Investment Incentives at Industrial Area

To accelerate equittable infrastructrure development of Indonesia in Industrial Area sector, the Government of Indonesia will facilitate the Regional Government through General Service Board in the field of Industrial Infrastructure. Huge funding is needed to develop an Industrial Area in one region.

Central Government, on December 28th of 2015 enacted Government Regulation Number 142 of 2015 regarding Industrial Area (“GR 142/2015”), as implementing provisions of Law No. 3 of 2014 regarding Industry. Since the enactment of GR 142/2014, Investors are provided convenience in administering and retaining the permits. Pursuant to Article 23 paragraph (6) of GR 142/2015, nuisance permit is not compulsory when investor applies for Industrial Area Working Permit due to the purpose of Industrial Area is to accommodate in industrial business engaged in various fields.

Article 41 of GR 142/2015 further stating on the Facility of Industrial Area given to the Industrial Area Companies and Companies in Industrial Area, these are facilities given by Central Government and Regional Government:

  1. Provides tax incentives based on Industrial Development Area (“IDA”);
  2. Provides convenience of construction and management of electricity for their own needs and industry in Industrial Area; and

Tax incentives provided is given to group of IDA, comprise of:

  1. Developed IDA consists of Java;
  2. Developing IDA consists of South Sulawesi, East Kalimantan, North Sumatera except Batam, Bintan, and Karimun, South Sumatera,;
  3. Potential IDA I (one) consists of North Sulawesi, West Kalimantan, Bali, and Nusa Tenggara;
  4. Potential IDA II (two) consists of Papua and West Papua.

The regional area of IDA may provide incentives to Industrial Area Companies and Industrial Companies in Industrial Area, in a form of local tax deduction, local tax relief, or local tax exemption and/or regional retribution, e.g. reduction or exemption of Land and Building Title Transfer Duty, Land and Building Tax which never be transferred to Industrial Companies in Industrial Area will be the subject of the tariff Land and Building Tax in the land of origin, Street Lighting Tax deduction or Street Lighting Tax relief for environment road in the Industrial Park, and others which in accordance to laws and regulations.

By providing facilities and incentives permit, the goverment expects significant increment of investment especially in Industrial Area. Furthermore, it is also necessary to overcome competitive market in Southeast Asia especially Indonesia and compete with ASEAN Economic Community to interact many investors.

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