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Govt launches 'priority list' to jack up investment in key industries
Indonesian government has issued a regulation containing a so-called priority list that promises potential investors fiscal and nonfiscal incentives and scraps some restrictions on foreign investment.
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The government aims for the jobs law and its implementing regulations to improve Indonesia’s business climate by revising 79 prevailing laws. (Shutterstock/buffaloboy)
T
he government has issued a regulation containing a so-called priority list that promises potential investors fiscal and nonfiscal incentives and scraps some restrictions on foreign investment to spur inflow of investment to the recession-hit country.
Presidential Regulation No. 10/2021, which implements elements of the recently passed Job Creation Law, stipulates that the priority investment list covers high-tech, pioneering, export-oriented, research-oriented, capital-intensive and labor-intensive industries, as well as national strategic projects. The new rules will come into effect 30 days from Feb. 2.
The regulation also officially scraps the government’s negative investment list (DNI) and allows both foreign and domestic investment in all business sectors, with the exception of six prohibited sectors – including narcotics and gambling – and businesses that can be carried out by the government. Foreign investment, however, is still capped in certain sectors.
Industries included in the priority list will get both fiscal and nonfiscal incentives, including tax allowances, tax holidays and relaxed licensing procedures. The businesses eligible for tax allowances range from e-commerce to small scale power plants, while oil and gas refineries, vaccine manufacturers and electric vehicle (EV) and EV battery manufacturers are eligible for tax holidays.
“With the changes in the business licensing process and expansion of industries for investment, we believe this will be a game changer in spurring investment and creating new jobs,” Coordinating Economic Minister Airlangga Hartarto said in a statement on Monday.
Investment, which together with household spending accounts for more than 89 percent of the gross domestic product (GDP) last year, has been impacted severely by the raging global pandemic.
Read also: Jobs law liberalizes more industries for investors
