TEMPO.CO, Jakarta- Finance Minister Bambang Brodjonegoro said revision of tax holiday will precede another policy package to be announced next week by the government.
The government is formulating a new economic policy expected to draw foreign investment and to avert the impact of the global economic slowdown.
The policy is also expected to reduce the U.S. dollar pressure on rupiah and revive the countrys flagging economy.
The finance minister gave no details of the new policy, but he said it would strengthen the purchasing power of the people.
"This is not only about fiscal incentive as the effect would be extensive on our economy , not only exports , but also the purchasing power of the people facing the present difficult time," he said on Thursday, August 27.
He said tax holiday is expected to attract investors to venture in pioneer industries and manufacturing industry.
"We no longer rely too much on commodities as export earners. We have to start off expansion of exports of manufactured goods," he said.
He said eight of nine sectors entitled to tax holiday are manufacturing sectors.
In addition, the revision of tax holiday is in synergy with two other policies already announced by the government including in the mining sector.
One of the policies is government regulation (PP) No. 18 of 2015 and regulation of the finance minister No 89/PMK.010/2015 on tax allowance facility for the processing and refining of copper concentrate, gold and silver , iron ore, thorium ore , tin ore, nickel ore and other non iron mineral ores.
The other one is the regulation of the finance minister No. 132/PMK.010/2015 on harmonization of import tariffs by raising import duties on certain products in a bid to improve competitiveness of domestic industries and to reduce dependence on imports.
"Tax holiday is not the only facility as there is tax allowance to boost development of smelters and refining of minerals with potential competitiveness," the minister said.
The finance ministry has issued a regulation No. 159/PMK.010/2015 on exemption or cut of income tax for companies operating in pioneer industry.
The new regulation is a revision of a regulation of the finance minister No. 130/PMK.011/2011 and no 192/PMK.011/2014 on tax holiday for pioneer industry.
Pioneer industries include upstream metal industry, oil refining industry, oil and gas based organic base chemical industry, machinery industry, agricultural, forestry and fishery-based processing industries, telecommunications, information and communications industries, sea transport industry, etc.
Coordinating Minister for Economy Darmin Nasution said the policy package concerns the real sector, financial , sector, institutional deregulation and regulation, issuance of new policies and tax holiday.
President Joko Widodo has held a series of economic meetings over the past week including with business leaders.
State Secretariat Ministry Pratikno said the meetings were not a reflection of panic, but seriousness of the government in handling the present condition.
"The challenges are real - Greek crisis, Chinas yuan devaluation and U.S. economy strengthening," Pratikno said.