Batam investors ask for tax relief

Batam investors ask for tax relief

The Jakarta Post, Jakarta

Hundreds of foreign companies with interests on Batam island in Riau province have asked for tax relief, creating anxiety among island authorities who worry that they will not be able to reach tax revenue targets this year.

The foreign companies have applied for tax relief following a slump in the electronics market in the United States, the largest buyer of electronic goods from the island, Antara news agency quoted the Batam Island Authority officials as saying.

Since the economic slowdown hit major economies five months ago, more than 5,000 workers employed in the electronics industry have lost their jobs.

The news agency quoted industry players as saying that the agency's plan to raise the monthly regional minimum wage to Rp 700,000 (US$70) from Rp 510,000 per month would force many foreign companies to shut down their activities and leave Batam.

The local authorities have projected tax receipts in 2001 at Rp 1 trillion.

To date, there are 515 foreign companies operating in Batam.

Aside from the request for tax relief, the Batam Island Authority was also concerned over a recent report that about 140 foreign companies had evaded their formal tax obligations for many years.

Head of the island's tax office Djangkung Soedjarwadi said his office was auditing the 140 companies and would take them to court.