SBY pledges to end tax problems in oil and gas sector
President Susilo Bambang Yudhoyono pledged Tuesday to put an end to tax problems in the oil and gas sector in a bid to boost investment. Speaking before oil and gas industry stakeholders, Yudhoyono said his administration was committed to making Indonesia's investment climate attractive for oil and gas investors.
"We have developed a package of investment incentives and established a prudent fiscal policy. We are formulating ways to overcome tax problems in oil and gas resources investment," Yudhoyono said in his speech at the opening ceremony of the 33rd annual convention and exhibition of the Indonesian Petroleum Association (IPA).
The tax issue is one of the problems plaguing the industry. Last February, for instance, the Finance Ministry revealed five oil and gas firms owed US$113 million in unpaid income tax.
Some of the contractors later paid up, but one contractor, ExxonMobil Oil Indonesia Inc., said there was a difference of opinion on the tax issue, and that the dispute was still being processed in a tribunal.
Yudhoyono claimed his administration had made "vigorous efforts to ensure legal certainty and effective regulation".
Indonesia is targeting investment of $16.6 billion in oil and gas this year, up from $12.9 billion in 2008.
"Although the global financial crisis has hit our economy, we expect this year we will be able at last to maintain the 2008 level of investment," said Energy and Mineral Resources Minister Purnomo Yusgiantoro.
IPA president Roberto Lorato said IPA members were committed to promoting investment in Indonesia. He added several conditions were required to make the government target in investment achievable, including "a stable regulatory regime".
The IPA convention and exhibition runs from May 5-7. The opening ceremony Tuesday saw the signing of 12 new oil and gas contracts, three new coal bed methane (CBM) contracts, and five gas sales contracts.
The next two days will be filled with sessions to discuss a broad range of issues, including the fallout of the crisis on the oil and gas sector, and the challenges of Indonesia's production sharing contracts.
