Development of the eastern region
Development of the eastern region
The choice of Biak, Irian Jaya, as the pilot project for the
eastern region's comprehensive development program is laudable.
The tax incentives and liberal regulatory procedures will most
likely woo domestic and foreign investors. Besides the program,
the government should probably also think in terms of:
* Cost of communication. Communication is vital for national
unity. Today, a one-minute telephone call to the far eastern
region costs about Rp 1,650, plus PPN (value added tax).
In the developed world, relentless technological changes are
driving down the cost of telephone calls, and a call from London
to New York costs virtually the same as carrying it from one
house to the next.
If the cost structure is similar in Indonesia, it is probably
time for a retrospection of the policy of distance-based charges
by telephone companies. With increasing affluence, people in
cities here are spending more time making telephone calls.
When the affordability of the people and businesses of the far
eastern region are taken into consideration, there seems to be a
social and business justification for economical pricing of long
distance calls. This will make it possible to provide distant
areas with many of services in terms of information and develop
in these regions.
* Subsidized air transportation to this region.
* "Investment allowances" to companies operating in the
developed region for investments in the far eastern region. When
existing companies diversify and expand their operations and
invest in industries in the identified backward regions, they may
be allowed to claim investment allowances against the payment of
income taxes from the profits of existing companies; the
allowances depending on the level of the region's prosperity and
the type of industry.
* Substantial reductions/waivers in the personal income taxes
of executives taking up jobs in this region.
* Ease in employing expatriates and waiver of expatriate-
related costs.
Probably, benefits such as these are investments by the
government which, in turn, will bring much higher returns to the
exchequer in the long run. These benefits would offset capital
costs and the cost of doing business in these regions and attract
domestic and foreign investors.
D. PRABHAKAR
Jakarta