The Covid-19 pandemic has had a negative impact on various sectors globally, including investment developments. In this phase of economic recovery, a number of countries are competing to attract investors to invest in their country by implementing various policies, one of which is the provision of various fiscal facilities and incentives.
Indonesia itself has implemented several policies to attract investors, such as ratifying and enforcing the Job Creation Omnibus Law. Coordinating Minister for the Economy Airlangga Hartarto in a webinar held some time ago said, “Indonesia is committed to improving competitiveness and the investment climate, through structural reforms by combining 76 regulations into one through the Omnibus Law system in Law (UU) no. 11 of 2020 concerning Job Creation,” he said. As well as simplification of licensing procedures through the Online Single Submission Risk Based Approach (OSS-RBA), which is an update of the first version of OSS. The purpose of OSS-RBA is to increase transparency and openness in obtaining business permits. Coordinating Minister Airlangga explained, “In this system, the type of licensing will be adjusted based on the risk level of each business. For example, MSME licensing procedures are different from big businesses.”
In addition, the government has also established an Investment Management Agency (LPI) which aims to gain investor confidence. In addition, to increase, prioritize, and optimize long-term investments to support sustainable development. “The government has allocated US$1 billion in 2020 as LPI’s initial capital, and will add another US$4 billion this year to optimize LPI’s role. Currently, there is also a Sovereign Wealth Fund (SWF) of around US$3 billion from three countries, namely the Netherlands, Canada, and the United Arab Emirates (which have entered the LPI),” said Coordinating Minister Airlangga.
The next step taken by the Indonesian government to attract investment into Indonesia is to provide fiscal facilities for investors. The Indonesian government will remove the energy, communications and tourism sectors from the negative investment list, which is a list of sectors that are restricted to foreign investors.
The fiscal incentives provided consist of tax incentives and customs incentives. The tax incentives provided include tax allowances, namely the government’s policy to provide tax relief in the form of deductions in a certain amount of income tax for investment in certain business fields and/or in certain areas.
Furthermore, in the form of tax holidays, namely tax incentives in the form of reducing or eliminating taxes given to taxpayers for a certain period of time. Tax holidays are also often referred to as tax holidays or tax holidays. The provision of a tax holiday is considered to be able to open up larger Small and Medium Enterprises (SMEs) to develop more rapidly even in the midst of economic pressure due to Covid-19.
The last is investment allowance, namely reduction of corporate income tax and net income reduction facility for investment purposes as well as reduction of gross income in the context of certain activities. The investment allowance provided includes a reduction in net income for new investment or business expansion in certain business fields which are labor-intensive industries, and/or a reduction in gross income for carrying out work practices, apprenticeships and/or learning activities in the context of fostering and developing certain competency-based human beings. .
Meanwhile, customs incentives are in the form of exemption from import duties on imports of machinery and goods and materials for construction or industrial development in the context of making investments.
It is hoped that the government’s policy to provide fiscal facilities can attract many investors to enter and invest in Indonesia in order to restore and improve the economy in Indonesia, which had slumped due to the Covid-19 pandemic.