Govt studies tax holiday facility for new refineries
Thursday, March 19 2009 - 02:11 AM WIB
Minister of Energy and Mineral Resources Purnomo Yusgiantoro said in Jakarta on Wednesday that providing a tax holiday for such projects was possible under the Government Regulation No. 62/2008 on income tax facilities for investment projects with certain characteristics.
The construction of fuel refineries could even receive a tax holiday or a zero tax facility under such a regulation, Purnomo said, adding that the tax incentive plan was currently being studied by his office, BKPM and Pertamina.
He said that the tax incentive proposal would be later submitted to Minister of Finance for approval. According to him fiscal incentives are needed to encourage the construction of new refineries. At present, investors are still reluctant to build refinery not only because it is costly but also due to the fact that such a project offer a little margin.
According to Pertamina, the total capacity of the existing refineries in the country reaches about 830,000 barrels per day (bpd), still much lower than the fuel demand which totals about 1.2 million bpd.
Indonesia, which at present still imports to fill the production gap, needs to increase its fuel production by at least 55,000 bpd a year to meet the estimated five percent annual growth in the fuel demand, Purnomo added. (*)