INDONESIAN cinephiles may be in for a disappointing year. Since February imports of Hollywood films have been on hold, and cinemas are running short of new ones to screen. The reason is a row over a fairly small amount of tax. Indonesia’s tax authority has started enforcing a long-neglected rule that the royalties on imported films are taxable as well as the physical reels of celluloid. It is demanding 31 billion rupiah ($3.6m) in back taxes for the past two years’ worth of imports. While the importers appeal against the decision they have stopped bringing new Hollywood blockbusters into the country.
The dispute has brought into the limelight a small but rapidly growing industry that is a vestige of what was once a web of monopolies and cartels that enriched relatives and cronies of the Suharto regime at Indonesians’ expense. Friends and family of the former dictator enjoyed exclusive franchises over whole industries, from essentials like flour and cement to luxuries like films. From the 1980s the Hollywood studios had to distribute their output through Group 21, a company in which one of Suharto’s cousins then owned a stake (his family has since sold this).
When Indonesia’s economy collapsed in 1997-98, bringing the regime down with it, the IMF insisted on the dismantling of the monopolies as a condition of giving aid. A fair-competition agency, the KPPU, was created, and Suharto’s successors opened up industries such as telecoms, banking and civil aviation. The entry of new competitors, Indonesian and foreign, has brought great benefits to consumers.
With their patriarch out of power and their monopolies busted, the Suharto family’s ventures have largely fallen by the wayside, though the wealth they amassed in the
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