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Not all firms enjoy incentives
While government has made commitments to extend the fiscal stimulus to businesses through import duty exemptions, not all small businesses have taken this up, as government data shows
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While government has made commitments to extend the fiscal stimulus to businesses through import duty exemptions, not all small businesses have taken this up, as government data shows.
Of the Rp 1.76 trillion (US$174.33 million) allocated to import duty exemptions, the Customs and Excise Office has so far only granted Rp 74.86 billion to sectors importing auto parts, and telecommunication and information devices, director of customs facilities at the Customs and Excise Office, Kusdirman Iskandar said on Wednesday.
As of June 1, the office has received 26 requests from importers of auto parts, telecommunication and information devices, electronic components, intravenous packages and shipping parts.
The allocation of the remaining Rp 736.2 billion will be determined by the Finance Ministry's fiscal policy office (BKF), said Kusdirman. "It will be determined taking into account recent economic conditions."
In the 2009 state budget, the government allocated a total of Rp 2.5 trillion for import duty exemptions.
Hadi Suryadipraja, chairman of the Auto Parts Industries Union (GIAMM), said only a small number of businesses had requested the import duty exemption in part because the regulation setting out its detailed legal basis came too late.
"The Finance Ministry's regulation on import duty exemption was issued on Dec. 31, 2008, the ministry's regulations on which sectors were eligible for exemption was issued on Feb. 26 and the Customs and Excise Office's implementing regulation on April 24. Not to mention the requirements to get such exemptions are difficult," he said.
Companies need to provide a list of raw materials planned to be exempted to the Industry Ministry to get approval, before submitting the list, along with other legal documents like tax file numbers and business licenses, to customs and excise officials.
Businesses this year have already received several incentives from the government to help them deal better with the impacts of the global economic downturn, although some economists and government officials now agree that the negative impacts to the local economy have not been as severe as earlier predicted.
In addition to the import duty exemption, the government has cut the rate of income tax for businesses to 28 percent.
