Habibie to help shipowners

JAKARTA (JP): President B.J. Habibie pledged on Thursday to review the IMF-prescribed value added tax on importing ships on the grounds that the vessels were of strategic importance.

"It's possible that the value added tax policy will be removed," he told members of the Indonesian National Shipping Association (INSA) at their annual meeting.

He promised that the government would issue a new ruling on the shipping sector in one month to provide facilities for the shipping industry to import vessels and components.

Under an agreement with the IMF in January, the government removed value added tax exemptions, including those on the importing, chartering and maintenance of ships.

INSA secretary-general Barens TH Saragih said that maintaining the value added tax would precipitate the collapse of the national shipping industry, and cause many companies to register their ships in countries with tax free policies like Singapore, Honduras or Panama.

The government exempted the shipping sector from paying value added tax in 1996, but reinstated it early this year as prescribed by the IMF which is organizing a multibillion dollar bailout economic package for the country in return for economic reforms. (rei)