2. REFORMS IN INDONESIA
INDONESIA, THE LARGEST ECONOMY IN SOUTHEAST ASIA, IS NOW BECOMING ONE OF
THE MOST ATTRACTIVE INVESTMENT DESTINATION IN THE WORLD
IN THE LAST 5 YEARS, THE TOTAL OF INVESTMENT REALIZATION IN THE G-20 MEMBER
STATE INCREASED BY 22.4% IN AVERAGE, REACHED US$43BILLION LAST YEAR
3. REFORMS IN INDONESIA
HOWEVER, THE GOVERNMENT IS AWARE THAT DOING BUSINESS IN THE
WORLD´S LARGEST ARCHIPIELAGIC NATION IS NOT THE EASIEST.
AMONG THE MAIN CONCERNS OF INVESTORS IN INDONESIA ARE:
QUALITY INFRASTRUCTURE AND LOGISTICS COSTS
INEFFICIENT BUSINESS LICENSING,
CORRUPTION
REGULATION
POLICY ISSUES
LABOR ISSUES
4. REFORMS IN INDONESIA
THE GOVERNMENT RECOGNIZED THESE ISSUES, AND NOW IS
WORKING THROUGH AN AGENCY, THE INDONESIA INVESTMENT
BOARD (BKPM), TO IMPLEMENT THREE REFORM PRIORITIES:
1. THE IMPROVEMENT OF BUSINESS LICENSING
2. THE DEBOTTLENECKING OF INVESTMENT REALIZATION
3. THE DEVELOPMENT OF INVESTMENT CLIMATE BY IMPROVING BOTH FISCAL AND
NON-FISCAL FACILITIES
6. REFORMS IN INDONESIA
1. THE IMPROVEMENT OF BUSINESS LICENSING
BY INAUGURATING THE NATIONAL ONE-STOP INTEGRATED SERVICE (OSS) CENTER,
FOR INVESTMENT AT THE BKPM EARLIER THIS YEAR
INVESTORS CAN NOW PROCESS INVESTMENT LICENSES AT BKPM WITHOUT
HAVING TO LIAISE WITH OTHER MINISTRIES/ INSTITUTIONS
THIS ALLOWS AUTHORITIES TO REDUCE PROCESS TIME, SYNCHRONIZE
PROCEDURES, AVOID AUTHORITY OVERLAP, AND ELIMINATE RED TAPE.
7. REFORMS IN INDONESIA
COST OF DOING BUSINESS
COST OF DOING BUSINESS IN INDONESIA SOURCES FROM DOING BUSINESS REPORT
2014, A STUDY ELABORATED BY THE WORLD BANK GROUP TO MEASURE THE COSTS
TO FIRMS OF BUSINESS REGULATIONS AND THEIR ENFORCEMENT ACROSS 185
ECONOMIES AND SELECTED CITIES AT THE SUBNATIONAL AND REGIONAL LEVEL.
TO HAVE PERSPECTIVES ON BUSINESS RELATED REGULATIONS AND COST UPON
DOING BUSINESS IN INDONESIA, PLEASE VISIT EASE OF DOING BUSINESS IN
INDONESIA 2014
Office Lease Cost
Manpower Cost
Fuel Cost
Water Tariff
Electricity Cost
8. REFORMS IN INDONESIA
2. THE DEBOTTLENECKING OF INVESTMENT REALIZATION
RECENTLY, BKPM HAD SOLVED A NUMBER OF PROBLEMS HAMPERING INVESTMENT OF 22
COMPANIES WORTH US$ 99 BILLION, OUT OF 88 COMPANIES UNDER FACILITATION SINCE LAST
YEAR
THE ISSUES ARE MAINLY RELATED TO:
Land acquisitions
Misuse of permits
Supply of raw materials
Cooperation contracts
Tax regulation
9. REFORMS IN INDONESIA
2. THE DEBOTTLENECKING OF INVESTMENT REALIZATION
IN ADDITION, THE BOARD IS ALSO STRENGHTENING ITS END-TO-END SERVICE FOR
INVESTORS, FROM IDENTIFYING AND EXPLORING INVESTMENT INTERESTS,
FACILITATING INVESTORS TO OBTAIN PRINCIPAL LICENSE, TO REALIZING THEIR
INVESTMENT PLANS
10. REFORMS IN INDONESIA
3. THE DEVELOPMENT OF INVESTMENT CLIMATE BY IMPROVING
BOTH FISCAL AND NON-FISCAL FACILITIES
INDONESIA OFFERS FISCAL FACILITIES FOR INVESTORS, AMONG OTHER THINGS, IN FORMS
OF :
IMPORT DUTY FACILITY
TAX ALLOWANCE
TAX HOLIDAY
THE GOVERNMENT AIMS TO
REDUCE THE INVESTMENT LICENSE PROCESSING TIME TO MÁXIMUM 15 DAYS FOR EACH
TYPE OF PERMIT
REDUCE STARTING-A-BUSINESS PRODEDURE FROM SEVEN TO ONLY FIVE STEPS
11. REFORMS IN INDONESIA
Import Duty Facility Regulation of The MoF No. 176/PMK.011/2012
(amandement Regulation of The MoF No. 176/PMK.011/2009)
Facility
o Exemption from import duty on the import of machines, goods and materials for production for a period of 2 years.
