ASEAN KEY DESTINATIONS
Government to issue fiscal incentives for industrial zones
In an effort to provide certainty for potential investors in the country’s industrial zones, the Finance Ministry is set to issue a regulation on incentives for such zones, an official has said.
Industry Ministry director general for industrial-estate development Imam Haryono said he expected that detailed incentives for industrial zones could soon be issued so that further development of industrial zones could go ahead.
“I thanked the Coordinating Economic Minister for issuing the new regulation on industrial zones on time, and we hope that a derivative regulation on fiscal incentives can be issued soon,” he said Thursday.
Government Regulation No. 142/2015 on industrial zones, which came into effect on Dec. 28 last year, divides industrial zones into four categories, namely developed industrial development estates (WPI) in Java; developing WPI in southern Sulawesi, eastern Kalimantan, northern Sumatra (other than Batam, Bintan and Karimun) and southern Sumatra; potential WPI in northern Sulawesi, western Kalimantan, Bali and Nusa Tenggara; and potential WPI in Papua and West Papua.
The Industry Ministry has proposed that greater incentives be given for less developed zones to lure more investors to go to those regions.
The new regulation is set to provide tax incentives for industrial zones in the form of tax holidays and tax allowances.
It is also set to provide regional incentives in the form of reductions, allowances or exemptions from regional taxes and/or levies.
Among the regional taxes and levies are land and building acquisition fees, property tax (PBB) and street lighting tax (PPJ).
The regulation also stipulates non-fiscal incentives, such as the revocation of requirements to obtain environmental licenses for tenants of industrial zones as long as the operators have already obtained the licenses for the whole area of the zones.
Imam said the government aimed to ensure 60 percent to 70 percent of industrial activities in the country were carried out in industrial zones in the next 20 years.
A number of sectors, such as small and medium industries, meanwhile were exempt from the stipulation, he said.
Indonesian Industrial Estate Association (HKI) chairman Sanny Iskandar lauded the government’s target as he said carrying out industrial activities in industrial zones was much more efficient than outside industrial zones.
“I think tenants in industrial zones can conduct their businesses efficiently as industrial zones provide more integrated infrastructure and utilities, pollution mitigation and transportation,” he said.
Imam said that industrial zones, particularly those operated by the government, should aim to provide higher efficiency, productivity and innovation to attract more companies to the zones.
According to the Industry Ministry’s estimate, only 6 percent of total industrial zone areas are managed by the government through state-owned enterprises or local administrations, with the remainder operated by private businesses.
Industry Ministry data show that in 2014 there were 74 industrial zones with a total area of 36,295 hectares.
Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below