Investment Incentives in Indonesia
Incentives or guarantees
- Forms of Aid
- Among the measures supporting FDI are reductions of duty on imported inputs and capital equipment, additional incentives for investment in export or for investment in certain regions, a new bill on taxation which laid down in 2006 a simplification of fiscal incentives and an adjustment of VAT.
- Privileged Domains
- Exemption from duty, simplified formalities for requests for building permits and other permits.
- Privileged geographical sectors
- There are seven Customs areas and 40 industrial parks. The industrial parks are spread all over the country, but 32 of them are located in Java. There are some on the island of Bintan, at Medan (in the North of Sumatra), at Banten (Java), at Bekasi, at Bogor and Tangerang (in the West of Java), Semarang (in the center of Java) and at Makassar (in the South of Sulawesi). There is also an area under transborder Customs called Sijori including Singapore, Johor (Malaysia) and Riau (Sumatra) in Indonesia.
- Privileged Geographical Zones
- The State gives incentives to foreign and national industrial companies which choose to set up business in one of the 7 Customs areas. The government announced in 2006 a development plan for 7 special economic areas or "islands of excellence" situated in strategic places, where infrastructures, industries and inputs (including a qualified workforce) were already in place. The first ones were created on the islands of Batam (south of Singapore), Bintan and Karimun.
- Country Risk
Tax incentives offered to foreign investors
- Special tax treatments
Tax incentives are available to entities with capital investments in certain industry sectors or locations in Indonesia, including accelerated depreciation, a 5% per year tax investment allowance (30% total) and a reduced withholding tax of 10% on dividends paid to non-residents.
For more information on tax incentives you can consult the Investment Coordinating Board.
- Useful Links
Board of Investment of Indonesia
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