Reducing the time for processing investment applications to a few hours from the previous days is among the new measures to be implemented by the Indonesian government as part of its recently announced September economic policy package.
The new measure is contained in the second installment of the stimulus package first introduced by the administration early this month, as it revealed an action plan to boost economic growth in Southeast Asia’s largest economy and defend the ailing rupiah.
On September 9, President Joko Widodo unveiled the country’s first installment of the stimulus package, featuring massive deregulation and tax breaks to boost investment.
“(We) hope it would need only three hours,” Chief Economics Minister Darmin Nasution said when announcing on September 29 the details of the second installment of the package that aims to drive up investments, as quoted in a report by state-run news agency Antara News.
There are two types of investment licenses—one for investment in industrial estates and another for investment outside industrial estates. Under the old regulation, licensing procedure for investment outside industrial estates could take up to eight days, Darmin said.
Head of the Investment Coordinating Board (BKPM) Franky Sibarani said prospective investors will need only three hours to obtain an investment license from the agency.
“That includes the license itself, the articles of association of the company and NPWP (registration number of tax payer). That is for investment in industrial estate. In three hours the prospective investors could choose the location and start construction,” he said.
The investment should be at least IDR100 billion (about US$7 million) or should provide at least 1,000 jobs for Indonesians, he said.
“For investment in industrial estate, an investor needs only to sign commitments for certain norms like analysis on environmental impact,” he added.
He said the president has also assigned BKPM and related ministries to simplify the licensing procedure for investment in industries with potential to be the country’s economic backbone.
Furthermore, the processing of permits in the mining and geothermal sectors will be slashed from up to four years to just 15 days, according to a report by Indonesia-Investments.
Indonesia’s GDP growth slowed to a six-year low of 4.67% year-over-year in the second quarter of 2015, while the rupiah has depreciated to a 17-year low against the U.S. dollar. Capital outflows from Indonesia are the result of monetary tightening in the U.S., low commodity prices, and sluggish global economic growth, particularly China’s hard landing.
Meanwhile, Indonesian Trade Minister Thomas Lembong said the Trade Ministry revoked four ministerial decrees and revised five regulations in an effort to support the economic policy package. One of the changes involves a regulation, to become effective in January 2016, which will relax import requirements in relation to importers’ identification numbers.
Furthermore, another revised regulation concerns Indonesian-language labels on imported products. The government will give more time to importers to attach such labels on products.
Earlier, the government said it will also cut income tax on the interest that exporters earn when they deposit their export proceeds in local banks. This will make it more attractive for exporters to keep their funds onshore, hence boosting foreign exchange liquidity. Currently the income tax on bank interest (from deposit accounts) is 20%. The tax cut varies depending on whether deposits are U.S. dollar- or rupiah-denominated and on the maturity of the deposit.
Photo: Province of British Columbia
