Government Set to Impose New Rules to Curb Current Account Deficit
Jakarta. The government will issue four regulations on Monday aimed at narrowing Indonesia’s widening current-account deficit.
The regulations will impose an anti-dumping tax to curb imports, expand tax allowances to more companies, give visa exemptions to four more countries in a bid to boost tourism, and increase mandatory biodiesel content in diesel to reduce fuel imports, Coordinating Economic Affairs Minister Sofyan Djalil said on Friday.
Sofyan said companies eligible for the tax allowance include those that reinvest their profits in Indonesia instead of repatriating it to their home countries; conduct research and development; export a certain amount of their products; or create a certain number of jobs.
The companies will get a 30 percent cut in their income tax bills for five years, a longer loss carryforward period of 10 years, and an income tax rate of only 10 percent on repatriated dividends.
The government will also increase the mandatory biofuel content of diesel to 15 percent from 10 percent currently. This will rise to 20 percent later, Sofyan said.
In addition, the government will issue temporary anti-dumping duties on products such as steel and textiles.
The duties will be imposed immediately when a complaint arises, instead of waiting for the result of a formal investigation, which could take up to a year. The government will remove the duties should an investigation find a company not guilty of dumping.
“The practice of dumping in the steel and textile industries creates low prices and makes local companies such as Krakatau Steel and [Krakatau] Posco unable to compete. This is an unfair trade,” Sofyan said.
Lastly, citizens of Japan, Russia, China and South Korea will no longer be required to obtain visas to enter Indonesia, bringing the number of visa-exempt countries to
19 in order to boost foreign arrivals and increase foreign-exchange revenue.
Bank Indonesia Governor Agus Martowardojo said on Friday that the new policies would help Indonesia maintain its current-account deficit at between 2.5 percent and 3 percent of the gross domestic product this year.
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