indonesia, in a move that
\nwas to help promote economic growth in the region.<\/p>\n
However, Manuel said there were few signs that more money was
\nflowing from the western part of Indonesia to the eastern part
\nvia the banks.<\/p>\n
About 80 percent economic activity in the region is dominated
\nby small and medium enterprises, mainly in the fishery and
\nagribusiness sectors.<\/p>\n
During the same hearing, a deputy to the minister of maritime
\naffairs and fisheries, A.R. Maklin, sought the support of
\nlawmakers to upgrade the Makassar Port in South Sulawesi and the
\nBitung Port in North Sulawesi to become international hubs
\nserving the eastern regions.<\/p>\n
These hubs are necessary to accelerate economic development in
\neastern Indonesia, he said.<\/p>",
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"sponsor": "Okusi Associates",
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