How Tax Policies Could Kill Industries in Indonesia

Jakarta, Indonesia (News Today) - Coordinating Minister for Economic Affairs Hatta Rajasa said he would immediately discuss harmonization of a number of tax regulations that still allow multi-interpretations causing losses to the state and public.

"Next Tuesday we will meet with the finance minister, and other technical ministers such as the ministers of industry, trade and the head of the BKPM (Capital Investment Coordinating Board). We will discuss and formulate the issues and after that we will report to the vice president," he said here on Thursday.

He said there were at least 13 things that could be improved in various sectors including shipyard and film industries as President Susilo Bambang Yudhoyono raised during a cabinet meeting earlier.

"I have already had the data. There are 13 points that have to be discussed such as for an example in the shipyard and heavy industries," he said.

As an example he referred to the case in the cooperation between GE Lokomotive and Inka in production of locomotives in which the cost for importing locomotives was cheaper than the tax for purchasing domestically-made locomotives.

"Purchasing locomotives made in Indonesia is being taxed while importing them is free of ’bbn’ tax," he said. The case also happened in the shipyard industry as President Yudhyono has said. In view of that he hoped following the discussion with the ministers concerned later no multi-interpretations in tax regulations would occur again so that no party would suffer a loss.

President Yudhoyono earlier ordered a review of some tax policies in 2011 to make them correct for supporting business development and national economic growth. The president made the order before the cabinet ministers ahead of a plenary cabinet meeting on Thursday.

"I ask you to work hard. Do not only refer the issue to the directorate general and the finance minister but it must also reach me. In the future our tax regulations must be fair for the people and the tax payers," he said.

He said he was very concerned about the problem after reading the statement of film director Hanung Bramantyo in the media. Hanung had said that the government had "killed" national film industry because it has imposed a higher tax on the industry than on imported films.

"I feel disturbed by his statement. Of course this is not right. How we can develop the national film industry if the tax system is like that. In view of that, please study it to see if the case is true. If it is, correct it," he said.

Source : kompas

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