Tax Exemptions, Foreign Ownership Among Govt Incentives for SEZ Investors in Indonesia

TEMPO.CO, Jakarta - The government provides fiscal assistance for investors in special economic zones or SEZs in Indonesia, including ease of access to permits and tax exemption. The fiscal assistance took the form of up to 20 years of tax exemption, while non-fiscal assistance includes 100 percent of foreign ownership. 

Secretary General of the SEZ National Council, Rizal Edwin, explained that SEZs were developed in response to the concentrated development in Java and Sumatra. SEz is also quite helpful in maximizing the industries, exports, and imports. 

Some other fiscal incentives for SEZ are tax holidays, tax allowances, value-added tax exemptions, luxury goods sales tax exemptions, import duty suspensions, import tax exemptions, raw material excise exemptions, regional tax exemptions, and being able to participate in VAT refunds for the tourism industry.

Furthermore, Edwin explained, that investors who invest with a minimum of Rp100 billion receive a tax exemption of 10 years, 15 years for investors who invest a minimum of Rp500 billion, and 20 years with a minimum investment value of Rp1 trillion.

In the non-fiscal sector, the government provides several incentives, including, the right to build for up to 80 years, one-stop service, no negative list, environmental approval by BUPP, no export obligations, and up to 100 percent foreign ownership.

"These facilities will boost foreign investors to enter and develop the special economic zone and will hopefully improve the local economy,” Edwin said on Monday, July 22, 2024. 

Bambang Wijanarko, Acting Head of the Investment, Cooperation, and Communication Bureau, explained that the SEZ policy is a development of two similar policies, the free trade area and the integrated economic zones. 

"The economic development (free trade area and integrated economic zones) is mostly a top-down policy, where all funding comes from the central government budget,” he said. 

Furthermore, Bambang also said that applications for special economic zones have increased in the last few years after the passing of the Job Creation Law which is based on Government Regulation Number 40 of 2021 concerning Special Economic Zones.

HALGI MASHALFI

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