Tax incentive & efficacy

In a bid to boost investment, government launched a new tax incentive where certain projects and/or in certain areas will enjoy tax income break. But based on various surveys by different organizations, income tax is not an issue. Investors are willing to pay tax, but all they need is certainty and eradication of under the table payments.

This is not the first time government offers tax incentive. Back in 90s, Soeharto administration once offered tax holiday to certain projects. Kiani Kertas (that time controlled by Soeharto's golf buddy Bob Hasan), Tuban Petrochemical (controlled by Hashim Djoyohadikoesoemo, younger brother of Soeharto's son-in-law Prabowo Subianto), and Texmaco Perkasa Engineering (owned by Marimutu Sinivasan, one of Soeharto's favourite businessman) were among the receipients of tax holiday. But all of these projects almost bankrupt and even until now are struggling after almost 10 years. And most important, the facilicy failed to attract significant FDI.
Antara reported that nine types of investment would be eligible for tax income incentive. Investment in palm oil/cooking oil in Sulawesi, corn mills in Sulawesi, fish processing in Sulawesi, Maluku, and Papua, sugar plants outside Java, and cement in Papua are among them.
I'm not saying this is a kind of wrong medicine. I just sense the reemerging of cronyism in selecting companies which eligible to get.

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Jonan resigned, Mukijat the new Bahana CEO

Ignatius Jonan had tendered his resignation as CEO of state-owned investment bank company PT Bahana Pembinaan Usaha Indonesia (BPUI) after five years in that position.

Jonan managed to save the company from bankruptcy of huge bad loans to big boys like Peter Sondakh (Rajawali), Prajogo Pangestu (Barito), Arifin Panigoro (Medco), Agus Anwar (fugitive), Mohamad S. Hidayat (Chairman of Indonesian Chamber of Commerce & Industry, owner of MSH Group), and Hashim Djoyohadikusumo (Tirtamas, currently Nations Energy) following the financial crisis in 1997.
"Shareholders accepted his resignation and appointed Boyke WE Mukijat as the new CEO," said an official at Bank Indonesia, the central bank, which owns 80% shares of BPUI. Government owns the remaining 20% shares.
But people close to Jonan said BI and MSOE are just about to decide whether to accept or not Jonan's resignation.
It is not clear why Jonan resigned. But some sources said he felt no more chemistry with officers at the ministry of state owned enterprises who represent government as the shareholder of BPUI.
Boyke was BPUI's managing director BPUI, a key ally of Jonan when the company restructured the massive debts of Rp9.1 trillion (US$1 billion) back in 2001.

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Richest Indonesians, My List

Below is my list of the richest Indonesian, based on their net worth in Indonesia and other countries:

1) Eka Tjipta Widjaya (major source of wealth: APP, Asia Food & Property, and finance)
2) Rahman Halim (Gudang Garam)
3) R. Budi Hartono (Djarum Group, properties, and 10% shares in BCA---the largest private-owned bank in Indonesia, Bank Hagakita, and Bank Haga)
4) Sukanto Tanoto (RGM International, APRIL)
5) Lim Sioe Liong (First Pacific, Indofood, Bogasari, Unggul Indah Cahaya, properties etc)
6) Sjamsul Nursalim (Gajah Tunggal tire, GT Petrochem, Singapore assets, Jakarta properties)
7) Soeharto & Family (Humpuss, Citra Group, Hanurata etc)
8) Putera Sampoerna
9) Mochtar Riyadi (Lippo properties)
10) Peter Sondakh (cash in hands, Bentoel)
11) Hashim Djoyohadikoesoemo (Khazakhstan and Azerbaijan oil and gas operations)
12) Aburizal Bakrie (Bakrie & Brothers, Bumi Resources, Energi Mega Persada, etc)
13) Paulus Tumewu (Ramayana)
14) Edwin Soeryadjaja (Adaro, MGTI, etc)
15) Sudwikatmono (Indika Group)

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What's weird with Forbes' Indonesia rich list?

We knew from the Forbes that Rahman Halim and family (Gudang Garam) is the richest in Indonesia followed by R Budi Hartono (owner of Djarum Group), Putera Sampoerna, Aburizal Bakrie, Lim Sioe Liong (Salim Group), Eka Tjipta Widjaja (Sinar Mas), and Paulus Tumewu (Ramayana Group).
1) Rahman Halim = US$2.3 billion
2) Budi Hartono = US$2.2 billion
3) Sampoerna = US$1 billion
4) Aburizal Bakrie = US$735 million
5) Lim Sioe Liong = US$655 million
6) Eka Tjipta Widjaja = US$515 million
7) Paulus Tumewu = US$500 million

Is it true that Bakrie is wealthier than Lim or Eka? Eka's net worth in 1999 Forbes list was at US$2.5 billion. It's true that the company struggled with the crisis at Bank International Indonesia (BII) in 2001 and the huge bonds at Asia Pulp & Paper. But the company survived and aggresively expand its business in the last four years.
Could it be possible that Tumewu or Bakrie are richer than Sukanto Tanoto who has US$7 billion investment in Brazil and China?
"No way that Bakrie could match Sukanto. I would say Eka Tjipta is the richest for Indonesia," said one investment banker in Singapore.
Where is Hashim Djoyohadikoesoemo with his US$2.5 billion worth of oil and gas assets in Khazakhstan & Azerbaijan?
How about Mochtar Riyadi family with their Lippo Group? How about Peter Sondakh who got US$800 million in cash from the divestment of Excelcomindo to Telekom Malaysia?
How about Soeharto? Where is Soeharto family's money which Time magazine estimated at US$15 billion eight years ago? The Soehartos' net worth was put by Forbes at $1.7 billion in 1999 and $4 billion in 1998. I just can't believe the family's wealth had dropped to below US$500 million.
What about Sjamsul Nursalim?
While he once had US$3 billion debts to government and pledged some key assets like Gajah Tunggal (the largest tire manufacturer), GT Petrochem (petrochemical company), and Dipasena (the largest shrimp farm in Asia), I believe that Sjamsul regained control over two of these companies, not to mention other assets in Indonesia and Singapore.
So many questions I can't answer myself. But I tend to believe that the Forbes list could help some of Indonesian richests who still owe the state or those who bought back their pledged assets to keep away from tax officers or those who want to squeeze their money for various reasons.
Last year tax officers questioned Paulus Tumewu over his personal income tax. Tax officers claimed Tumewu had cost the state losses of Rp355 billion (US$40 million). But no further investigation since September 2005 as Tumewu left the country to Singapore for 'medical treatment'.

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