Monday, January 07, 2008

Tax Incentive or Pertamina Reform?

Now we know that our oil production capacity has declined (Op-ed, Kompas, 01/07/08) and it prevents us to reap the benefit of recent high oil price. Ministry of Finance wants to use tax incentive to attract more, presumably, foreign investment in oil mining industry.

Umar Juoro of CIDES, that op-ed author, disagrees. He argues that it would take long time before such new investment result in more production --three years at least, he wrote. Instead, he proposes to reform Pertamina, the state owned oil company, --notorious for, well, its inefficiency--, to be as good as Petronas or Aramco, to take the lead in our effort to increase oil production.

Now, in your opinion, which one is more feasible --within period of three years?

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