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The passage of the investment bill is set to miss the March
13 deadline as the government and House of Representatives still find
themselves at odds over the issue of incentives for investors.
"There is one final chapter that we haven't agreed upon, but it is the
one with the most difficulties -- the incentives chapter," House
Commission VI deputy chairman Lili Asudiredja told The Jakarta Post
after chairing closed-door talks on the bill with the government
Thursday.
According to minutes of the meeting obtained by the Post, the
government is opposed to most of the provisions set out in the
incentives chapter drawn up by the committee, which covers such topics
as the types of businesses that can be granted incentives, and the
types of incentives that can be granted.
Legislator Hasto Kristianto blamed the government for the prolonged
debate, saying it had failed to present an acceptable alternative to
the House-drafted incentives chapter at the meeting.
"The government has not initiated any breakthrough to address the
stalemate in the incentives debate," he claimed.
Speaking to reporters after the meeting, Hatanto Reksodipuro, the Trade
Ministry's secretary-general, who lead the government team at the
meeting, said that the government's stance should be clear from the
incentives it was already granting to business under various government
regulations, such as Regulation No. 1 of 2007, which allows taxes to be
deferred for longer periods.
The government currently offers a wide variety of incentives to
business through tax breaks and relief for designated industries,
especially for export-orientated firms and firms that import certain
types of textile products.
In response to Hatanto's statement, Hasto said that a government
regulation had to be based on a law.
"This is exactly what we are talking about. On what law is the
government basing its incentives regulations?"
Despite the disagreement over incentives, the meeting managed to
resolve the debate on the chapter granting power to the government to
renegotiate contracts with foreign investors should they be found
guilty by a court of committing corporate crimes, such as tax evasion
and marking up cost-recovery estimates.
"The government has agreed on the main principles of the proposed
chapter, but wants some rewording," he said.
With a date for the finalization of the incentives debate still
unclear, and with further work to be done on the details of the
corporate crimes chapter, Hasto said that the bill would be delayed yet
again, despite being before the House for almost two years.
However, he said that the committee would fast track its discussions so
that all of the chapters could be finalized by the end of this month.
Once passed into law, the investment bill will provide for
non-discriminatory treatment as between local and foreign investors,
competitive investment incentives, two-year stay permits for foreign
investors, corporate social and environmental responsibilities, the
extension of land use rights (titles) to 95 years, the establishment of
special economic zones and various other aspects designed to improve
the country's investment climate.
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