KEK Meikarta Poses Huge Potential Loss for Government

Wednesday, 22 November 2017 , 12:00:00 WIB -

Coordinating Minister for Maritime Affairs Luhut Binsar Panjaitan (in the middle) is seen giving a speech, looked by Lippo Group Chief Executive Officer (CEO) James Riady (third left); President of Meikarta, Ketut Budi Wijaya (right); Director General of Immigration, Ministry of Law and Human Rights, Ronie Sompie (second left) and other government executives at the topping off of the first two-tower building in KEK Meikarta, Cikarang, Bekasi Regency, Jawa Barat, Sunday (29/10). (ANTARA)

JAKARTA, GRES.NEWS – The development of special economic zones in Bekasi, Karawang and Purwakarta, including the Meikarta Special Economic Zone (KEK Meikarta), may be counterproductive and will only burden the government financially, according to Ecky Awal Mucharam, Commission XI member, House of Representatives.

According to him, the special economic zones will enjoy fiscal incentives and other facilities to bolster investments as part of the government’s effort to spread economic growth in the country.

"The special economic zones may have effects that contradict the objective of their development, as they are being developed in regions that are already posting faster growth than other regions," he said, quoted by, Monday (20/11).

The KEK Meikarta, for instance, poses potential loss to the government as it will receive immense fiscal incentives, from tax holidays, tax allowances, Value Added Tax holidays to import tax holidays. Such potential loss will also happen in other special economic zones in said regions, Bekasi, Karawang and Purwakarta.

The tax holiday scheme will even mean that organizations running their business in the special economic zones will receive up to 100 percent Income Tax holiday for 25 years. Therefore, ironically, the government will lose income from regions that have been contributing greatly to its tax income. To note, 40 percent of the country’s gross domestic product (GDP) from the industry sector is coming from these regions.

"In addition, the government is taking responsibility for the zones’ infrastructure development. The budget should instead maximize the State Budget for the people’s welfare. It would be unfortunately if the fund is used for infrastructure projects in regions that are already relatively advanced," Ecky said.

House of Representatives Commission II member Sarehwiyono from the Gerindra (Great Indonesia Movement) Party is in agreement with Ecky. According to him, the KEK Meikarta project launched by the Lippo Group violate a number of laws, such as Law No.20.2011 on Apartments.

He even claims that the construction violate Indonesia’s criminal law. (mag)