Kadin urges fair treatment

JAKARTA (JP): The Indonesian Chamber of Commerce and Industry (Kadin) yesterday called on the government to pursue a transparent incentives policy and quickly ease liquidity to inject life into businesses.

The chamber said after a national coordinating meeting of its executives here that the government should now develop a transparent policy to deal with a high-cost economy.

"The government should not waive certain companies from import tariffs on capital goods and raw materials. This facility should be open to everyone with clear-cut guidelines," said chairman of the chamber's real estate sector, Agus Kartasasmita.

"The government is also expected to give tax holiday incentives to all new businesses which create more employment and earn foreign exchange. This facility should not be limited to certain firms," he added.

Last month, the government granted tax holiday facilities to six firms: PT Polysindo Eka Perkasa, PT Texmaco Perkasa Engineering, PT Kiani Kertas, PT Smelting Copper Co., PT Trans Pacific Petrochemical and PT Seagate Technology Sumatra.

The chamber also called on the government to ease liquidity as most businesses now faced serious liquidity problems, which could lead to unemployment problems.

"In a bid to enliven businesses, tight money should be loosened and the government should no longer use tight money to stabilize the rupiah against the U.S. dollar," Agus said.

The chamber suggested the government let the market decide on the fair value of the rupiah.

It also called on the government to help reduce banking lending rates to a healthy level by cutting further short-term Bank Indonesia Certificates (SBI) rates to 20 percent by the end of this month and 15 percent by the end of this year.

Minister of Finance Mar'ie Muhammad said at a hearing with the House of Representatives' Budgetary Commission that the government was committed to easing rupiah liquidity.

"We are already aware of the situation and we understand that if this tight liquidity continues for long, it will punish everyone," Mar'ie told the commission.

Mar'ie also said that Bank Indonesia, the central bank, would continue to cut its short-term papers to a healthy level after it cut one-month and three-month SBI rates twice by 5 percentage points to 25 percent and 23 percent respectively. (rid)