TEMPO.CO, Jakarta - The government said it hopes to make decision next month on tax holiday on an oil refinery project to be built in cooperation with investors, as reported by Antara News.
The government and prospective investors have failed to reach an agreement on the tax incentive resulting in delay in the implementation of plan to build new oil refineries.
Indonesia, a producer crude oil, has not built a single oil refinery after the fall of the Suharto regime in 1998 resulting in growing dependence on imports for oil products notably oil fuels.
Continued deficits in the country trade and current account balances have been attributable mainly to growing imports of oil including oil fuels.
Caretaker energy and mineral resources minister Chairul Tanjung, who is chief economic minister, admitted the issue on tax holiday is not yet wrapped up.
"We promise in October before the present government ends its term of office," Chairul said.
He said the margin in oil refinery is small, therefore, tax holiday is important to attract investors.
He said there are at least two locations ready to build oil refinery including Bontang, in East Kalimantan and Arun in Aceh.
He said the government also plans to expand the capacity of existing refineries.
The new refinery is to be built under the government private partnership scheme with a processing capacity of 300,000 barrels of crude oil per day.