Economic Policy


Encouraging national industrial competitiveness,
through deregulation, simplifying bureaucracy, law enforcement & business certainty.

Accelerating national strategic project,
by removing various obstacles: licensing simplification, settlement of spatial issue and provision of land, accelerating the procurement of government goods and services, the discretion in the settlement of obstacles and legal protection, support the regional head to conduct the acceleration of national strategic projects.

Increasing investment in property sector by issuing the policies to stimulate housing development for low income, while offering opportunity for greater investment in property.

3-Hour Investment License Services for investment in industrial estate with min. investment of IDR 100 billion and/or 1,000 local labor.

Eliminating Required License on Forestry sector from 14 to 6 licenses.

Acceleration of SOP for the issuance of Tax Allowance:

25 days (from 28 days) for Tax Allowance and 45 days (from 125 days) for Tax Holiday.

Value Added Tax exemption for shipbuilding, railway, airplane, which include spare parts.

Interest-on-deposit tax reduction facilities for exporter.

Development of Logistic Center in Bonded Zone in Cikarang, West Java for the manufacturing industry, and for fuel oil logistic in Merak, Banten.

Fuel

• Price reduction of Avtur, Pertamax, and Pertalite starts on 1 October 2015.
• Price reduction of solar by IDR 200/L starts on the third day after announcement.
Gas
• Gas price will be set according to purchasing power of the industries.
• For fertilizer industry, gas price will be reduced to USD 7 mmbtu
• Starts on 1 January 2016. Electricity
• Automatic tariff adjustment of electricity will be applied for industry I3 and I4
• Up to 30% discounted tariff for midnight consumption (23.00-08.00).
• Up to 40% of electricity bills in the first 6-10 months can be deferred and be paid gradually for labour-intensive industry.

Minimum Wages Policy

Fixed formula that will be applied by the government to determine increases in labour wages across the 34 provinces of the Archipelago. The new formula is also designed to provide more certainty to business owners regarding minimum wage growth.

Minimum wage = current wage + [ current wage x (% inflation + % Δ GDP) ]


SME’s Loan

  • Expansion of loan (KUR) recipients and the extension of loan by the Indonesian Export Financing Institution (LPEI) to small- scale businesses so that they can ramp up their exports.
  • The recipients of KUR can be a person or legal entity.
  • Interest rate subsidy from Government for Small Medium Enterprises from 22% to 12%).

Income tax tariff (PPh) reduction for assets revaluation for legal entities or individual who doing the accounting book.

Previously, only limited companies with USD accounting book that can propose an asset revaluation. From previously 10%, the tax rate cuts are as follow:

  • 3% for those who propose asset revaluation until 31 December 2015;
  • 4% for those who propose asset revaluation in first semester of 2016;
  • 6% for those who propose asset revaluation in second semester of 2016.

Double-tax removal for infrastructure & Real Estate Investment Trust (REITs).

Incentives package for Special Economic Zones (SEZ), e.g. Tax Holiday 20-100% for 10-25 years.*

Certainty for existing investor on permit of water resources management.*

Online import licenses for drugs and raw materials to less than an hour.

Note: *upcoming Govt. Regulation

Acceleration on Land Certification Process

  • Increasing number of certified surveyor, especially from non civil servant
  • Speed up the time needed to land registration announcement, from 30-60 days to 14 days
  • Shifting land registration process to electronic system
  • Giving commercial rights for indigenous people and people who lives in plantation / forest area

Tax incentives for labor intensive industry,

  • Tax allowance 5% for 6 years for apparel and shoes industry with criteria min. investment of Rp. 50 billion / US$ 3.7 million
  • Income tax incentives, a discount of 50% for labor intensive industry with export oriented products and min. 5000 workers

One Map Policy

  • Scale 1:50,000
  • To resolve the overlapping land use problems and resolve regional borders

Develop Energy Security

  • Acceleration on the construction and development of oil refinery
  • To reduce import on fuel, it is required to build refinery with capacity of 300,000 barrel per day

Incentives for Aircraft Maintenance Company

  • Maintenance, repair and overhaul / MRO
  • To support aviation industry in Indonesia and attract more investment on the industry

Accelerating electricity infrastructure development

  • Presidential Regulation No.4 Year 2016 on the Acceleration of Electricity Infrastructure Development
  • To expedite licensing, land acquisition, company registration, etc.

Stabilizing supply and price of beef

  • To increase cattle population
  • Improvement of logistic and distribution
  • Improvement cattle and beef business management
  • Institutional enforcement though Public Cattle Centre (Sentra Peternakan Rakyat)

Developing village access to global logistics

  • Commercial post service development
  • Single billing (electronic) for the payment of port services
  • SOE synergy to enhance the export of SME’s products
  • Indonesia national singe windows for port services

Negative List on Investment Reform

  • 100 % FDI Distributor affiliated with production. 67 % FDI for distributor not affiliated with production
  • 100% FDI Raw Material for Pharmacy from previously open to 85% FDI
  • 100% FDI e-commerce in partnership with SME, previously closed to FDI
  • 100% FDI marketplace for min investment of US$ 8 million, open 49% for under US$ 8 million
  • 100% FDI for film industry
  • 67% FDI for transport infrastructure and support services
  • 100% FDI for tourism

Increasing SMEs Competitiveness

  • Credit for export oriented SME’s with 9% rate
  • Lower income tax discount (0.5%)
  • Land and building transfer tax reduction (from 5% into 1%)

Improvement of ease of doing business in Indonesia related to 10 indicators.