Tax exemption proposed for travel in ASEAN

JAKARTA (JP): Travelers leaving Indonesia for other ASEAN countries can soon expect to be exempted from exit taxes following the government's most recent commitment to spur subregional economic growth and cooperation.

Coordinating Minister for Production and Distribution Hartarto said the exit tax exemptions were expected to encourage travel from Indonesia to other member countries of the Association of Southeast Asian Nations (ASEAN).

"Hopefully, this will also spur cooperation within the ASEAN economic growth areas," he said on Wednesday evening.

Eighteen Indonesian provinces form parts of the three subregional economic cooperation areas or growth triangles, which link all ASEAN countries except Vietnam. These areas are the Indonesia-Malaysia-Thailand Growth Triangle, the Indonesia- Malaysia-Singapore Growth Triangle and the Brunei-Indonesia- Malaysia-Philippines East ASEAN Growth Area.

There are eight provinces involved in the growth areas in Sumatra, four in Kalimantan, four in Sulawesi. Maluku and Irian Jaya are also involved in the growth areas.

Hartarto said the exemptions from exit taxes for travel in these economic cooperation areas was stated in Government Regulation No. 57/1996.

However, he said, the government had not settled a timeframe to implement the ruling, nor had it decided which airports and harbors could apply the exemption.

The exit taxes are Rp 250,000 (US$108.7) for travelers leaving the country by plane and Rp 100,000 for those traveling by ship. According to sources, there are plans to increase these taxes.

Neighboring countries have long urged Jakarta to abolish the taxes, saying they hamper the growth of regional cooperation.

Welcome

Businessman Sofyan Wanandi of the Gemala Group welcomed the plan yesterday, saying it would not only benefit the governments and businessmen of ASEAN countries but the common people as well.

"I think the high exit taxes are often one of the reasons people are reluctant to travel overseas," he told The Jakarta Post. "If many people travel, more interactions will take place, and this is good," he added.

He said the tax exemption would also cut corporate costs, which in turn would boost trade and investment in the region.

Sofyan noted, however, that the government must first develop a control mechanism to ensure that the tax exemption is not abused.

"They must be able to make sure that people don't just stopover in Singapore to avoid the taxes before continuing to the United States," he said.

Hartarto said that apart from applying exit tax exemptions, the government was planning to provide non-fiscal incentives, such as increasing the value limit allowed for commodities of small-scale businesses to be exported duty-free.

The current limit of Rp 50 million, he said, would be increased to Rp 100 million.

Other non-fiscal policies which are starting to be implemented, or are currently being discussed, include the free- flow of cross-border trade between Indonesia and neighboring countries, the gradual provision of more transportation facilities and the implementation of limited open-sky policies.

The government is also planning to reduce the telephone charges linking places within the economic cooperation areas and to expedite sea transportation between North Sulawesi and the southern Philippines.

The economic cooperation areas were established three years ago. Since then 47 memorandums of understanding have been signed.

Hartarto said that only 14 agreements had been followed through so far. These relate to projects on trade, tourism, telecommunications, services and construction of industrial facilities. (pwn)