Jakarta. President Joko Widodo’s administration is preparing a decree to give fiscal incentives to investors in special economic zones, as it aims for a total of 25 such areas by 2019, a top official said on Wednesday.
Franky Sibarani, the chief of the Investment Coordinating Board (BKPM), said that the agency proposed a tax allowance for investors in the SEZs, directly handled by the regional one-stop-service investment board (BPM-PTSP). The BKPM chief also said there would be a special arrangement for land ownership in the areas locally known as KEK.
“The point is that we want to encourage infrastructure development so that it will attract investors [who can develop] special economic zones. There are currently eight zones and we hope to have 17 more by 2019,” he told journalists in Jakarta.
Ten of the zones would be dedicated for tourism, with the remainder hosting a variety of activities, from mineral resources to fisheries.
The SEZs are expected to be centers of economic growth, where manufacturing is integrated with supporting industries.
“For example, a crude palm oil-based zone which has its palm oil plantations outside the zone. If the industries are integrated and add value, the incentives would not only be given to the companies that are inside the zones,” Franky said.
Franky said the Sei Mangke SEZ in North Sumatra, which hosts palm oil and rubber industries, is an example of an area that would automatically be eligible for tax allowances under the new decree.
“We will make the decree as interesting as possible,” he said.
Under current SEZ regulation, land rights can be acquired for 30 years and can be extended by 10 years twice, but Franky proposed a longer period.
“How about if we set the land ownership right at 50 years and allow it to be extended by 15 years twice — or 80 years in total? This could attract tourism investors who’d like to build hotels and other facilities,” he said.
Indonesia’s eight economic zones that are currently under development are Sei Mangkei in North Sumatra; Tanjung Api-Api, South Sumatra; Tanjung Lesung, Banten; Mandalika, West Nusa Tenggara; Maloy Batuta Trans Kalimantan in East Kalimantan; Palu, Central Sulawesi; Bitung, North Sulawesi; and Morotai in North Maluku.
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