Experts laud planned tax incentives

Experts laud planned tax incentives

JAKARTA (JP): Investment and trade consultants hailed the
government's plan on Saturday to provide new tax incentives in
order to boost the inflow of foreign direct investment into the
country.

But they said that providing tax incentives would not work in
attracting foreign investors if the government failed to create
political stability in the country.

"The bottom line is, the government can not solely depend on a
tax incentive scheme to attract investors. It should also create
a conducive climate for investment," said Johan Bukit, a director
of IndoTrade trade and investment consulting company.

Bukit said the most important thing for the government was how
to create political stability, impose a proper fiscal policy and
eliminate all red tape.

State Minister of Investment/chairman of investment planning
board (BKPM) Marzuki Usman said on Friday he would propose an
amendment to the existing tax law to pave the way for the
issuance of a tax holiday to investors.

Marzuki said without the tax holiday, Indonesia would no
longer be attractive to foreign investors.

Besides preparing the tax holiday, the government would also
empower provincial investment offices (BKPMD) to issue investment
permits in an attempt to lure investors.

As part of the incentives to draw wary foreign investors, the
government is also considering allowing foreigners with a total
investment of at least US$1 million to obtain permanent resident
status, which would free them from visas to enter the country.

According to BKPM, foreign direct investment approved by the
government in the first half of this year dropped 77.5 percent to
$1.88 billion from $8.35 billion in the corresponding period last
year.

However, the number of approved foreign investment in the same
period rose 7.5 percent to 518 projects from 482 projects.

"This phenomenon proves that investment in the country is not
dead, it's just changing its form," Bukit said, adding that he
recognized a shift in investors' interests from large-scale
projects in previous years to medium-scale projects.

Bukit said many investors still complained that the
regulations were not fully implemented, there was a lack of
consistency and it was confusing despite the government's strong
commitment in boosting foreign investment. (01)