JAKARTA: Indonesia will provide longer tax exemptions and other fiscal and non-fiscal benefits to investors in its special economic zones (SEZs), a senior government official has confirmed.
Meanwhile, the government is planning to add four more SEZs to the existing 22 designated economic areas in the country, with a total investment value of 161 trillion rupiah (US$9.9 billion).
On Monday (Jul 22), SEZ National Council secretary general Rizal Edwin said that a 20-year corporate income tax exemption will be given to investors with a minimum investment value of 1 trillion rupiah.
Those with a minimum investment of 500 billion rupiah will get a 15-year corporate income tax exemption, while those with a 100 billion investment will receive a 10-year corporate income tax exemption.
Other fiscal incentives for SEZs are tax holidays, tax allowances, value-added tax exemptions, tax exemptions on luxury goods sales and regional tax exemptions.
According to Mr Rizal, non-fiscal measures include the government’s assistance in providing facilities for investors in the SEZs, such as building use rights for up to 80 years, ease of access permits and 100 per cent foreign ownership.
“The provision of these facilities is to increase Indonesia’s attractiveness and competitiveness to attract foreign investment in the SEZs through government regulations, which can help to boost the economy in the area and eliminate regional inequality,” he said, as quoted by local media platform Tempo.
In Indonesia, not all businesses are allowed to be 100 per cent owned by foreign investors. Industries where businesses can be fully foreign-owned include those in the oil and gas construction services, oil and gas drilling at sea, geothermal drilling, the timber industry and internet service providers.
Indonesia first started developing SEZs in 2009, with the passing of the Law Regarding Special Economic Zones. According to this law, these designated areas which are subject to unique economic regulations, should aim to create more equal economic development among different regions which have traditionally been concentrated in Java and Sumatra.
The first SEZ in Indonesia was in Tanjung Lesung, in Java’s Banten province which opened in 2012. The current 22 SEZs spread throughout Indonesia mainly focus on the industrial, tourism and digital sectors.
