Highlights of the IMF economic reform package
Highlights of the IMF economic reform package
JAKARTA (JP): These are some of the main points in the
memorandum attached to the letter of intent from President
Soeharto to the International Monetary Fund.
* Gradual elimination of fuel and electricity subsidies,
starting on April 1.
* Increases in excises on alcohol and tobacco on July 1.
* Remove VAT exemptions on goods such as electricity for
private companies, taxis, soybean feed for cattle, sugar,
personal goods, medical equipment and other machinery and capital
equipment.
* Impose a 5 percent local sales tax on gasoline starting
April 1.
* Expand range of goods subject to luxury sales taxes.
* Raise the annual tax audit coverage. Develop improved VAT
audit programs. Increase recovery of tax arrears.
* Incorporate Investment Fund and Reforestation Fund into the
central government budget.
* Discontinue any special taxes, customs or credit privileges
to the National Car. Discontinue any budgetary and extra-
budgetary support and credit privileges to IPTN projects.
* Limit growth of broad money to 16 percent in 1998.
* Amend Banking Law to allow full privatization of state
banks.
* Tighter supervision of commercial banks.
* Lift restrictions on branching of foreign banks by February.
* Cut import tariff on food items to a maximum 5 percent.
* Abolish local content rules on dairy products from Feb. 1.
* Cut tariff rates on non-food agricultural products by 5
percentage points.
* Abolish import restrictions on all new and used ships.
* Phase out export taxes, beginning with leather, cork, ore
and waste aluminum products on Feb. 1. Replace some export taxes
with rent taxes to discourage overexploitation of natural
resources.
* Eliminate all types of export restrictions, such as quotas,
within three years, unless for health or security reasons.
* Lift export ban on palm oil after March; set export taxes on
palm oil at rates not exceeding 20 percent.
* Remove restrictions on foreign investment in palm oil
plantations on Feb. 1, and on wholesale and retail trade by
March.
* Dissolve all formal and informal restrictive marketing
arrangements for cement, paper and plywood as of Feb. 1.
Eliminate internal and external trade restrictions on cement.
* Allow traders to buy, sell and transfer farm products --
including cloves, cashew nuts, oranges and vanilla -- across
district and provincial boundaries.
* Abolish all retribusi (local taxes) at all levels on export
goods.
* Limit Bulog's monopoly to rice. Permit flour millers to sell
or distribute flour to any agent from Feb. 1. Allow all traders
to import sugar and sell it domestically. Release farmers from
formal and informal requirements to plant sugarcane.
* List 12 state enterprises in the first year, selling
controlling or even complete stakes to the private sector. Sell
more shares of state companies already listed.
* Set clear profit and performance targets on all remaining
state companies, eventually closing nonviable enterprises.
(emb/prb)b