Indonesia Targets 18 Industrial Zones worth US$17.73 B to Operate in 2019
Indonesian industrial zone Morowali Industrial Park (IMIP) in Central Sulawesi. Photo by PT IMIP.

JAKARTA (TheInsiderStories) – Indonesian government will bring forth a policy to address the trade and current account balance, said the official on Tuesday (05/28). This was done by revising the incentives policy in Special Economic Zones (SEZ).

Currently, the revision of two Government Regulations, namely Regulation Number 96 the Year 2015 concerning Facilities and Ease of SEZs and Regulation Number 2 the Year 2011 concerning the Implementation of SEZs still under discussion. The government hopes that the revision will attract more investment in the economic zones area.

Head of Fiscal Policy Board of the Finance Ministry, Suahasil Nazara, said the government was reviewing a number of incentives that had previously been given to businesses that invest in SEZs. Some of these incentives, for example, tax holiday facilities and tax allowances.

According to Nazara, investors need certainty from a number of fiscal incentives promised by the government for 12 SEZs. The government must respond according to legislation, he said.

The incentives referred to, among others, he revealed, the fiscal facilities applicable in the SEZs. There are also promised non-fiscal incentives such as property ownership for foreigners and visas to a foreign worker. Nazara hoped that the revision will be completed soon so the investors can immediately invest in SEZs.

Furthermore, he said, the government also studied the forms of incentives given abroad so that investors glanced at SEZs to become their business fields. One country that is an example, namely China.

“There are also many SEZs in China, including we see local governments there because this is not only the central government but there are regional governments,” said Nazara.

So far, he adds, several SEZs began operating in Indonesia, such as Mandalika in West Nusa Tenggara and Tanjung Lesung in Banten. It’s just that, the area has not been filled 100 percent.

“The point is to make SEZs in Indonesia truly a place that gives an attraction for companies to operate by adding incentives,” he added.

It said the provisions of the tax holiday for SEZs were listed in Minister of Finance Regulation Number 104/PMK010/2016, where investors could get a reduction in corporate income tax by 20 percent to 100 percent.

“These investors have been lining up, but they all need clarity and certainty regarding SEZs. So we are discussing revisions to SEZs incentive rules, we are really pursuing this revision,” said Nazara.

Previously, the government targets to operate 18 industrial zones outside Java in the third quarter (3Q) of 2019. The projects have a potential investment of US$17.7 billion. The investment includes the construction of supporting infrastructures, such as power plants, water treatment, wastewater treatment plants, land, and roads.

The 18 industrial zones were located in Lhoukseumawe, Ladong, Medan, Tanjung Buton, Landak, Maloy, Tanah Kuning, and Bitung. In addition, there are also in Kuala Tanjung, Kemingking, Tanjung Api-Api, Gandus, Tanjung Jabung, Tanggamus, Batulicin, Jorong, Buli, and Bintuni Bay.

As far as November 2018, 10 industrial zones have been operating, including the National Strategic Project (NSP). The 10 industrial estates are located in Morowali, Bantaeng, Konawe, Palu, Sei Mangkei, Dumai, Ketapang, Gresik, Kendal, and Banten.

Based on Presidential Regulation Number 58 the Year 2017 concerning the Acceleration of the Implementation of NSP, there are 23 industrial zones designated as national projects. So, the Widodo government is still in arrears of 5 industrial zones that have not been built until the end of his administration.

Referring to the Committee for the Acceleration of Priority Infrastructure Provision note, project preparation has been difficult due to a variety of issues, from technical to social aspects, including delays in preparing bidding documents.

The Committee projects that there are 31 national projects totaling Rp276.4 trillion which can be completed until the 3Q of 2109. The number will be an additional list of 62 NSPs that have been completed during the 2016-2018 periods, with a total investment of Rp320 trillion.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com