Indonesia offers incentives to investors in special economic zones

[JAKARTA] Indonesia will offer tax holidays of up to 25 years for investors in the country's special economic zones, the chief economy minister said on Thursday.

Darmin Nasution told reporters that investors would be eligible for income-tax discounts of between 20 per cent and 100 per cent for 10 to 25 years.

Foreigners would also be permitted to own property in special economic zones, and firms there would be able to import raw materials without paying value-added tax, the minister added. "This is our effort to stimulate economic activity in the periphery of the country through special economic zones,"Nasution said.

Frank Sibarani, the head of the Indonesian Investment Coordinating Board (BKPM), told reporters that firms operating in special economic zones would be exempt from the negative investment list, which sets limits on foreign involvement in many sectors of Southeast Asia's largest economy.

President Joko Widodo's administration has regularly rolled out a series of stimulus measures since September, including lowering energy prices, cutting red tape and reforming the minimum wage formula.

Higher government spending helped Indonesia's struggling economy grow slightly faster in the third quarter, but not enough to show a real turnaround has begun.

Gross domestic product expanded 4.73 per cent from a year earlier, the statistics bureau said on Thursday. That was faster than 4.67 per cent in the previous quarter - the slowest in six years - but below a Reuters poll median of 4.79 per cent.

Indonesia currently hosts eight special economic zones specialising in activities from palm oil, petrochemicals to tourism.

REUTERS