Invest in Indonesia Now
Dear Investor, Invest in a country whose people don’t know how to give up, invest Indonesia NOW.
The source of this information comes from non-ministerial Indonesian state media: investindonesia.go.id/en/
Dear Investor, Invest in a country whose people don’t know how to give up, invest Indonesia NOW.
With everything so new and uncertain during COVID-19 pandemic, you can be certain that BKPM is here to support your business. We understand that business nowadays is making every effort to sustain over the long run and seeking a solid foothold to stay evolves. Accordingly, we at BKPM are committed to pledging all possible endeavors to ensure your business not only survives but also thrives in Indonesia.
BKPM has taken several strategic steps to boost the flow of investment, aiming to keep the economy going and create employment opportunities for the Indonesian people. Job creation becomes more essential as there have been layoffs in various business sectors as a result of the pandemic situation, which have led to a sharp increase in the unemployment rate.
What we do to maintain investment climate during COVID-19 pandemic:
Facilitating existing companies that are already operating in Indonesia in overcoming obstacles they may face; Facilitating stalled investments; ringing in new investments to Indonesia; Giving incentives to companies that are going to conduct expansion.
In the early of COVID-19 outbreak, BKPM together with the Ministry of Health saw the urgency of the supporting medical equipment availability in a massive amount, as the pandemic was predicted to continue for quite some time. Both institutions then agreed to provide acceleration licensing for investors coming from related sectors. All licenses related to medical equipment are managed to be completed within 1x24 hours (1 day). The regulation is stipulated through the Chairman of BKPM Decree Number 86 Year 2020 on Providing Ease of Business Licensing for Certain Business Fields Related to the Handling of COVID-19.
We launched BKPM Investment Control and Command Center where licenses through OSS is monitored directly by BKPM Chairman Bahlil Lahadalia himself along with BKPM team. We continue to adopt by coordinating with all parties online. We get used to it, we are managing well. Furthermore, as the online services will be the most mode for the investors to reach out to BKPM officers, we continue improving both our website www.bkpm.go.id and www.investindonesia.go.id to optimize our services through the online system.
To facilitate more complicated queries or problems from the investors, BKPM continued to open the in-person consultation services at BKPM One-Stop Integrated Services (PTSP) Center. The service adopts the procedure referring to standard health protocols in the new normal era. It includes avoiding a gathering of people in large numbers and limiting services to 100 queue numbers a day grouped into 4 (four) queuing schedules.
WHY INDONESIA
Indonesia is listed on the ten world investment destination countries in 2020. We have a broad market potential which constitutes 40% of the ASEAN market and located in a strategic location: a hub between Asia and Australia continentals.
With a vast land area of 1,905 million square kilometers and multifarious characteristics, also rich in raw materials for natural resources with competitive price, we provide you plenty options of investment location with a variety of incentives attached. One of which is a provision of 4,000++ hectares of land at affordable price by the Government in Batang Regency, Central Java (Central Java Province has the lowest labor wage compared to other Provinces).
We also offer you a provision of taxation and non-taxation incentives according to investors business fields/investment value/other characteristics.
Indonesia now is the most preferred place for a business engaged in the field of labour-intensive manufacturing, export-oriented manufacturing, pharmaceutical and medical devices industry, renewable energy, infrastructure and mining industry with added value. Those fields will receive strong support and beneficial incentives from the government.
We understand that business across the globe nowadays is running under an extraordinary situation. For that reason, we grant you with breakthrough policy during the pandemic in the form of provision of recommendation letter for foreign workers, business visits, and shareholders during the travel restriction due to Covid-19. End-to-end service, including assistance from survey/preliminary stage to after-care service, is also available at your convenience.
INCENTIVES AND REGULATIONS TO SUPPORT THE BUSINESS DURING THE PANDEMIC
The Indonesian government through BKPM provides supports and policy breakthrough on the investment-related regulations. Several new policies were made, combined with the existing policies aimed to attract more investors.
The Chairman of BKPM Decree No.86/2020 on Providing Ease of Business Licensing for Certain Business Fields Related to the Handling of COVID-19.
BKPM formulates the regulation as its proactive response in facilitating companies involved in the COVID-19 handling efforts. The facilitation comprises from reduction and/or facilitation of business licensing requirements; acceleration on the business licensing process; and privileged assistance services for licenses in Medical Equipment, Pharmaceutical, and Supporting Industries.
The BKPM Announcement Number 8 of 2020 on Submission Flow of the Issuance of Letter of Support for the Visit of Foreign Investment Limited Liability Company Representatives and/or Foreign Experts during the COVID-19.
The announcement was issued to regulate the role and support of BKPM on Foreign Workers Recommendations during the COVID-19 pandemic period. BKPM can provide discretion in a form of a letter of recommendation for a Foreign Worker Visa application to companies that were considered strategic in terms of investment value, employment, in the completion of investment projects, and other considerations based on authority as long as it provides public benefit. The announcement was based on an agreement with Minister of Justice and Human Rights, Minister of Manpower, and Head of BKPM on May 15th, 2020.
