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Call for Crackdown on Illegal Foreign Workers

Local Business Leader Says Illegal Foreign Workers Cost Indonesians Jobs and Frustrate Tax Collection Efforts.

(7/11/2005) A increasingly desperate need for foreign exchange to fund public spending projects has prompted calls from several quarters for a crack down on businesses in Bali operated illegally by foreigners.

Drs. Panudiana Kuhn, the Chairman of the Bali branch of the Indonesian Employers’ Association (APINDO), was quoted in the Friday, July 8, 2005 edition of the Indonesian-language Bisnis Bali as saying the presence of illegal foreign workers in Bali was displacing local workers and causing substantial losses in tax collection efforts.

Kuhn estimates that there are some 5,000 foreign workers in Bali of which only 10% are formally registered and paying taxes.

According to Kuhn, if the local government took a more active role in enforcing labor and immigration policies against illegal foreign workers the amount of resulting tax revenue might well dwarf the tax collected from the hotel and restaurant sector. Moreover, Kuhn, who is also a member of the Advisory Council of the Indonesian Chamber of Commerce (KADIN), said the widespread failure to pay income tax by the foreign workers makes is problematical for the government to execute its current campaign to persuade Indonesians to accept their civic responsibility to pay taxes.

Kuhn called on the government to be more transparent in how they handle foreign workers and their tax issues in order to avoid creating social imbalances. "The Government must collect taxes in accordance with the law. This also includes foreign workers married to locals and operating businesses in the province," Kuhn insisted.

The Official Count

The 2004 government figures showed only 494 foreign "registered" residents living in Denpasar of which 43 were Americans, 107 Australians, 179 Asians, and 169 Europeans.