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