Incentives planned to cope with upcoming price increases
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."