Tax holiday

Tax holiday

From Neraca

Minister of Investment/Chairman of the Investment Planning Board Sanyoto Sastrowardoyo is optimistic about the tax holiday planed by the government. However, I cannot help but wonder how effective the policy will be in terms of realizing investment projects.

The Investment Planning Board completed a study in cooperation with the Institute for the Development of the Economy and Management and the University of Indonesia that concludes that this fiscal facility will improve the realization rate of investment projects.

But how could the study predict the effect of the policy over the next 10 years? And what if an investor who has been given the facilities does not operate his business in accordance with the requirements?

Tax revenues will decline, and so far the team in charge of studying and selecting eligible investors has not come up with the relevant criteria. I hope there will be no unhealthy competition as a result of giving preferential treatment to certain groups.

Since the deregulation measures of 1993, both domestic and foreign investment has increased, albeit with occasional fluctuations. Investment projects have good prospects, but what about their realization? The actual realization of projects is said to be below 50 percent.

More research should be done to study the realization rates and to determine how the Investment Planning Board and the Ministry of Investment select and approve investment applications.

SUPRI A.L.

Jakarta