Govt to add tax incentives for human resources

JAKARTA (JP): The government is preparing a regulation to increase tax incentives to companies which provide training and education to their employees, a senior official said yesterday.

Assistant to the Coordinating Minister for Production and Distribution Ihjar Musa, said the regulation would allow companies to have more than 100 percent tax deduction.

"We haven't agreed on the percentage of tax deductions, but it will certainly be over 100 percent," Ihjar said at the sidelines of a conference on the future of the country's manufacturing sector.

In Malaysia and Australia, the amount of companies' expenses on employees' training and education which could be deduced from their taxable income was between 100 percent and 200 percent, he said.

Ihjar said the policy was now being prepared by the education ministry, the manpower ministry and the coordinating ministry of production and distribution and it was expected to gain approval by the end of the year.

"The policy aims to encourage more companies to improve their human resources so they will be able to compete internationally," he said.

Ihjar, who heads the service and infrastructure division in the ministry, said the proposed regulation would clarify the existing policy on tax incentives for companies, which provide training and education to its employees.

He said the government had issued a tax regulation allowing companies to deduct their expenses for training and education from their taxable income.

But the regulation was not clear and often abused, he said.

The theme of yesterday's conference, held by information technology company PT Astra Graphia, was the country's manufacturing sector in the global market after the year 2000.

Coordinating Minister for Production and Distribution, Hartarto, said human resources and knowledge of applicable technology was an important factor for information technology to compete internationally.

According to the minister, the information technology market in Indonesia reached US$948 million last year and was expected to increase to $1.1 billion this year.

The information technology market for members of the Association of Southeast Asian Nations (ASEAN) totaled about $6.33 billion last year.

Ihjar said a team comprising 14 ministers and headed by the Coordinating Minister for Production and Distribution was established last July to coordinate the synergy between the information and telecommunications sector in the country.

The group, based on Presidential Decree No. 30 this year, consisted of 14 ministers including the ministers of finance, industry, manpower, research and technology, investment and tourism, post and telecommunications, he said. (das)