Benget Besalicto Tnb. , The Jakarta Post , Jakarta | Tue, 06/23/2009 1:22 PM | Business
The country's business lobby has called on the government to provide tax incentives for the information technology sector and allow it greater access to financing to accelerate its growth amid the sector's ever-increasing significance in the overall economy.
Anindya Bakrie, deputy chairman of the Indonesian Chamber of Commerce and Industry (Kadin), said Monday the government needed to reform its tax policy to boost the development of the IT sector, whose nationwide penetration remains far less developed than in other countries in the region.
"Currently, the tax on locally made IT products is higher than on the imported ones," he said.
"I think the government should consider providing tax incentives for IT businesses."
He also urged greater accessibility to financing for the IT sector, to increase investments in the underfunded sector.
"Most IT projects so far, particularly by small- and medium-scale companies, face stumbling blocks in getting financing support," Anindya said.
He was speaking to the press after attending a seminar on the information and communication technology (ICT) initiative to improve competitiveness and accelerate economic development, organized by Kadin and leading IT company Intel.
The seminar was also attended by officials from the Information and Communications Ministry and the National Development Planning Agency (Bappenas), as well as businessmen from the Indonesian Society of Information Technology (Mastel) and the Indonesian Association of Computer Businessmen (Apkomindo).
The aim of the seminar was to provide the foundation to draw up a road map on information technology development in Indonesia.
Despite the problems, however, Anindya said the sector was experiencing robust growth, with growth this year expected to reach 10 percent.
"The IT sector has a huge potential in Indonesia. Despite the lack of incentives and financing access, it's been growing well in the country," he said.
"It would grow much faster if the government just provided the incentives and wider access to the financing system."
Although currently regarded as having the strongest growth in the region, Indonesia still saw poor penetration of information technology compared to other countries in the region.
The country's broadband penetration, for instance, is still only about 10 percent.
"Considering the penetration of IT in Indonesia is still very low, we need to work harder to catch up to the other countries in the region," said Bandung Institute of Technology IT expert Suhono Harso Supangkat.
Intel's Indonesia country manager, Budi Wahyu Jati, said that to help speed up IT growth, the government would need to include IT development in its Rp 73 trillion stimulus package.
"The infrastructure that will be developed under the stimulus package should not only cover physical infrastructure, but also ICT infrastructure," he said.
"Much like other infrastructure, the ICT infrastructure's development will also generate a multiplier effect on the economy.
"ICT development has also become an indicator of economic growth of a country."
He pointed out a recent survey that said every 10 percent increase in broadband penetration could potentially boost a country's economic growth by between 0.3 and 0.4 percent.
"As we've witnessed in other countries, ICT can help improve our overall competitiveness and accelerate our economic development," Budi said.
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