Resuming strategic projects

Resuming strategic projects

President Megawati Soekarnoputri is scheduled to lead a
ceremony marking the resumption of 14 strategic projects with a
total investment value of US$9.3 billion at the ammonia and
fertilizer factory of PT Pupuk Kujang in Cikampek, West Java, on
Wednesday.

The decision to resume the projects is a very significant step
because the investment will certainly involve foreign
businesspeople, who are expected to help the Indonesian economy
recover.

All of the projects had been postponed for some years due to
corruption, collusion and nepotism, not to mention the financial
crisis that hit Asian countries, including Indonesia, in 1997.

The postponement of the projects apparently frightened foreign
investors away from doing business in Indonesia.

Although the resumption of the projects will hopefully bring
international investors back to Indonesia, it may also revive
corruption, collusion and nepotism.

It is thus necessary to control the 14 strategic projects or
else they will only become new cash cows. -- Media Indonesia,
Jakarta

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Editorial-Tax
Other Opinion
JP/6/OTHER

Tax free in Batam

By virtue of Government Regulation No. 39/1998, the exemption
of value added and luxury taxes was revoked as of March 31, 1998.
The government regulation was part of the second letter of intent
between Indonesia and the International Monetary Fund (IMF).

For the people, the government and the private sector in
Batam, the exemption of the value added and luxury taxes are no
longer a matter of procedure but a must. The central government
seems to have no choice but to agree with it.

In case of possible questions from other regions about the
matter, local officials may say companies in Batam must still pay
income taxes although they are exempted from value added taxes
and luxury taxes.

Batam seems to be trapped, or even to have trapped itself, so
that without the exemption of the value added tax, investors will
not come. Such a facility is indeed useful to investors but is
not the most important thing. The Survey Center for International
Private Enterprise said there are at least 12 factors which are
usually taken into considerations by investors, with tariffs and
taxation ranking ninth.

Among the other factors in attracting investors are the local
market's characteristics, currency risks, trade policy,
government regulations, political stability and macroeconomic
policy. -- Bisnis Indonesia, Jakarta