Govt seek tax incentives to woo investors
Govt seek tax incentives to woo investors
JAKARTA (JP): State Minister of Investment and State
Enterprise Development Laksamana Sukardi proposed on Wednesday
various incentives, including an income tax holiday and an offer
of permanent residency for foreigners in an attempt to bolster
investment.
Speaking during a hearing with the House of Representatives,
Laksamana said to revitalize the real sector, the government must
review various incentives and abolish disincentives.
His proposal, presented to House's Commission V on industry
and trade affairs, is subject to approval from the Ministry of
Finance and the Ministry of Industry and Trade.
It includes a limited offer of a tax holiday, a scheme that
runs counter to the existing tax law and the economic recovery
program as worked out with the International Monetary Fund (IMF).
The Ministry of Finance is currently reviewing the tax holiday
scheme instituted in February by the previous administration of
former president B.J. Habibie. The scheme offers a tax holiday of
up to 10 years for investors in 22 "pioneering" industrial
sectors.
Laksamana's proposal is for an income tax holiday for all new
investment projects until March 31. Thereafter, investors would
be offered tax deductions.
"The idea behind this scheme is to attract investment within a
short time so as to create more jobs and to boost economic
growth," he said.
Calling the scheme an "Early Bird Program" he said only quick
investors with commitment would benefit from these incentives.
His proposal also gives incentives to existing investors.
Investment projects that have not begun production would enjoy
similar tax holidays and deductions for one year starting on Jan.
1.
He proposed to revive or extend import facilities, for up to
one year, for companies which have been working at below capacity
because of the crisis. Companies which raise their production
capacity would be offered import facilities on raw materials.
Companies which have operated their machinery for the last
five years would enjoy import facilities for spare parts
equivalent to 5 percent of the machinery's value.
Laksamana offered companies exemption from land and property
taxes during the construction period and two years thereafter.
There would also be income tax deduction for benefit payments
to companies operating in remote areas and an exemption on value
added taxes for export-oriented companies.
Laksamana also sought to attract foreigners as well as foreign
companies to work in the country.
Foreigners investing more than $1 million should be given
permanent resident status, he said.
He proposed six-year work permits for expatriates in the
fields of quality control and export marketing, and two-year
extensions for expatriates's work permits.
He said the Provisional Stay Permit Card (KITAS) should be
turned into a multifunction immigration document.
He proposed to rescind a 1995 regulation requiring the
presence of an Indonesian on a company's board of directors and
that the personnel director must be an Indonesian.
To streamline the investment process, Laksamana suggested the
establishment of service centers throughout Indonesia providing
information on procedures, policies and opportunities, he said.
Economic indicators, immigration and labor issues and
information on infrastructures would also be provided, he said.
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