Law of Investment in Indonesia: Investment Facilities in Common

Mariske Myeke Tampi

Figure 1. Foreign Investment Flow (FDI) by region 2012-2014

(in billion dollars)

Developing Asia’s Countries Reached The Highest Number of Foreign Investment Flow (FDI)

in 2012-2014

• Government is to provide facilities to any investors.

• Investment facilities set forth before may be given toany investors that:

a. Expand its business; and

b. Make new investment.

Investment Facility

Investors receiving facilities set forth before shall be thosefulfil at least one of the following criteria:a. To employ plenty of workers;b. Belonging to high priority scale;c. Belonging to infrastructure development;d. Transferring technology;e. Pioneering new industry;f. Domiciling in remote area, deserted area, border area or any other area deemed

necessary;g. Preserving the environment;h. Conducting research, development and making innovation;i. Making partnership with micro, small and medium-sized enterprises or

cooperatives; andj. Using capital goods or machinery or equipment produced domestically.

Investment Facility

Facilities given to investors set forth before may be inform of:a. Net income tax deduction up to certain level of investment made within

certain perios.b. Import duty holiday or reduction for imported capital goods, machinery

or equipment domestically unavailable for production;c. Import duty holiday or reduction for raw materials or support materials

for production within certain period and with certain conditions;d. Value added tax holiday or postponement for imported capital goods or

machinery of equipment domestically unavailable for production withincertain period;

e. Accelerated depreciation or amortisation; andf. Property Tex reduction, especially for certain business fields in certain

region, area or zone.

Investment Facility

Company’s Income Tax Holiday of Reduction

Company’s income tax holiday or reduction within certain amount and period may be given to new

investment in any pioneering industries, that is, any industries possessing extensive connections, providing

high value added and externalities, introducing new technology and possessing strategic value for national

economy.

• Facilities set forth before will be given based onnational industrial policy issued by the goverment.

• Facilities set forth before do not apply to any foreigninvestments that are not in form of limited liability(establishment of limited liability in Indonesia isbased on Law Number 40 of 2007 concerningLimited Liability)

Company’s Income Tax Holiday of Reduction

Principle Investment Licensehttp://www.bkpm.go.id/en/investment-step-by-step/principle-license

Business Licensehttp://www.bkpm.go.id/en/investment-step-by-step/business-license

Success Storyhttp://www.bkpm.go.id/en/home-investment

Law Number 25 of 2007 concerning Investment

http://unctad-worldinvestmentforum.org/

http://www.bkpm.go.id

References