Govt grants tax holidays to six firms

Govt grants tax holidays to six firms

JAKARTA (JP): The government will grant tax holidays to six
out of 19 companies which applied for the facility, State
Minister of Investment Sanyoto Sastrowardoyo said here yesterday.

Speaking to journalists after meeting with President Soeharto,
Sanyoto said the six companies included three national companies
-- consisting of two listed units of the textile producer Texmaco
Group: PT Polysindo Eka Perkasa and PT Texmaco Perkasa
Engineering and PT Kiani Kertas.

The newly established pulp and paper giant PT Kiani Kertas,
controlled by businessman Mohammad "Bob" Hasan, is partly owned
by foundations chaired by Soeharto.

The other three businesses that received the income tax
holiday -- PT Smelting Copper Co., PT Trans Pacific Petrochemical
Indotama and PT Seagate Technology Sumatra -- are Indonesian-
foreign joint ventures.

"Up to now, we have received 19 applications for income tax
exemptions but only six of them have been completed with
comprehensive documents," Sanyoto told journalists.

"The President decided on the tax holidays after he and the
three of us -- myself, Coordinating Minister for Production and
Distribution Hartarto and Minister/State Secretary Moerdiono,
assessed the six applications," Sanyoto added.

Decrees

He said even though Moerdiono was yet to issue government
decrees regarding the granting of the tax relief, the tax holiday
was effective starting yesterday.

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

Sanyoto said Polysindo and Texmaco Perkasa were exempted from
income tax for eight years and five years respectively, Kiani
Kertas for 10 years, Smelting Copper for seven years, Trans
Pacific for six years and Seagate Technology for nine years.

Polysindo in Karawang, West Java, has invested Rp 650.3
billion (US$216.8 million) in plants to produce polyester chips,
polyester filaments, polyester staple fiber, polyester grade and
terephthalic acid.

"Its technology innovation and product diversification are
among the factors considered for qualifying Polysindo for the tax
facility," he added.

Texmaco Perkasa, which operates in Karawang and Kaliwungu,
Central Java, manufactures capital goods, especially for the
textile industry, such as spinning/weaving machineries. Its
strength lies in technology innovation, said Sanyoto.

Kiani Kertas in Berau regency, East Kalimantan, has invested
Rp 1.63 trillion in building pulp and paper mills. It is a
pioneer in the province's pulp and paper industry and responsible
for regional development.

Smelting Copper in Gresik, East Java, with US$715 million
investment, is a pioneer in producing copper-cathode using
domestic raw materials. It is a joint venture between Mitsubishi
Materials Corporation of Japan and PT Freeport Indonesia, which
operates a copper mine in Irian Jaya.

Trans Pacific Petrochemical in Tuban, East Java, with $2.3
billion investment, is the country's first integrated olefin and
aromatic center.

Trans-Pacific is 10 percent owned by Tirtamas, 60 percent by
PT Trans Pacific Petrochemical Ltd. (a Tirtamas affiliate), 20
percent by a subsidiary of Thailand's Siam Cement Public Company
Ltd and 10 percent by Japan's Nissho Iwai Corporation. The
Tirtamas Group is controlled by businessman Hashim
Djojohadikusmo.

Seagate Technology of the United States is located in Medan,
North Sumatra. Its $65 million plant is a pioneer in producing
electronics components.

Seagate is also the world's largest independent disk drive
maker. (rid)