Caterpillar, through a subsidiary Caterpillar Indonesia Batam, would build $100 million heavy machinery plant in Batam. (AFP Photo/Paul J. Richrads)

Michelin, Caterpillar Joint Venture Closer to Tax Holiday


OCTOBER 23, 2015

Jakarta. Global tire maker Michelin and heavy machinery manufacturer Caterpillar inched closer to securing a tax break for investments in Indonesia, after the Ministry of Industry agreed to proposals.

Michelin and Chandra Asri Petrochemical have formed a joint venture to construct a $435 million synthetic rubber plant in Cilegon, Banten. Michelin owns 55 percent of the project dubbed Synthetic Rubber Indonesia, while Chandra Asri controls the remainder.

Caterpillar, through subsidiary Caterpillar Indonesia Batam, will build a $100 million heavy machinery plant in Batam.

"Both companies just need to wait for approval from Finance Ministry to get the tax holiday," Haris Munandar, the head of industry and research board at Industry Ministry, said.

The most recent tax holiday policy allows companies that invest more than Rp 500 billion ($36 billion) in specific pioneering industries are eligible for income tax break between five and 15 years.

Pioneering industries have been defines as including upstream metal processing, petroleum refining, organic basic chemicals derived from petroleum and natural gas and machine tool manufacturing.

Infrastructure investments, telecommunications and IT, agriculture production and marine transportation have also been targeted.

Major companies, including Unilever Oleochemical Indonesia and Sinar Mas' Energi SejahteraMas, have secured tax holidays for investments totaling Rp 35 trillion.