Hadi Poernomo new director general of taxation

JAKARTA (JP): Hadi Poernomo was installed on Monday as the new director general of taxation, replacing Machfud Sidik, who was appointed director general of fiscal decentralization, a new post at the finance ministry.

Minister of Finance Prijadi Praptosuhardjo said the reshuffle was part of an overall restructuring as the finance ministry anticipated tough fiscal challenges ahead.

"The challenges ahead require the finance ministry to restructure its organization," Prijadi said in a speech during the inauguration ceremony.

Hadi, who was previously the director of tax inspection, had long been expected to replace Machfud, who assumed the post of director general of taxation last year.

Prijadi said the tax office must work hard to increase the country's relatively low tax revenue, but the effort should not stifle the business sector or the economy in general.

He added that the tax office also must boost its performance and credibility, and improve its administrative services in order to gain the public's confidence.

The tax office raised some Rp 97.2 trillion (US$10 billion) in tax revenue in the nine-month 2000 fiscal year, slightly more than the government's target of Rp 94 trillion.

The tax revenue target for the 12-month 2001 fiscal year is about Rp 180 trillion, compared to the total state budget of Rp 315.76 trillion.

Machfud has been roundly criticized by businesspeople over the recent introduction of various new tax rulings aimed at boosting tax revenue, including increasing the income tax on the interest of bank deposits to 20 percent from 15 percent.

Prijadi said Machfud's new position was an "important post". He said Machfud must design new rulings to implement the government's new fiscal decentralization policy, including intergovernmental fiscal relations.

The new fiscal decentralization policy is part of the autonomy law that came into effect earlier this year, giving provincial and regency administrations the power to manage their own economic and social affairs.

The government is under pressure from the International Monetary Fund to prevent regional administrations from going on a borrowing spree to help finance their budgets.

It is feared that borrowing by the regions could pose a risk to the country's overall economy if regional administrations default on their loans.

The government has issued a circular banning provinces and regencies from taking out both domestic and overseas loans for at least the remainder of this year.

Prijadi also announced a number of new appointments to fill other key posts at the finance ministry, including three new top officials at the Capital Market Supervisory Agency, or Bapepam.

The three new officials at the agency are Mohammad Noor Rahman, who will head the financial inspection bureau for publicly listed financial services-related companies; Indarto, who will lead the financial inspection bureau for publicly listed nonfinancial companies; and Anis Baridwan, who will head the accountancy and transparency bureau.

Prijadi also raised the status of the agency for state auctions and claims to that of a directorate general, and appointed Karsono Surjowibowo as its director general.

But the finance minister cut the authority of the fiscal and monetary policy body, which is now the fiscal policy body. This move was made because Bank Indonesia, as the country's independent central bank, controls monetary policy.

Prijadi, however, said he expected the fiscal policy body to cooperate closely with Bank Indonesia to achieve monetary stability. (rei)