New policy to boost 'the east'<\/p>\n
JAKARTA (JP): President Soeharto is considering the
\nintroduction of new tax incentives to companies planning to
\ninvest in eastern provinces of Indonesia, a minister said
\nyesterday.<\/p>\n
\"The President is considering new incentives, but he said they
\nmust not contradict existing regulations,\" State Minister of
\nResearch and Technology B.J. Habibie told journalists after the
\nfirst plenary meeting of the Council for the Development of
\nEastern Indonesia at the Bina Graha presidential office.<\/p>\n
The council comprises of 13 ministers, including the Minister
\nof Finance, Minister of Agriculture and Minister of Defense and
\nSecurity, as well as senior officials.<\/p>\n
Habibie, who is also the executive chairman of the council,
\nsaid that tax incentives are part of the proposals put forward to
\nthe President by the council in the one-hour meeting.<\/p>\n
Habibie said that additional incentives are required because
\ndevelopment in the country's eastern part is more difficult than
\nits other areas.<\/p>\n
\"There are many hurdles in developing eastern Indonesia
\nbecause of its remoteness, which can make it expensive for
\ninvestors to commence businesses,\" he said.<\/p>\n
Underdeveloped eastern Indonesia has become a major concern
\nfor policy makers as well as various observers since it can
\nheighten criticism on regional disparity amid the country's
\noverall impressive economic growth.<\/p>\n
Tax-free<\/p>\n
Habibie, concurrently head of the Agency for Technology
\nAssessment and Implementation, also said the council's proposals
\ninclude a temporary tax-free status for companies setting up
\noperations in eastern Indonesia.<\/p>\n
\"The incentives are expected to spur investors to enter
\neastern Indonesia. Once their businesses have matured, we can
\nbegin imposing taxes on them,\" he said.<\/p>\n
It was only last December when the government issued new tax
\nlaws, effected in January, which allow investors operating in
\neastern parts of Indonesia to carry forward losses for up to 10
\nyears.<\/p>\n
The other tax incentives offered by the laws include
\nacceleration in asset depreciation and the reduction of the 20
\npercent withholding tax on after-tax profits of permanent
\nestablishments in Indonesia.<\/p>\n
Habibie also said that the council had appointed four
\ntask forces to formulate policy proposals on environment, human
\nresource development and technology, infrastructure and
\ninstitutional development.<\/p>\n
The council will also take into account existing regional
\ncooperation with other members of the Association of Southeast
\nAsian Nations in making proposals for the development of eastern
\nIndonesia, he said.<\/p>\n
He added the council has a team of advisors consisting of
\nformer governors of provinces encompassed in eastern Indonesia.
\n(hdj)<\/p>",
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"sponsor": "Okusi Associates",
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