International -- Readers Report
Mexico and the Flat Tax: Perfect Together? (int'l edition)
From "Tax reform: Fox is pushing the case" (International Business, July 24), Mexico's tax-collection system appears to be in shambles, burdened by corruption, rampant avoidance, and a large underground economy.
A flat tax at a low rate would be easy to understand, easy to administer, fair to all, invite a minimum of avoidance, vastly reduce legal costs for taxpayers, eliminate almost all corruption associated with tax collection, and provide a Reaganesque spurt to economic growth.
If sold correctly, this tax could result in a higher level of compliance and could be at such a low rate that it would almost instantly spur economic growth, which will then bring in increased revenue. It could be the stepping stone of a new PAN dynasty.
Homewood, Ill.Return to top
Freeport Indonesia: The Good and the Bad (int'l edition)
Overall, "A pit of trouble" (Asian Business, July 31) was comprehensive and balanced in dealing with a complex subject. There are several points, however, we wish to clarify:
1) The article implies that PT-Freeport Indonesia (PT-FI)'s 1991 contract of work (COW) was "cozy" and therefore is now undergoing "public scrutiny" by the new democratically elected government. The contract has been extremely beneficial to Indonesia, which has already realized more than $400 million in added revenues than it would have under the previous contract. In all, from 1992 to '99, the new contract has produced $1.42 billion in direct benefits to the Indonesian government. President Abdurrahman Wahid and many of his ministers have repeatedly said that PT-FI's 1991 COW will be honored. You also say there are "15 years left" in the contract; in fact, it extends to 2041.
2) You suggest that Indonesia's new provincial-autonomy law may lead to a renegotiation of PT-FI's COW. While it is unclear how new contracts will be managed, the Indonesian government has made it clear that existing contracts, such as PT-FI's, will be honored.
3) The unfortunate May accident did not destroy any of the local people's homes. Moreover, benefits provided to the local people are greater than those listed. They include 4,139 houses, 100 km of new roads, 22 bridges, and construction of 3 schools, 12 places of worship, 2 hospitals, and 3 health clinics. This is in addition to 5,000 scholarships to Papuans, free health care for Papuans, a malaria-control program that has reduced the incidence of the disease by 70%, and training and employment for 1,300 Papuans.
4) The story says dividends from a trust fund for locals "have not been invested." PT-FI's offer of the trust fund was made in 1996, but it is still under negotiation and has not yet been accepted by local leaders.
5) The article states that Freeport- McMoRan Copper & Gold Inc.'s new human-rights policy "is being only partially implemented" and PT-FI compliance officers don't have time to "study" the compliance forms signed by employees. These are routine forms, not human-rights complaints or reports of alleged violations. We take any allegation of a possible human-rights violation seriously and act promptly and appropriately, as you note elsewhere in your story.
Paul S. Murphy
& Gold Inc.
New OrleansReturn to top
China Will Prosper Only When It Opens Its Economy (int'l edition)
China has been a "sleeping lion" on the verge of entering the New Economy ("China's tangled Web," Asian Edition Cover Story, July 17). The nation could prosper from taking part in it. The number of mobile-phone subscribers and users of the Internet has been increasing extremely rapidly, though the levels are still very low. Since its population is large, the number of cellular-phone users has already become bigger than the number in Japan. So it is of great importance whether or not the "sleeping lion" wakes up.
But China's current economic system will not bring about success. China will be forced to establish a more open economic system. The efficiency of information technology is strongly related to human capital. China has high-quality human resources, but building an open system is necessary to make better use of them. At the beginning of the 20th century, China failed to adopt imperialism and was conquered by a few Western countries. If China is to make the transition to the New Economy, it will have to become a fierce rival of industrialized countries during the beginning of the 21st century.
TokyoReturn to top