After the Tax Drama, Indonesia Outlines New Plan to Boost Local Industry

The Jakarta Globe

One thing lost in the complex web the Hollywood film boycott has spun is the reason the government gave for wanting to hike taxes on film imports in the first place: to stimulate the local film industry.

Just days after the boycott began on Feb. 17, Tourism Minister Jero Wacik said the president, prompted by a comment from director Hanung Bramantyo in the local media about improving the domestic industry without imposing new taxes, had asked him to review the proposed tax regime.

On Thursday, Jero finally announced the plan to help the struggling industry, outlining a new company that would help fund local projects.

“We are going to establish Indonesian Film Finance to provide low-interest loans to Indonesian filmmakers,” he said. “This way we can help to improve the quantity and quality of Indonesian films.”

Aside from the help with funding, Jero said the Finance Ministry had also agreed to eliminate taxes on the importation of film production equipment. “Film production equipment and materials have always been listed as luxury items and therefore were slapped with high taxes,” he said.

However, Jero said it was not possible to do away with the value-added tax, either on domestic or foreign films. “So instead of revoking the value-added tax on domestic films, we are going to reduce the tax to a minimum level,” he said.

The country’s film industry has suffered a downturn in recent years. In 2009, only six local films sold more than a million tickets each at the box office. In 2010, only one movie broke the million mark.

Last year, 81 Indonesian films had cinema releases, slightly down from 83 films in 2009, although a significant decline from 91 big-screen releases in 2008. Even without Hollywood blockbusters, 75 foreign films were imported in the first seven months of this year.

The government is hoping to double local film production to about 200 a year by 2014 to equal the number of foreign films imported.

Jero said he wanted that ratio to eventually be 60 percent local films to 40 percent foreign.

In March, the minister also said the government was planning to allocate a special budget to subsidize the production of films that “instill love in the nation, raise patriotism and national defense.” But that plan was quickly panned.

“Filmmakers will try to meet the criteria needed to get the subsidy instead of focusing their creative efforts on producing a quality film,” Joko Anwar, a prominent director, said at the time.

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