Thu, 18 Dec 2008
From: The Jakarta Post
By Mustaqim Adamrah, The Jakarta Post, Jakarta
A set of incentives have been prepared for businesses willing to operate in special economic zones (SEZs) to attract investment into the regions, with the government expecting the SEZ bill to soon be endorsed by lawmakers.

Trade Minister Mari Elka Pangestu said Wednesday the proposed incentives, still subject to deliberation by the House of Representatives' special committee on the SEZ bill, revolved around tax cuts, flows of goods, manpower, immigration and licensing procedures.

"We'll make sure goods will go in and out more easily in the special economic zones than in other places," she told reporters after a hearing with committee members, without detailing the time targeted for inspections to take place.

"We'll also establish an agency to process all investment-related licenses under one roof to make sure all the processes go smoothly," she said.

The government would provide companies in SEZs with cuts in income tax depending on the amount of investment, said Mari. That incentive, called an investment allowance, would apply for the first six years of operation for certain business sectors in particular areas.

However, she did not elaborate the criteria for businesses and areas to be eligible for the investment allowance.

"There will also be incentives in the form of cuts in or elimination of regional taxes or fees. Regional administrations will later decide the form and amount of these incentives," she added.

In a bid to boost the economy in the regions, the government plans to establish SEZs across the archipelago, providing special fiscal and non-fiscal facilities for companies willing to invest in the zones.

Up to 18 regions have so far proposed to have an SEZ in their respective areas.

The government has declared Batam, along with Bintan and Karimun, as an SEZ, and is planning to establish other SEZs around the country, including in Riau's Dumai, West Java, Central Java, East Java, Bali, South Sulawesi's Makassar, North Sulawesi's Bitung Island and East Kalimantan.

SEZ establishment will require however a legal basis in the form of a law, which the government expects the current SEZ bill to provide.

Specially for Batam, Bintan and Karimun, its SEZ declaration was based on a government regulation in lieu of law, while waiting for the endorsement of the SEZ bill.

The bill also mandates and sets aside an allotted space for micro, small and medium enterprises (MSMEs) in SEZs, and requires big businesses to work with MSMEs in industrial processes.



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