Celios Supports Fiscal Incentives Also Targeting the Midstream Industry

Jakarta (ANTARA) - The Center of Economic and Law Studies (Celios) supports the government’s move to prioritise fiscal incentives for investments that absorb labour, while also urging that the policy be directed towards midstream industries to increase domestic value addition.

Celios Executive Director Bhima Yudhistira assesses that tax incentives in the downstreaming programme have so far been concentrated in the upstream sector, thus the domestic economic benefits have not been optimal.

“The midstream industry should also be given more incentives,” he told ANTARA in Jakarta on Friday.

He cited sectors such as battery precursor industry and solar panel module manufacturing as strategic areas that need strengthening through fiscal incentives.

“So the consideration (in granting fiscal incentives) should not only be labour absorption, but also the value added generated in the midstream industry,” he said.

Celios also encourages the formulation of incentive policies to be more participatory, involving experts and stakeholders, including in the mineral downstreaming sector.

In addition, the government is expected to ensure that the incentive design remains aligned with global policies, including the implementation of the 15 percent global minimum tax, which limits the scope for extreme fiscal incentives.

“Monitoring of these fiscal incentives is important to see whether the companies granted incentives perform well. This must be continuously monitored by the Ministry of Finance and technical ministries,” said Bhima.

The government previously stated that it is shifting the priority of fiscal incentives from being based on large investment values to being based on labour absorption.

Minister of Investment and Downstreaming/Head of BKPM Rosan Roeslani, in a press conference at his office in Jakarta on Thursday (23/4), exemplified a coconut processing project worth US$100 million or approximately Rp1.72 trillion in Morowali, which has the potential to absorb 10,000 workers, even though the investment value is relatively small.

This policy is expected to encourage a better investment climate in the country while suppressing the unemployment rate.