Investment Incentives: Tax Holiday (MoF Regulation No. 150/PMK.010/2018 & BKPM Regulation No. 6/2019)
A tax holiday is a form of tax incentive which exempt the investors from corporate income tax for a minimum of 5 years and a maximum of 20 years from the commencement of commercial production, depends on investment value, starting at IDR 100 billion (USD 7.2 million). Afterwards, the company will get a corporate income tax reduction for 2 (two) years starting from the end of the tax exemption facility. Based on the latest update, there are 18 pioneer sectors eligible for applying for a Tax Holiday incentive.
Investment Incentives: Tax Allowance (Government Regulation No. 78/2019 & MoF Regulation No. 96/PMK.010/2020)
Tax Allowance grants 30% reduction in corporate net income tax for six years (5% each year) based on the value of the tangible fixed assets determined by the Minister of Finance. Tax allowance also facilitates accelerated deduction of depreciation and/or amortization, an extension of tax losses-carry forward for up to ten years, and reduction of the withholding tax rate on dividends paid to non-residents to 10% (or lower if treaty relief is available). To be eligible for applying for tax allowance, the applicants must meet the high-level criteria namely high investment value for export purposes, high absorption of manpower, or high local content. Currently, 166 business fields plus 17 business fields in particular areas are eligible for tax allowance, under certain requirements.
Investment Incentives: Import Duty Exemption & Green Lane Facility (MoF Regulation No.110/PMK.011/2005, MoF Regulation No.76/PMK.011/2012, MoF Regulation No.66/PMK.010/2015 and Chairman of BKPM Regulation No. 16/2015)
Import Duty Facility
Exemption of import duty on:
- imported capital goods (machines) for 2 years during construction period
- imported goods and material for production for 2 years during initial production (or 4 years for companies using locally produced machines min.30% of the total value of machines for production).
Green Lane Facility
A facility for new companies under construction. In a regular case, the custom goods will enter the red line during the customs checking status. Under Green Lane Facility, the goods owned by new companies can go through the green line, with faster and more certain custom clearance. Capital goods no longer require screening, cutting the processing time to only 30 minutes from previously 365 days.
Investment Incentives: Super Deductible Tax (Government Regulation No. 45/2019 and MoF Regulation No.128/PMK.010/2019)
Super Deduction Tax is the new investment incentive aiming to improve the quality of human resources in Indonesia. The incentive covers three different areas:
- Labour-intensive industries: a 60% net income reduction from the amount invested in the form of tangible fixed assets, including land utilised for taxpayer’s main business.
- Industries involved in vocational education programs in specific competencies: An up to 200% reduction in the gross income of the amount spent on related activities.
- Industries hold research and development activities to produce innovation: An up to 300% reduction in the gross income of the amount spent on related activities.
Omnibus Law: Strategic Action to Reform Investment Ecosystem The Omnibus Law on Job Creation is the latest regulation passed by the government and the House of Representatives to improve Indonesia’s business ecosystem. The law mainly targeted to simplify and harmonize existing regulations and permits, develop quality investments, reinforce job creation, and provide sustainable worker welfare.
SPECIAL TASK FORCE
We are well prepared to seize the opportunities during the pandemic as BKPM formed a special task force to attract business leaving China and facilitate their relocation to Indonesia. Thus far, BKPM’s investment relocation special task force has brought 7 (seven) companies to Indonesia with total investment of USD850 million and employment for 30,000 workers.
BKPM IS READY TO HELP MSMES TO KEEP THEIR BUSINESS RUNNING
BKPM’s strategy in attracting investments focuses on not only FDI but also partiality towards DDI and MSMEs. As mandated by the President of the Republic of Indonesia, MSMEs is one of the Key Performance Indicator (KPI) of BKPM that is the partnership between foreign investors or large domestic businesses with local businesses and MSMEs near the business.
6 Key Performance Indicators (KPI) of BKPM:
Improving Ease of Doing Business (EODB)
Execute Realization of Large Investments
Boost Large Investment Partnering with MSMEs
Ensure the Spread of Quality Investments throughout Indonesia
Investment Promotion Focused on Targeted Sectors and Countries
Increase Domestic Direct Investment (DDI), especially MSMEs
The Government through BKPM continuously tries various strategies to ensure even distribution of quality investment throughout the country, through Presidential Regulation of the Republic of Indonesia Number 44 Year 2016 concerning Lists of Business Fields that are Closed to and Business Fields that are Open with Conditions to Investment, the Government seeks to increase investment and the involvement of MSMEs.
