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DNI Relaxation Expected to Boost Investment

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26 November 2018 12:10 WIB

Industry Minister Airlangga Hartarto. TEMPO/Fardi Bestari

TEMPO.CO, JakartaThe government is set to boost investment especially foreign direct investment (FDI) in industrial sector. The country`s manufacturing industry has remained in the doldrums despite rising trend lately.

The government has sought to attract more investment as one of the main drivers of the country`s economic growth amid weak performance of the country in export.

The government stated that they are especially concerned with the deficit in the country`s foreign trade contributing to widening current account deficit, which has been blamed for the rupiah depreciation against the U.S. dollar lately.

More important still expected from the acceleration of investment is the opening of new jobs, Industry Minister Airlangga Hartarto has said.

The Industry Ministry recorded significant growth in the investment in the manufacturing sector in the past four years -- from Rp195.74 trillion in 2014 to Rp274.09 trillion in 2017.

In the first half of 2018, investment in the manufacturing industry already reached Rp121.56 trillion, opening new jobs for 17.92 million workers.

Other no less important benefit from an increase in foreign direct investment (FDI) in the country is transfer of experience, knowledge and technology.

In a bid to boost investment, the government has issued a series of policy packages such as offering tax allowance, tax holiday, import duty exemption and adoption of Online Single Submission (OSS).

The various strategic policies were to create more favorable and convenient business climate for investment especially FDI.

Most recently the government opened a number of business areas previously close to new investment including FDI in what was called relaxation of DNI (list of negative investment) which is a list of business areas closed to new investment or foreign investment.

The policy has triggered controversy with observers accusing the government of offering wide facility for foreign investment at the expense of domestic industry especially micro, small and medium enterprises (UMKM).

The government defended its policy dismissing the accusation of being driven by lack of readiness to understand the government policy and socialization.

The policy package opens the wider the possibility of partnership between foreign investment and UMKM to promote their economic scale, it said.

The government said DNI has to reflect balance between the goals of economic development and national interest, therefore, DNI has to be dynamic or has to continue to adapt to the changing condition of the national economy.

The relaxation of DNI was a revision of the Presidential Regulation No. 44 of 2016. It is part of the 16th policy package, designed to boost investment both domestic investment (PMDN) and foreign investment (PMA).

Among the business areas excluded from DNI are cloth printing and knitting industries, crumb rubber, copra, ketchup, milk processing, sweet condensed milk, timber-based goods manufacturing, essential oil, and nail, nut and bolt industries.

The government gave a number of reasons for the relaxation, citing, in the period of 2012-2016, there was only one additional industrial unit in crumb rubber processing sector - from 201 to 202 companies.

Crumb rubber industry was closed to PMA and PMDN and appropriated only for UMKM but under the new policy the sector is no longer included in the DNI. It is partly open to PMA and PMDN as no significant investment by UMKM in the sector over the past three years.

Industry Minister Airlangga said under the policy of DNI relaxation, there is no requirement for foreign investors to operate in partnership with local investors.

ANTARA




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