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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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By virtue of Government Regulation No. 39/1998, the exemption of value added and luxury taxes was revoked as of March 31, 1998.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