Deputy Industry Minister Confident Tax Incentives Will Maintain Indonesia's Investment Competitiveness
JAKARTA, DDTCNews - Deputy Minister of Industry Faisol Riza expressed confidence that Indonesia's investment competitiveness remains intact, supported by the various tax incentives offered by the government.
Faisol said global geopolitical dynamics pose one of the challenges in maintaining an attractive investment climate. Nevertheless, the provision of tax incentives can serve as a sweetener to keep investors coming to invest in Indonesia.
"The government is presenting various comprehensive incentive packages," he said during a working meeting with House of Representatives Commission VII, as quoted on Friday (4/7/2025).
Faisol said Indonesia currently faces the challenge of maintaining a stable and competitive business climate. If the business climate is maintained, investment will not only flow in but also grow and develop domestically.
He explained that the government has prepared four fiscal facilities. First, a tax holiday in the form of corporate income tax reductions of up to 100% for 5 to 20 years. Through PMK 69/2024, the government officially extended the validity of the tax holiday under PMK 130/2020 until 31 December 2025.
Second, a tax allowance in the form of a net income reduction of 30% of total capital investment in tangible fixed assets including land, charged over 6 years at 5% per year.
Third, import duty exemptions granted on imports of machinery, goods, and materials for industrial development and expansion.
Fourth, a supertax deduction enabling taxpayers to receive gross income reductions of 200% to 300% on expenditure for research, development, and training activities.
"Indonesia's opportunity to attract FDI through relocation is wide open. This opportunity can be seized if our domestic business climate is stable, competitive, and attractive," he said.
Faisol added that the government also provides three non-fiscal facility schemes to attract foreign investment. First, special economic zones and industrial estates that provide infrastructure and licensing facilitation. Second, national strategic projects for accelerated licensing and land acquisition. Third, export financing facilities to support export financing and insurance. Fourth, national vital objects that provide protection for strategic assets. Fifth, human resource training and competency certification aimed at providing competent industrial workers through training and industry-specific certification.
Faisol said global geopolitical dynamics pose one of the challenges in maintaining an attractive investment climate. Nevertheless, the provision of tax incentives can serve as a sweetener to keep investors coming to invest in Indonesia.
"The government is presenting various comprehensive incentive packages," he said during a working meeting with House of Representatives Commission VII, as quoted on Friday (4/7/2025).
Faisol said Indonesia currently faces the challenge of maintaining a stable and competitive business climate. If the business climate is maintained, investment will not only flow in but also grow and develop domestically.
He explained that the government has prepared four fiscal facilities. First, a tax holiday in the form of corporate income tax reductions of up to 100% for 5 to 20 years. Through PMK 69/2024, the government officially extended the validity of the tax holiday under PMK 130/2020 until 31 December 2025.
Second, a tax allowance in the form of a net income reduction of 30% of total capital investment in tangible fixed assets including land, charged over 6 years at 5% per year.
Third, import duty exemptions granted on imports of machinery, goods, and materials for industrial development and expansion.
Fourth, a supertax deduction enabling taxpayers to receive gross income reductions of 200% to 300% on expenditure for research, development, and training activities.
"Indonesia's opportunity to attract FDI through relocation is wide open. This opportunity can be seized if our domestic business climate is stable, competitive, and attractive," he said.
Faisol added that the government also provides three non-fiscal facility schemes to attract foreign investment. First, special economic zones and industrial estates that provide infrastructure and licensing facilitation. Second, national strategic projects for accelerated licensing and land acquisition. Third, export financing facilities to support export financing and insurance. Fourth, national vital objects that provide protection for strategic assets. Fifth, human resource training and competency certification aimed at providing competent industrial workers through training and industry-specific certification.