Listed firms ask for more incentives

Listed firms ask for more incentives

Urip Hudiono, The Jakarta Post, Jakarta

The government should consider giving more tax incentives to
publicly listed companies as part of its efforts to develop the
country's stock markets and attract more investment through them,
a business association says.

Indonesian Listed Companies Association (AEI) chairman
Airlangga Hartarto said on Thursday many investors preferred
investing through stock markets because it was quick and easy and
the regulations governing them were relatively transparent.

However, a problem lay with the lack of policies from
government to develop the stock markets and tap their investment
potential. The growth of publicly listed companies could be
encouraged through tax incentives, Airlangga said.

A recent survey by AEI shows most companies have to pay more
taxes after going public than when they were privately owned.

"Therefore, AEI proposes the government charge lower tax rates
for publicly listed companies by between 5 percent and 10 percent
lower than (current) rates," Airlangga said on the sidelines of a
World Bank-sponsored workshop on improving the investment
climate.

"Publicly listed companies should also be considered for an
immediate income tax cut, rather than the gradual 25 percent to
30 percent cut as proposed in the government's latest tax law
amendments."

With such tax incentives, Airlangga said, many companies,
including major corporations that were privately owned might
consider going public in the future.

Their revenue potential would spur the bourses' trading and
increase investment in the country.

"The tax incentives could also help ease the recent trend of
companies deciding to delist themselves from local bourses,"
Airlangga said.

Several companies have recently decided to go private --
including electronics firm PT Multi Agro Persada, heavy equipment
company PT Komatsu Indonesia and bottled water company PT Aqua
Golden Mississippi. The companies chose to leave the bourse as
part of their parent companies' policy to only be listed on the
bourses of their country of origin.

Tax incentives could also help spur economic growth and reduce
unemployment in the country, Airlangga said, if the companies
used the funds saved as working capital for expansion.

"If the companies grow and expand, they are more likely to
hire more employees," he said.

Citing a recent study by the Japan Bank for International
Cooperation (JBIC), Airlangga said although private firms
accounted for less than a quarter of the 1,000 Indonesian
companies surveyed, their revenues made up half the total.