Govt development tax well below target

JAKARTA (JP): The Ministry of Tourism, Post and Telecommunications got Rp 47.16 billion (US$19.4 million) in development tax in the past three years, less than 20 percent of the targeted Rp 239.74 billion.

The ministry's data shows just Rp 5.92 billion in development tax was collected in the 1994/1995 fiscal year, 13.16 percent of the targeted Rp 45 billion.

In 1995/1996, only Rp 21.61 billion was collected, 25.42 percent of the targeted Rp 85 billion. The ministry got Rp 19.62 billion or 17.89 percent of the projected Rp 109.74 billion for the 1996/97 fiscal year.

Presidential Decree No. 6/1993 rules that the 10 most visited provinces -- North and West Sumatra, Jakarta, West, Central and East Java, Yogyakarta, Bali, North and South Sulawesi -- must impose a 10 percent tax on hotels and restaurants. Twenty percent of the funds collected from this tax should be passed to the Ministry of Tourism, Post and Telecommunications.

The funds should be channeled to the Indonesian Tourism Promotion Board (ITPB) to promote tourism.

The development tax, locally called PB I, was doubled from five to 10 percent effective as of January 1994. It was previously based on a ministerial decree and set at 10 percent. It was later reduced to 5 percent before being doubled to 10 percent again in 1994 and effective only for the 10 provinces.

The country needs millions to promote tourism.

ITPB has been poorly financed over the past several years and has had acute financial problems.

Debts

In 1995, ITPB incurred debts of Rp 21.98 billion to advertising agents and other parties involved in their promotional activities.

ITPB was set up in 1991 as an independent foundation. It spent more than $20 million last year on advertising.

Besides, the development tax, the board's activities are financed from income from promotion programs.

The Ministry of Tourism, Post and Telecommunications has cooperated with the Ministry of Home Affairs to collect the funds but it has not helped much.

Sources said most of the 10 local administrations were reluctant to pass one-fifth of the funds to the ministry as required because they did not think ITPB's activities brought enough overseas tourists into their provinces.

Tourist arrivals last year grew by 18 percent to 5 million, bringing in $6.18 billion in foreign exchange, an increase of about 16.9 percent over the previous year.

The country expects to earn between $7.2 billion and $7.8 billion on 5.3 million to 5.7 million foreign tourists this year.

The government expects tourism will become the country's biggest foreign exchange earner by the end of the Seventh Five- Year Development Plan period in 2004. (icn)