Fiscal Incentives Focused on Labour-Intensive Industries, Here's Why
The government is beginning to change its approach to providing investment incentives by placing the absorption of labour as the primary factor. Through the Investment Coordinating Board (BKPM), this policy is expected to encourage the creation of more jobs amid global investment competition.
Minister of Investment and Downstreaming/Head of BKPM, Rosan Roeslani, emphasised that the provision of fiscal incentives will no longer be based solely on the size of the incoming investment value. The government will now consider the direct impact on society, particularly in terms of job creation.
According to him, the labour-intensive industrial sector is the main focus of this new policy. Industries capable of absorbing large numbers of workers are deemed to have a significant contribution to economic growth as well as reducing unemployment rates.
“Labour absorption will become an important parameter in providing incentives going forward,” said Rosan during a press conference in Jakarta on Thursday (23/4/2026).
He cited the example of the coconut processing project in Morowali with an investment value of around US$100 million. Although considered smaller compared to mineral-based downstream projects, that project is able to absorb a large number of workers, thus providing broad socio-economic impacts for the surrounding community.
In the old approach, projects with investment values like that might not have been a priority for receiving incentives. However, with the new policy, similar projects have a high chance of receiving government support due to their contribution to job creation.
This policy also serves as a signal that the government wants to encourage more inclusive investment oriented towards public welfare. In addition to boosting economic growth, this step is expected to create an even distribution of development benefits in various regions.
BKPM data shows that investment realisation in the first quarter of 2026 reached Rp498.8 trillion or about 24.4% of the annual target of Rp2,041.3 trillion. From that achievement, the number of workers absorbed reached 706,569 people.
This figure experienced a significant increase of 18.9% compared to the same period last year which recorded 594,104 workers. This increase indicates that investment is beginning to have a positive impact on job creation.
Going forward, the government is also opening opportunities for non-fiscal incentives to support investment sustainability, especially for sectors that have broad impacts on society.
With this new strategy, the government hopes that the investment climate in Indonesia will become increasingly competitive while being able to provide real benefits for sustainable economic growth and public welfare.