New policy to boost 'the east'
New policy to boost 'the east'
JAKARTA (JP): President Soeharto is considering the
introduction of new tax incentives to companies planning to
invest in eastern provinces of Indonesia, a minister said
yesterday.
"The President is considering new incentives, but he said they
must not contradict existing regulations," State Minister of
Research and Technology B.J. Habibie told journalists after the
first plenary meeting of the Council for the Development of
Eastern Indonesia at the Bina Graha presidential office.
The council comprises of 13 ministers, including the Minister
of Finance, Minister of Agriculture and Minister of Defense and
Security, as well as senior officials.
Habibie, who is also the executive chairman of the council,
said that tax incentives are part of the proposals put forward to
the President by the council in the one-hour meeting.
Habibie said that additional incentives are required because
development in the country's eastern part is more difficult than
its other areas.
"There are many hurdles in developing eastern Indonesia
because of its remoteness, which can make it expensive for
investors to commence businesses," he said.
Underdeveloped eastern Indonesia has become a major concern
for policy makers as well as various observers since it can
heighten criticism on regional disparity amid the country's
overall impressive economic growth.
Tax-free
Habibie, concurrently head of the Agency for Technology
Assessment and Implementation, also said the council's proposals
include a temporary tax-free status for companies setting up
operations in eastern Indonesia.
"The incentives are expected to spur investors to enter
eastern Indonesia. Once their businesses have matured, we can
begin imposing taxes on them," he said.
It was only last December when the government issued new tax
laws, effected in January, which allow investors operating in
eastern parts of Indonesia to carry forward losses for up to 10
years.
The other tax incentives offered by the laws include
acceleration in asset depreciation and the reduction of the 20
percent withholding tax on after-tax profits of permanent
establishments in Indonesia.
Habibie also said that the council had appointed four
task forces to formulate policy proposals on environment, human
resource development and technology, infrastructure and
institutional development.
The council will also take into account existing regional
cooperation with other members of the Association of Southeast
Asian Nations in making proposals for the development of eastern
Indonesia, he said.
He added the council has a team of advisors consisting of
former governors of provinces encompassed in eastern Indonesia.
(hdj)