Tax to be axed on public vehicles

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.