Government to provide more incentives to boost investment

JAKARTA (JP): The government is to provide more incentives for investors in a bid to boost new investment projects this year, it was revealed yesterday.

State Minister of Investment Sanyoto Sastrowardoyo said that offering new incentives was increasingly important to give a breathing space for private companies severely hit by the ongoing economic turmoil.

He declined, however, to give more details."The President advised me not to publicize this policy before consulting with my colleagues," he said after meeting with President Soeharto at his residence on Jl. Cendana, Central Jakarta.

Sanyoto said that the value of foreign investment approvals would probably not exceed US$20 billion this year without special incentives.

The minister noted that the total amount of foreign investment in the last four years averaged about $32 billion.

In the first quarter of this year the government approved 307 foreign direct investment projects worth $5.2 billion, Sanyoto said. This compares with 211 projects worth $6.5 billion in the same period last year.

The situation is more gloomy in the domestic investment sector; in the first quarter domestic investment approval totaled Rp 17.8 trillion ($2.08 billion) for 94 projects, compared to Rp 36.9 trillion during last year's first quarter, he said.

"The impact of the crisis is more strongly felt in the domestic investment sector," Sanyoto noted.

According to Sanyoto, the foreign investments include two projects worth $1.5 billion for electricity, gas and drinking water; housing construction on industrial estates (three projects worth $761 million); the chemical industry (21 worth $734 million), crops (nine worth $433 million); metal products (49 worth $434 million); and hotels and restaurants (11 worth $357 million).

Sanyoto also disclosed that the President would soon grant tax holiday facilities to 10 out of 20 companies that applied for the incentives.

"Most of them are domestic companies, and only two of them are foreign firms," said Sanyoto without further explanation.

In August last year, the President granted income tax exemptions to six out of 19 applicants.

To obtain the tax facilities, companies must contribute to economic development through technology, innovations and equity enhancement, Sanyoto said last year.

Despite the current economic turmoil, Sanyoto said he remained confident that foreign investors still see Indonesia as an attractive site for investment.

"The opinions of multinational companies remain unchanged," Sanyoto said, citing the result of a recent survey conducted by international agencies on Indonesia and Southeast Asia. (prb)