Govt may provide some incentives for refinery projects, but rejects tax holiday proposal

A meeting at the Ministry of Energy and Mineral Resources last week recommended that the government provide three incentives to attract investors to develop refineries in the country, but the meetign ruled out the provision of tax holiday.

The three recommended incentives are an abolisment of import duty on capital goods, the government's gurantee for financing, and a guarantee that the fuel products to be sold at the domestic market would be based on market prices, Saryono Hadiwidjoyo, Director for Downstream Oil and Gas Industries at the ministry, said in the Directorate General of Oil and Gas' website.

The website did not specify the participants of the meeting.

The meeting aimed to study seven incentives proposed for the development of refineries in the country.

Only three of the seven proposed incentives are feasible, while the four others were difficult to realize due to among others legal constraints, Saryono said.

?For example, in order to provide a tax holiday, the government needs to revise the tax law,? he said.

Investors also demand they receive lands from the Badan Layanan Umum (BLU) for their projects, but Saryono said such a demand would be also difficult to be meet, because the agency would likely be unable to provide lands in a short time.

Aside from incentives, the meeting also discussed several issues related refinery development in the country, including state owned oil and gas firm PT Pertamina's plan to build a refinery in Bojanegara in partnership with Iran's and Malaysia's companies.

The ministry will further hold intensive meeting about the incentives. (*)