Indonesia to offer investors tax incentives

The Indonesian government plans to offer tax incentives for investments in the country’s refining sector in a bid to become more competitive and boost domestic oil products output, an official said. “A 300,000 barrel per day (bpd) refinery could cost as much as US$4 billion. This is a huge investment, therefore we will offer tax incentives,” Muhammad Luthfi, the chairman of the National Coordinating Body for Investment said. He said these incentives, which would either be a tax holiday, tax reduction or tax allowance, would be decided later. Indonesia has seven oil refineries, all owned and operated by Pertamina, with a combined capacity of 1.05 million barrels per day (bpd). Pertamina currently has to import around 400,000 bpd of oil products as well as 350,000 bpd of crude oil as the country’s oil output and refining capacity are insufficient to meet growing local demand. (May 31, 2007)