Govt plans incentives for investment in SMEs

Govt plans incentives for investment in SMEs

The Jakarta Post, Jakarta

The government is considering providing incentives for foreign
companies who want to set up joint ventures with local small and
medium enterprises (SMEs), according to Investment Coordinating
Board (BKPM) chairman Theo F. Toemion.

"One possible incentive would be tax cuts," Theo told The
Jakarta Post on Friday.

He said that such an incentive scheme would be aimed at
boosting the role of SMEs in the economy and attracting more
foreign companies into the country.

"We are now discussing the plan with the relevant ministries,"
he explained.

Theo said that the role of SMEs was important to the country's
economic development as they employed huge numbers of people and
had been relatively unscathed by the 1998 economic crisis.

Theo also said that the investment incentive scheme would be
included in the new investment bill, which would be submitted to
the House of Representatives for deliberation in February to
replace the existing laws on foreign and domestic investment.

Under the proposed draft law, the government will provide
equal treatment both to foreign and local investors to boost the
country's attractiveness in the eyes of foreign investors.

Theo said that attracting foreign investment was vital as part
of the effort to restore the country's ailing economy to health.

Some business players have expressed fears that Indonesia will
be unable to compete with its regional peers, particularly
Thailand, in attracting foreign investors.