From Government of Indonesia
New Reforms Include Tax Incentives

The government introduced a new package of economic reforms on Tuesday (12/6/07) as part of its long-running program, offering faster approvals for investments, tax incentives for listed companies, accelerated depreciation and exemptions or reductions in land and building taxes.

"These policies are aimed at accelerating the development of the real sector and empowering micro, small and medium enterprises so as to increase the growth of the national economy," Coordinating Minister for the Economy Boediono told a press conference.

The latest policy package was part of an ongoing reform process, Boediono said. "The package … is part of a process of reform, which is pushing ahead gradually. It is like building a house, brick by brick."

The government said in a statement it intends "to formulate tax policies aimed at boosting capital markets by introducing incentives for listed firms".

Finance Minister Sri Mulyani Indrawati said the incentives for listed companies would take the form of lower tax rates, Reuters reported.

To empower SMEs, the government will provide more access to funding sources, including guarantees from a number of credit insurance agencies.

Foreign interest in the banking sector remained strong. South Korea's Hana Bank said it hopes to complete the acquisition of PT Bank Bintang Manunggal in September, while Singapore’s Temasek Holdings was reported to be considering selling its stake in Bank Internasional Indonesia to Kookmin Bank, which already has a stake in the bank.

Temasek needs to divest one of its holdings in line with the central bank’s single presence policy. Temasek also owns a stake in Bank Danamon.

Japan's Yamaha Motor Co. said Wednesday it will build an additional production line at its No. 2 plant on the outskirts of Jakarta. The producer is gaining market share on traditional market leader Honda and is expected to overtake it soon.

In the consumer market, sales of personal computers shot up 35% to 410,919 units in the first quarter compared with the same period last year and 9% up on the last quarter of 2006.

Sales of notebooks also rose sharply, reaching almost one fourth of PC sales in units in the same period.

The Jakarta Stock Exchange composite index finished the week on a new record at 2,120.640, bolstered by a rebound on Wall Street.

The rupiah was trading at 9,043/9,048 to the dollar.
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