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.