Government mulls new tax breaks to lure foreign investors

JAKARTA (JP): State Minister of Investment/Chairman of the Investment Coordinating Board (BKPM) Marzuki Usman said on Thursday his office was considering devising a more attractive tax incentive package to woo foreign investors back to the country.

"We hope the package proposal will be completed before the People's Consultative Assembly convenes its General Assembly (scheduled in November)," he was quoted by Antara as saying.

He did not give further details but said the proposal would be discussed in a Cabinet meeting next month.

The board will first evaluate similar incentive schemes in other countries, such as China and Singapore, before determining the level of tax incentives appropriate here, Marzuki said.

The scope of the incentives could be determined according to the location and sector of investment ventures, he noted.

Procedures for investment would be expedited by authorizing provincial investment offices (BKPMD) to license most investment projects, he added.

"A decree on this decentralization of authority is expected to be signed by the President soon," he said.

As part of the incentives to draw wary foreign investors, the government also is considering allowing foreigners with total investment of at least $1 million to obtain permanent resident status, which would free them from the need for a visa to enter the country.

Foreign investors often complain to BKPM about the complicated procedures involved in obtaining a visa or entry permit to Indonesia.

Marzuki said attractive benefits and simplified investment licensing procedures were important to stimulate foreign investment.

He noted that foreign investment was sorely needed to help accelerate economic recovery and generate jobs to the millions still unemployed and those laid off from the impact of the more than two-year-long economic crisis.

BKPM has said new foreign investment approval fell sharply due to the political uncertainty and the huge foreign debt overhang of both the government and the private sector. (cst)