Duties for mining equipment scrapped

Duties for mining equipment scrapped

Fabiola Desy Unidjaja, The Jakarta Post, Jakarta

The government is providing tax free facilities to oil and gas
companies that import upstream mining equipment as well as oil
products in a bid to reduce production costs in the industry.

Regulations on the move were signed last week by Minister of
Finance Yusuf Anwar.

"Tax free facilities are specified for 63 items, including
drilling tools, drilling equipment and other heavy equipment in
the upstream industry," the Ministry of Energy and Mineral
Resources' Director General for Oil and Gas Iin Arifin Takhyan
said on Tuesday.

Ministerial Decree No. 06/pmk 010/2005 signed on Jan. 28
stipulates that the tax-free facility will be applied for 18
months until July 15, 2006, and carries a retroactive principle
for all purchases made since July 16, 2002.

Decree No. 07/pmk/2005, signed on Jan. 18, stipulates that the
government has also scrapped import duty on oil products such as
leaded and unleaded premium fuel for all industries.

In the decrees, the government will also cut the time needed
to get a value-added tax rebate on exploration and production
equipment from 180 days to 120 days.

"This decision was made because the government is still
subsidizing fuel and we need to have more companies to use
drilling equipment, meaning that they will boost the upstream
industry," Iin said.

The government has been trying hard to boost the energy
industry and attract more investors due to the 5 percent per year
declining oil production over the past decade.

Indonesia is the largest oil producer in Southeast Asia but
continues to import crude oil to fulfill increasing domestic
demand.

Iin further said that revision of decrees took time as it
required approval from the House of Representatives.

"We are also considering scrapping several taxes imposed on
the mining industry during the exploration stage," he said,
without elaborating.