Tax facilities to Soeharto-linked firms to be reviewed: Hamzah
Tax facilities to Soeharto-linked firms to be reviewed: Hamzah
JAKARTA (JP): Newly appointed State Minister for Investment
Hamzah Haz said yesterday the government would review special tax
facilities given to companies owned by the family and friends of
former president Soeharto.
Hamzah, one of three cabinet members picked from opposition
parties, said tax breaks obtained illegitimately by businesses
through political connections should be revoked.
"I am placing a priority in reforming things related to
collusion, corruption and nepotism. This includes reviewing tax
breaks," he told reporters yesterday following a meeting with
other economic ministers.
He explained that if tax breaks were given to noneligible and
unqualified companies, the facility should be removed.
Hamzah's plans to review tax breaks is one of several current
efforts to abolish special facilities granted to businesses with
close ties to Soeharto, who was replaced by his protege B.J.
Habibie last week following wide-spread demand for political
reform.
Habibie's new government is currently under public pressure to
eradicate collusion, corruption and nepotism which flourished
under Soeharto's regime.
Among the large business operations granted special tax breaks
last year are PT Kiani Kertas, PT Smelting Copper Co., PT Trans
Pacific Petrochemical Indotama, PT Seagate Technology Sumatra, PT
Polysindo Eka Perkasa and PT Texmaco Perkasa Engineering.
Pulp and paper giant Kiani, controlled by Soeharto's golfing
partner Mohamad "Bob" Hasan, was given a 10-year income tax
exemption because of its key role in developing East Kalimantan
province where the company is located.
Smelting Copper, partly owned by mining giant PT Freeport
Indonesia, was granted a seven-year tax break because of its
pioneering role in producing copper-cathode using domestic raw
materials.
Trans-Pacific, controlled by well-connected businessman Hashim
Djojohadikusumo, was given a six-year tax break because it was
the country's first integrated olefin and aromatic center.
Seagate was given a nine-year tax holiday because of its
pioneering role in producing electronic components.
Textile-related industries Polysindo and Texmaco Perkasa,
controlled by the Texmaco Group, were exempted from income taxes
for eight years and five years, respectively, because of their
technology innovation and export-oriented operations.
Among changes since Soeharto stepped down last week, state oil
company Pertamina has said that it would review contracts with
affiliates Perta and Permindo, both Soeharto-linked firms.
The governor of East Java said yesterday that all projects
awarded to companies owned by Soeharto's children also would be
reviewed.
Besides looking into corrupt practices, Hamzah's other tough
job is to attract foreign investment amid declining confidence in
the country following the recent near-anarchy which led to the
step down of Soeharto.
He explained that to attract foreign investment, the new
government must first revive investor confidence by addressing
the problem of goods distribution to prevent further social
unrest, fulfilling the process of political reform and solving
the overseas private sector debt and the country's letter of
credit puzzle.
He, however, said that Habibie's determination to quickly
carry out a general election was a positive signal to foreign
investors, pointing out that an Australian investor had just
committed US$100 million in Indonesia's aluminum sector. (rei)