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NEWS UPDATES Asean Affairs   20  December 2010

Tax breaks for Indo green companies

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Indonesian companies that comply with environmental regulations may receive tax breaks, a minister said.

Environment Minister Gusti Muhammad Hatta said on Saturday that the move may encourage coal and oil companies to boost their investment in the country.

"We plan to provide tax relief to companies belonging to the 'green' category," Gusti said.

He did not provide details on possible tax breaks.

Those companies would also be eligible for greater access to loans from the country's banking system after they pass an environmental standards assessment, the report said.

The Environment Ministry and Bank Indonesia signed a memorandum of understanding on Friday, underscoring the government's efforts to prevent companies that violate pollution standards from receiving bank loans.

Under the agreement, Indonesian banks would have to consult with the Environment Ministry to check a company's standing in the Corporate Environmental Performance Ratings, or Proper.

The list is an annual assessment by the Environment Ministry meant to encourage regulatory compliance and punish the worst offenders.

The color-coded Proper ratings award a gold standing to companies showing the highest compliance and demonstrating a sense of responsibility toward their communities.

Blue and green marks follow, with a red rating indicating a lack of compliance with regulations.

Black is reserved for companies that knowingly and deliberately pollute the environment.

"Companies put under the red category will be denied access to credit. Companies put under the black category for the second consecutive time will be brought to justice," Gusti said.

A total of 690 companies were assessed this year, with manufacturing, mining, waste management and oil and gas firms all receiving ratings. Last year saw 627 companies receive ratings.

The assessments were carried out between April 2009 and July 2010.

Chevron Geothermal Indonesia's Darajat plant in Garut, West Java, and Holcim Indonesia's plant in Cilacap, Central Java, were the only Indonesian operations to receive gold ratings. Holcim is Switzerland's largest cement firm.

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