Incentives planned to cope with upcoming price increases
Urip Hudiono, The Jakarta Post, Jakarta
Low-income families will not be the only ones getting a helping hand from the government to cope with the upcoming fuel price hike, with industries, workers and farmers also set to receive incentives as compensation.
The government is currently working out incentive schemes for the country's business community and industries, to be announced and implemented following the fuel price hike, Coordinating Minister for the Economy Aburizal Bakrie said on Thursday.
Details remain sketchy, but Aburizal said the incentive for workers, for example, could be in form of raising the minimum amount of their monthly wage exempt from tax, which currently stands at Rp 1 million (about US$97).
In overall, "the incentives will be in the form of fiscal and non-fiscal incentives, as well as short-term and long-term ones," he said without elaborating.
"We are also talking with their employers to get assurances that there won't be any lay-offs following the fuel price hike," Aburizal said.
For farmers, the incentives would include raising the price of rice that the government purchases -- through State Logistics Agency (Bulog) -- from its current level of Rp 1,330 per kilogram.
Separately, Aburizal was quoted by Antara as saying that possible incentives for industry might include applying stricter customs checks on imported goods that domestic, labor-intensive industries can already produce, such as textiles, electronics and foot apparel, in order to reduce smuggling.
The Indonesian Chamber of Commerce (Kadin) chairman M.S. Hidayat had previously mentioned several incentives the business community and industry had requested to ease possible burdens from the fuel price hike, including the exemption of primary goods from value added tax (VAT), reducing weigh-bridge levies, providing a scheme to be able to pay taxes in installments, and the abolition of terminal handling charges (THCs).
Most industry has been purchasing oil-based fuels at market prices since July, but the upcoming fuel price hike would eventually push up transportation costs, thus increasing production costs.
Meanwhile, in relation to the fuel price hike plan, Aburizal also mentioned that the government would renegotiate up to 25 percent of its debts with foreign creditors -- in response to criticism that the fuel subsidies were not the only factor eating into the state budget's sustainability.
"The negotiations will, however, be conducted carefully, as to not affect our credit rating, which will only make future debt interest payments costlier," he said.
"And we are not asking for a debt haircut, but, if possible, lighter debt terms and longer payment periods, so the saved funds can be used for developing the education and health sector."