BKPM encourages not only FDI but also DDI, particularly MSMEs. BKPM encourages large investments and foreign investments partnering with MSMEs, which will bring in multiplier effects. We know that FDI brings indirect benefits which can be felt by the entire country, namely increases the amount of foreign investment and employment, increases savings and income because of the multiplier effect of investment, increases education and training, increases research, development and technology, increases the variety of goods and services in the market, improves infrastructure, increases large markets, and results in cheaper goods.
On 11 May 2020, the Government issued Government Regulation Number 23 Year 2020 regarding the Implementation of the National Economic Recovery Program which allows the Government to give interest subsidies and fund placements that can help businesses including MSMEs and ultra-micro businesses, and economically strategic business sectors including BUMN.
On Sept 17, Ministry of Cooperatives and Small Medium Enterprises (Kemenkop UKM) along with BKPM signed an MoU on Program and Policy Sinergy to Develop Micro, Small and Medium Enterprises and Cooperatives (MSMECs). This is a concrete step by the government in executing the President’s directives. Now, every investor coming to Indonesia, by law, must partner with a domestic business or MSMEs.
With this cooperation, the government gives the room for MSME to play a more significant part in the nation’s economy through three things, uncomplicated permit applications based on Presidential Instruction (Inpres) Number 7 the Year 2019 on Acceleration of Ease of Doing Business; Key Performance Indicator (KPI) BKPM which require large investments both foreign and domestic to partner with MSMEs; and the opportunity to develop entrepreneurship through MSMEs.
This Memorandum of Understanding regulates, among others, partnership facilitation activities between Foreign Investor (PMA) and large-scale Domestic Investor (PMDN) with MSMEs.
The facilitations encompass matchmaking activities such as seminars, market sounding, business forums, or mission/delegation visits of government agencies, foreign companies, and MSMEs.
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In addition to partnership facilitation, Kemenkop UKM and BKPM are committed to building MSMEs and cooperatives capacity regarding investment licensing procedures and regulations, as well as business management.
BKPM data shows that during September 2020, micro-businesses managed to break the record for achievement throughout 2020. Business Identification Number (NIB) applications for micro-businesses were recorded at 170,152 or equal to 86% of 197,332 NIB issued through the Online Single Submission (OSS) system. And in October 2020, NIB submissions broke this year’s record high of 377,540 NIB. Of the total NIB submissions in October 2020, 93.6% came from micro-businesses, as many as 353,478 NIB. The rapid increase in micro-businesses’ NIB applications during the pandemic was a form of Indonesia’s economic strength in which MSMEs support 60% of GDP. BPKM will continue to serve MSMEs, and through The Job Creation Law (UU CK), the Government provides protection and strengthens the MSMEs.
The Job Creation Law is a policy breakthrough to provide fast, easy, and efficient business licensing. The CK Law provides special treatment to MSMEs, including ease of licensing. MSMEs only need to register with the OSS system to obtain NIB which can be used as a business license, where procuring the NIB can be done within 3 (three) hours via OSS. Furthermore, the Government also protects MSMEs.
The CK Law provides a very strong and good emphasis. It is stated explicitly that foreign investors are prohibited to be shareholders of MSMEs, FDI can only do large-scale businesses. And foreign investors are required to partner with MSMEs. This is a concrete form of the state being present for MSMEs.
This can be seen under Article 174 of the CK Law regarding Regional Authority, it is stipulated that the authority of Ministries/Institutions (K/L), including the regional heads, is interpreted as a part of the President’s authority’s delegation to K/L and regional heads. Under Article 174 point B, not a single business license has been taken over by the Central Government. Permits are still issued by Regional Government based on NSPK and processed through OSS.
However, if license processing times violates the NSPK prepared by the Central Government, it will automatically be considered approving the permit. This is to provide certainty and efficiency for the businesses.
To supervise its implementation, the Central Government will form a special team comprised of technical Ministries/Institutions (K/L), BKPM, and the local Government. Currently, BKPM is in the proses of developing a version of the OSS system based on CK Law.
The system will be later used by all regional governments, including regencies/cities, to be integrated.
Thus, concludes a glimpse to the Indonesian Government’s efforts to protect the continuity of the Indonesian economic sustainability even during the pandemic which stems from the Indonesian Government’s readiness to facilitate investors, both large and small, FDI and DDI and supporting them to thrive in Indonesia, which results in why they should invest or relocate to Indonesia. Indonesia provides what businesses need right now which is: ease; speed; certainty; and efficiency.
Indonesia is a country in the middle of an economic transformation and an attractive country to cooperate with. How Indonesia has transformed from a dependence on natural resources to competing in manufacturing and services, a futuristic Indonesia but still rich in culture.
Indonesia is a dynamic nation, mastering science and technology. Indonesia is not just about its beautiful nature and its abundant natural resources, but Indonesia is also a large country, with a large economy, large market, and large opportunities. How Indonesia can survive during the pandemic, an era of uncertainty.
How the Government is present, how the Indonesian people believe that we can get through this challenging time together, how Indonesia is a country of resilient people, because that is how they were raised; to solve problems and to never give up.
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