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