o Import duty facility for a period of 4 years is granted to a company using locally-produced machines at least 30% of the total value of machines for its production.
Criteria
o Import duty facility is granted to a company industrial sector which produces:
o Goods and/or
o Services, including :
o Tourism and culture
o Public transportation
o Public health services
o Mining
o ConstructionTelecommunication
o Port
o Import duty facility may be granted to the extent that the machines, goods and materials:
o are not produced in Indonesia;
o are produced in Indonesia but the they do not meet the required specifications;
o are produced in Indonesia but the quantity is not sufficient for the need of the industry
INVESTMENT
INCENTIVES
12. REFORMS IN INDONESIA
TAX ALLOWANCE GOVERNMENT REGULATION NO.144 YEAR 2012
(AMANDEMENT GOVERNMENT REGULATION NO.52 YEAR 2011)
Reduction of net income of 30% (thirty percent) of the investment, charged for 6 (six)
years respectively at 5% (five percent) each year.
Eligible for 129 business segments since 2011, expanded from 38 segments in the
previous regulation.
Under centain requirements, among others: minimum amount of investment value
and workforce, and certain project location (especially outside Java island).
Accelerated depreciation and amortization,
Imposition of income tax on dividends which paid to foreign tax subject of 10% (ten
percent), or a lower rate according to the avoidance of double taxation agreement,
and
Compensation losses longer than 5 (five) years but not more than 10 (ten) years with
the certain conditions (can be seen in the regulation)
INVESTMENT
INCENTIVES
13. REFORMS IN INDONESIA
TAX ALLOWANCE GOVERNMENT REGULATION NO.144 YEAR 2012
(AMANDEMENT GOVERNMENT REGULATION NO.52 YEAR 2011
INVESTMENT
INCENTIVES
14. REFORMS IN INDONESIA
TAX HOLIDAY REGULATION OF THE MOF NO. 130/PMK.011/2011
Facility
o A taxpayer can be granted a tax relief facility for a period of between 5 and 10 years, starting from the commencement of its commercial production.
o After the expiration of the tax holiday, the taxpayer will be entitled to an income tax reduction of 50% for a further2 years.
o By considering the purpose of maintaining the competitiveness of national industries and the strategic value of certain business activities, the duration of the tax relief and
reduction can be extended based on a decision by the Minister of Finance .
Criteria
o Constituting a pioneer industry:
o Basic metal industries;
o Oil refinery industries and/or basic organic chemicals originating from oil and natural gas;
o Machinery industries;
o Industries in the field of renewable resources;
o Communication devices industries.
o Having a new investment plan having obtained the approval of competent authorities in a minimum amount of IDR 1 trillion (USD 100 million).
INVESTMENT
INCENTIVES
15. REFORMS IN INDONESIA
THE AGENCY ENCOURAGE INVESTMENT IN KEY SECTORS, ACCORDINGLY WITH THE
GOVERNMENT´S WORK PROGRAM, NAMELY: INFRASTRUCTURE; MANUFACTURING;
MARITIME ; TOURISM, SPECIAL ECONOMY ZONE (SEZ), AND INDUSTRIAL PARKS
