Tax to be axed on public vehicles

Rendi A. Witular, The Jakarta Post, Jakarta

The government is exempting public vehicles and spare parts from export duties in a bid to improve public land transportation services, a minister says.

The measure comes on Wednesday, a day after the government increased fuel prices by an average of 29 percent, a bid which is likely to increase transportation fees.

Minister of Transportation Hatta Radjasa said the Ministry of Finance had approved the proposal to exempt import duties of new and used buses, minivans and trains by registered public transportation operators.

"We don't want to see public transportation services remain poor; particularly the possibility that the operators increase fees in line with the higher fuel prices. For public transport users, paying more means getting better services," he said late on Monday.

Import duties for cars, buses and trucks and their spare parts currently range between 5 percent and 10 percent.

Public vehicles are often run down in the country and replacement vehicles and spare parts are relatively expensive. Operators also ignore safety regulations and continue to run dilapidated vehicles, putting their passengers' safety at risk.

Most accidents with public vehicles in Indonesia are caused by brake failures and flat tires often resulting from the poor maintenance of vehicles.

According to Hatta, the impact of increasing fuel price would ticket prices to rise from 7 percent to 10 percent.

The minister said passenger ferry and train tickets would also likely rise by about 30 percent for business and first-class passengers, however in government-owned ferries and trains the economy rate would remain the same, he said.

Aircraft fuel is not subsidized and air tickets would not be affected, he said.

The government announced late Monday an increase in premium gasoline by 33 percent to Rp 2,400 (26 U.S. cents) from Rp 1,810 and automotive diesel fuel by 27 percent to Rp 2,100 from Rp 1,650.

Hatta also said the ministry was planning to liberalize the country's railway industry by revising the law on railways, which was expected to be submitted to the House of Representatives this month.

It is also preparing to liberalize the country's ports by preparing a draft revision to the law on shipping.

The revision will allow private sector interests to operate ports by stripping the monopoly rights of state port operators PT Pelindo I through IV.

Pelindo has been criticized for poor management and corruption and business complain that it is costly and time-consuming to bring goods into the country.