RI-U.S. businesspeople boost joint intiatives<\/p>\n
JAKARTA (JP): Indonesian and American businesspeople, buoyed
\nby the progress of their first-year efforts, yesterday expanded
\ntheir joint initiatives to four new areas they believe are
\ncrucial to improving the competitiveness of the Indonesian
\neconomy.<\/p>\n
The 75 executives, who met at the Shangri-La Hotel for the
\nsecond annual Indonesia-U.S. Private Sector Roundtable, worked
\nout a set of recommendations on privatization and deregulation,
\nsmall and medium-size enterprises, the protection of intellectual
\nproperty rights and human resources.<\/p>\n
The first business roundtable in Washington last September
\nzeroed in on three issues related to their countries' bilateral
\ntax treaty, Indonesia's distribution system and customs
\nadministration.<\/p>\n
"We are delighted by the responsiveness of both governments in
\naddressing our priorities," noted R. Michael Gadbaw, Chairman of
\nthe U.S.-Indonesia Business Committee, one of the cosponsors of
\nthe roundtable.<\/p>\n
Gadbaw said previously the U.S.-Indonesia tax treaty gave
\nAmerican companies higher withholding rates than their European
\nand Japanese counterparts, thus penalizing U.S. investors in
\nIndonesia.<\/p>\n
"But we were extremely pleased that the U.S. and Indonesia
\nsigned a protocol on July 24, amending the treaty to lower the
\nwithholding tax rates for royalties, dividends and interests to a
\nlevel comparable to our competitors," Gadbaw, who is also a vice
\npresident of General Electric Co., said.<\/p>\n
He added that restrictions on imports and distribution imposed
\non foreign companies had also been eased by the June 4, 1996
\npackage of deregulation measures.<\/p>\n
The deregulation package allows foreign companies to import
\ncomplementary products from their affiliates overseas and to sell
\ntheir own products locally up to the wholesale level.<\/p>\n
The second business roundtable, which was opened by
\nCoordinating Minister for Production and Distribution Hartarto,
\nwas also co-sponsored by the U.S.-ASEAN Council and the AmCham in
\nIndonesia and hosted by the U.S. Committee of the Indonesian
\nChamber of Commerce and Industry, which is chaired by businessman
\nTony Agus Ardie.<\/p>\n
Gadbaw added that several programs have been launched to help
\nmodernize and improve the efficiency of Indonesia's customs
\nadministration.<\/p>\n
The set of recommendations on the four priority areas was
\nprepared at a workshop Monday and finalized at the roundtable
\nmeeting yesterday.<\/p>\n
Privatization<\/p>\n
Regarding the privatization and deregulation of electricity,
\nwater, toll roads and telephones, the roundtable suggested the
\nestablishment of a regulatory regime to function as a rate-
\nsetting body.<\/p>\n
"But the regulator must be separate and distinct from any
\ngovernment company which provides a similar or competing service
\nand must treat government companies the same as the new private
\nsector companies," the meeting noted.<\/p>\n
The participants brought up two old issues in the petroleum
\nsector; recommending that oil mining contractors be allowed to
\nconsolidate their taxes related to several concessions and that
\noil producers be allowed to sell their own fuel products.<\/p>\n
As Indonesia's car population increases, the need for a
\ndenser, more service-oriented distribution system becomes more
\nurgent," the businesspeople said in supporting their argument for
\nthe deregulation.<\/p>\n
They said these needs can be met by foreign direct investment,
\nand the result would be increased tax revenues to the government.<\/p>\n
They hinted that none of the more than 10 private oil refinery
\nprojects are likely to be implemented unless those involved were
\nallowed to distribute their products.<\/p>\n
The meeting recommended that besides power generation, the
\ntransmission and distribution of electricity should also be
\nopened to private investors.<\/p>\n
"We also recommend a more transparent and competitive regime
\nfor independent power projects," the business roundtable said.<\/p>\n
They also addressed the problems of high credit transaction
\ncosts and the limited scope of lendings to the private sector,
\nrecommending that banks be allowed to secure loans with movable
\nassets such as industrial machinery and that the enforcement of
\ndebt contracts be strengthened.<\/p>\n
"The U.S. private sector has the technology to develop an
\ninformation system to register and track the movement of movable
\nassets," the businesspeople said in supporting their
\nrecommendation.<\/p>\n
The Indonesian government recently enacted a mortgage and
\nhypothec law but it only covers land, buildings and other fixed
\nassets associated with land.<\/p>\n
The roundtable cited the 30 percent tax collected from the
\nclaims paid to an insured party as a disincentive to further
\ninvestments.<\/p>\n
"This practice is an issue because it hinders the time in
\nwhich a company can restore its plant operations," the
\nbusinesspeople noted. (vin)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ri-us-businesspeople-boost-joint-intiatives-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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