An Investment in Indonesia: Benefits Given by the Government

An investment is a form of business to get profit in the future, or specifically in Indonesia, an investment or more known by a capital investment, as regulated under Law No. 25/2007 about Capital Investment, is all form of capital investments by local investor or foreign investor to conduct business in Indonesia. More specific in the same regulation, it states that a foreign capital investment is an activity of investing to conduct business in Indonesia using either fully foreign capital or joint-capital with local investor.

In Law No. 25/2007, it also states that the investor could get general benefits such as:

1. The investor is given two years of limited stay permit
2. The limited stay permit could be changed into a permanent stay permit if the investor has lived in Indonesia for consecutive 2 years
3. Re-entry permit for several trips for the holder of limited stay permit and with a validity period of one year for a maximum period of 12 months from the date a limited stay permit is granted
4. Re-entry permit for several trips for the holder of limited stay permit and with a validity period of two years for a maximum period of 24 months from the date a limited stay permit is granted
5. Re-entry permit for several trips for the holder of permanent stay permit given for maximum 24 months from the date a permanent stay permit is granted

Furthermore, in the fiscal sector, the Government also gives some benefits in a form of:

1. Income tax through net income reduction to a certain degree of amount investment made in time
2. Exemption or relief of import duties on imported capital goods, machinery or equipment for production purposes that cannot yet be produced in Indonesia
3. Exemption or relief of customs on raw materials or auxiliary material for production purposes for a certain time period and certain requirements
4. Exemption or deferral of the value-added tax of imported capital goods or machinery or equipment for production purposes that cannot be produced in Indonesia over a certain period of time
5. Accelerated depreciation or amortization
6. Relief for Land-and-Building tax, specifically for certain business fields in certain regions

By enacting Law No. 22/1999 and later changed with Law No. 32/2004 about Regional Government, the Indonesian Central Government gives the Regional Government the rights to also make regulations specific to their region. This enactment of law also takes effect to the region’s regulations about capital investment, where every region has probably given different facilities depends on the region’s main business sector.

For example, in Banten, the Regional Government gives the investor facility by enacting a New Public Service or NPS. The NPS itself has the objective of giving the very best service to the investor as it is their right. Few principles held by this service for example are serving rather than overseeing, public interests set as the main objective and not as side effect, and respecting people instead of just productivity. In conclusion, the facility given by Banten’s Government is to give better services that could also ease the investor. In the end, those facilities also encourage people to invest in Banten.