Indonesia Says It Will Revise Tax Incentives to Lift Investment

Finance Minister Sri Mulyani Indrawati said Indonesia will revise its tax incentives and offer them to a larger number of business sectors, in a bid to attract more investment. (Reuters Photo/Darren Whiteside)

By : Tabita Diela & Maikel Jefriando | on 8:01 PM February 21, 2018
Category : News

Jakarta. Indonesia will revise its tax incentives and offer them to a larger number of business sectors, in a bid to attract more investment, Finance Minister Sri Mulyani Indrawati said.

Tax allowance and tax holiday rules, last revised in 2016, had failed to attract a significant amount of investment into Southeast Asia's biggest economy, the minister told reporters in Jakarta on Wednesday (21/02).

She did not give specifics, but said the government has in mind adding at least 20 business sectors to the 145 currently qualifying for allowances

Boosting investment has been an economic priority for President Joko "Jokowi" Widodo, particularly since sluggish consumption has capped annual economic growth at around 5 percent for several years.

Thomas Lembong, head of Indonesia's Investment Coordinating Board (BKPM), said many manufacturing companies sought tax incentives before investing in the country.

"Competitor countries are very responsive to issues like this. If we can execute this, there will be incoming [investment]," Thomas said on Tuesday.

Last month, he warned that Indonesia was losing out to peers such as the Philippines, Thailand and Vietnam in attracting investment, due to regulatory uncertainties.

The government is planning to change the minimum investment required to get a tax holiday, she said. At present, the minimum ranges between Rp 500 billion ($36.7 million) and Rp 1 trillion.

Other revisions would include clarifying how tax holidays work.

"Things like this will be defined more clearly so that investors can have certainty over the incentives they can get," Sri Mulyani said.

Rules of the Ministry of Finance might be revised this month, while the presidential regulation could take another month to issue, she said.

Reuters

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