From The Jakarta Post

Investment incentive package finalized
The Jakarta Post, Jakarta

The government has finalized a new package of policies aimed at boosting investment, including the provision of tax incentives for investors in the underdeveloped eastern part of the country and for local small and medium enterprises (SMEs).

Other policies will include the streamlining of customs clearance procedures for capital goods, and simplifying the procedures for securing business visas by investors.

Firman Ukur Tamboen, an advisor to the coordinating minister for the economy, said Tuesday that the package -- which will officially be introduced by way of presidential instruction -- would involve various improvements in four general policy areas: taxation, customs and excise, labor and the SME sector.

"There will be clear timelines for the relevant ministries in implementing these policy actions, which it is hoped will address the many obstacles that have been hampering investment," he said as reported by Antara.

He said that the new policies would include improving investment licensing and permit procedures, synchronizing regulations and procedures as between the central government and local administrations, and reviewing environmental impact analysis procedures for investment projects.

In the taxation sector, the government planned to provide various incentives for investment projects in specific sectors, in Indonesia's eastern region, and for those involving local SMEs.

The government would also review the value-added tax on particular commodities to promote exports, while improving transparency in the tax service.

"In addition, the fiscal incentives will include the provision of guarantees against certain types of risks associated with investment projects," Firman said.

For the customs and excise sector, the government would focus on improving the flow of capital equipment and goods needed for investment purposes by streamlining customs clearance procedures and making better use of industrial zones. Investment projects producing goods subject to excise duty would have their registration and payment procedures simplified.

Meanwhile, in the labor sector, the government would overhaul the labor legislation and better regulate relations between employers and employees.

Potential overseas investors could also expect easier procedures when applying for business visas.

The new investment policy package follows the government's move last month to issue a package of policy actions aimed at encouraging private-sector participation in the development of the country's infrastructure.

The government is also preparing a package of incentives for the financial sector, Coordinating Minister for the Economy Boediono said last week after a meeting with Bank Indonesia to improve coordination between government fiscal policy and the central bank's monetary policy.

Indonesia is expecting realized investment to grow by 12 percent to some US$10 billion this year, the Investment Coordinating Board (BKPM) said recently, compared to some $8.9 billion in 2005.
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