Home / Knowledge / News / Textiles / Tax cuts mooted for Indonesian textile, footwear companies
Tax cuts mooted for Indonesian textile, footwear companies
08
Dec '15
As Indonesia battles a stubborn economic slowdown, the country's Investment Coordinating Board (BKPM) has proposed income tax cuts to support the labour-intensive textile and footwear industry, according to a newspaper report.

The BKPM's Deputy Director for Investment Monitoring and Implementation, Azhar Lubis, said the board had suggested to the Office of the Coordinating Economic Minister and the Finance Ministry to suggest a reduction in employees' income tax by as much as 50 per cent for five years.

The suggested tax cut would only be applicable for companies that export 50 per cent of their production, employ at least 5,000 workers and provide details on the employees' Social Security Management Agency (BPJS) policies and salary slips.

Azhar explained that the incentive was expected to benefit the industry's cash flow. “Some companies file their workers' taxes directly to the tax office, so if the rate is cut, it will, of course, increase their cash flow,” he said.

The government is pushing efforts to revive growth in the labour-intensive industry after the country's economy weakened to the lowest level since 2009 in the past three quarters.

Falling demand combined with soaring material prices, rising electricity tariffs and illegal imports have forced manufacturers of shoes and textile goods to lay off workers. At least 40,000 workers at footwear factories and another 39,000 textile workers have lost their jobs in the first half of this year.

To avoid more layoffs and revive the industries, the BKPM launched a special help desk for the two industries in October. Called “DKI-TS”, the desk has so far assisted 33 companies that are under pressure to terminate 24,509 workers, of which three cases had been solved, saving 1,458 jobs, the newspaper reported.

Indonesian Textile Association (API) chairman Ade Sudrajat welcomed the tax incentive, but was of the opinion that it would only benefit the employees, not the businesspeople. “It will be useful to increase our employees' purchasing power,” he said.

He also added that the terms and conditions were too strict. “There are only few factories with more than 5,000 workers. It'd be better if it was at least 2,000 workers,” he said, adding that fewer than half of the shoe companies employed upward of 5,000 workers.

Indonesian Footwear Association head Eddy Widjanarko shared the same view with Ade. “The benefit for us [the businesspeople] is only a little, but we appreciate the stated effort and intention to support the labour-intensive industry,” he commented. (SH)

Fibre2Fashion News Desk – India

Must ReadView All

President Donald Trump; Courtesy: White House

Textiles | On 24th Jan 2017

US sets ball rolling for withdrawal from TPP

President Donald Trump has set the ball rolling for withdrawal of the ...

Textiles | On 24th Jan 2017

Indian cotton consumption estimated at 290 lakh bales: CAI

The domestic consumption of cotton during the crop season 2016-17...

Stefano Gallucci (left), CEO, Santex Rimar Group, and Tamer Hasbay, President, Has Group; Courtesy: Santex Rimar

Textiles | On 24th Jan 2017

Santex Rimar to market all Has products globally

Italy based Santex Rimar Group has signed an agreement with Turkey...

Interviews View All

Amardeep Singh
Orient Craft

'In export markets, the trend in terms of embroidery, is towards matte...

Veronique Lee
Modavanti

‘Sustainable fashion is trending upwards, slowly but surely, as people...

Frank Gossmann
Rotorcraft AG

‘RT3 motto is: Do not check millimetres, check colours.’

Marcel Alberts
Eurofibers

Coating at a fibre level is a practice not usually seen in the...

Eamonn Tighe
Nature Works LLC

Eamonn Tighe, Fibres and Nonwovens - Business Development Manager of...

Suresh Patel
Sidwin Fabric

Sidwin Fabric is a manufacturer and exporter of polypropylene textiles and ...

Bani Batra

Bani Batra’s couture wedding collection is inspired by traditional Indian...

Silvia Venturini Fendi
Fendi s.r.l

"Yes, my confidence and positive attitude are my strengths and should be...

Mike Hoffman
Gildan Activewear SRL

Gildan Activewear, a manufacturer and marketer of branded clothing and...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
January 2017

January 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


eNEWS
Insights
Subscribe today and get the latest News update in your mail box.
Advanced Search