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)