Indonesia's SEZs set to attract 92.3t rupiah in investments in 2021

Jakarta

INDONESIA'S special economic zones (SEZs) are on track to attract 92.3 trillion rupiah (S$8.7 billion) in local and foreign investment by the end of 2021, of which nearly 32.8 trillion rupiah has already been realised as of July.

Revealing this at a webinar on Monday, Coordinating Economic Affairs Minister Airlangga Hartarto said that, until July, a total of 166 investors have invested in the SEZs and created over 26,700 jobs.

The companies operating in the SEZs exported 3.66 trillion rupiah worth of goods between January and July 2021, he remarked.

There are currently 19 such zones across several provinces in Indonesia, of which 15 are in operation with another four under construction.

The Indonesian government under President Joko Widodo has pledged to make the SEZs a top priority in order to attract foreign investment, boost industrial activity and create jobs.

Mr Hartarto noted that, as of August this year, 129 business entities have registered their profiles in the SEZs to enjoy certain facilities once they are operational there.

These facilities include exemption from income tax, value-added tax, purchase tax on luxury goods, import duty, import tax and excise.

Speaking at the same event, Finance Minister Sri Mulyani Indrawati said that the government will provide fiscal incentives and other perks in the SEZs.

Companies can enjoy tax holidays depending on the size of their investments. They can get 10 years of tax exemption for an investment worth 100 billion rupiah, a 15-year tax holiday for a 500-billion rupiah investment, and a 20-year tax holiday for a one-trillion rupiah investment.

Dr Sri Mulyani added that the government is developing an application system that will improve efficiency for investors, as they will only need to use one system for various services in the SEZs. "It provides convenience because it only requires one single document," she said.

The application system is developed by the Indonesian National Single Window Institution, along with the Ministry of Finance's Directorate General of Taxes and Directorate General of Customs and Excise.

"I hope that the development of information and technology in the SEZs can realise the competitiveness of Industry 4.0 development in Indonesia" she said.

Also at the webinar, Investment Minister Bahlil Lahadalia stressed that consumption and investment have helped to boost Indonesia's Covid-19-hit economy.

"Investment is the most important instrument to boost national economic growth," he said, adding that the government has set a target to attract 968.4 trillion rupiah in investments for the whole of 2022.

In his remarks, he reiterated the 2021 target to attract total direct investment of 900 trillion rupiah from domestic and overseas sources.

He noted that Indonesia has already obtained close to half that amount - 442.8 trillion rupiah - in the first six months of the year.

For the second quarter of 2021, Singapore was the top foreign investor with US$2.1 billion, followed by Hong Kong, the Netherlands, Japan and China.

In 2020, Singapore maintained its position as the largest investor in Indonesia with investments totalling US$9.8 billion, according to the Investment Coordinating Board.

Singapore has stayed top of the list since 2014, with its investments spread across various sectors including manufacturing, energy and logistics.