Business Friendly atmosphere in Indonesia I

Indonesia is a country with great opportunities and provides immense opportunities for business and investment. Its leadership has keen desire to make Indonesia as the hub of international business and tried its best to attract foreign investment and to provide business people and investors best possible facilities.
Business needs stability, peaceful and friendly atmosphere and ample opportunities to grow and flourish. Business people and investors are highly sensitive, and invest only where they get maximum assurance to get back a good and handsome return against their investment.
Indonesia is an emerging economic power and its visionary leadership created a business and investment friendly atmosphere and ready to welcome genuine investors. The government of Indonesia has valued to continue implementing prudent macroeconomic policies and structural reforms and issued the job creation law on October, 2020 also known as Omnibus Law. The Omni bus law amends some 75 current laws and aimed to stimulate domestic and foreign investment by removing bureaucratic inefficiencies, simplifying business licensing requirements and liberalized more industries. The Omnibus law liberalizes many business sectors for foreign investment the regulation liberalizes over 245 business lines, including important sectors such as, transportation energy and telecommunication. The general principle under the positive investment list is that a business sector is open to 100 percent foreign investment the regulation removes ownership limitations in dramatic business partnership. It has introduced dramatic liberalizations to Indonesia’s business atmosphere. The government has classified business fields into four categories. 1. Priority sectors 2. Business fields open to larger enterprises, including foreign investors, but are subject to a compulsory partnership with, corporations and micro small medium sized enterprises (MSMEs). 3. Business fields that are a fully open to foreign investment.
The following business fields are open to 100% foreign investment

v Oil and Gas construction
v Onshore upstream oil installation
v Onshore and offshore distribution pipeline
v Onshore and offshore oil and gas drilling service
v Electricity generation
v Construction of electricity installation
v Geothermal electricity generation
v Supermarkets
v Departmental Store
v Ports
v Airport and airport supporting services
v Maritime cargo handling
v Telecommunication
v E-commerce
v Pharmaceutical Industry
v Hospitals

Following are the priority sectors for investment
To classify as priority sectors, business enterprises must meet the following criteria
• Must be labour incentive
• Must be capital incentive
• Must be part of national project
• Must be involve a pioneer industry (renewable, oil refinery, metals) etc
• Must implement research and development activities
There are 245 business fields under this category that can be found under benefit of the positive investment list. Moreover, businesses in priority sectors are eligible for a range of fiscal and non-fiscal incentives. Fiscal incentives include a 50 percent corporate income tax reduction for investment between 100 billion rupiah (US$ 6.9 million) and 500 billion (US$ 4.9 million) for a period pf five years and 100 CIT for investment 500 billion rupiah (US$ 34.9 million) for a period between five and 20 years. In addition, there are tax allowance available in the form of a reduction in the taxable income of 30% of the total investment for six years, special withholding tax rate on dividends of 10 percent and tax losses carried forwarded up to 10 years. Examples of non-fiscal incentives with provision of supporting infra-structure, simplified business licensing procedures, and the guaranteed supply of energy materials. It explores a few examples of the prioritized business lines and their incentives below: -

Examples of priority Business sectors and their incentives

Business Lines Incentives
Textile and garment Industry

Pharmaceutical Industry
Digital Economy (hosting data processing etc)
Geothermal (Exploring and drilling )
Cooking Palm oil Industry
Automobile Industry
Oil and Gas Refinery
Cosmetic Industry

Tax allowance and investment allowance
Tax Allowance
Tax Holiday

Tax allowance

Tax Allowance
Tax Allowance
Tax Holiday

Business fields that stipulate specific requirements or limitations
Under this category, business fields are open foreign investments but are subject to the following types of restrictions
v Lines of business reserved for domestic investors
v Lines of business subject to foreign ownership limitations
v Lines of business that require special licenses.

Business fields with Specific Requirements

Business Fields Requirements
Publishing of Newspapers magazines 100 percent domestic capital required for establishment and up to 99% foreign capital ownership for business development and expansion
Private broad casting Agency 100% domestic capital required for establishment and upto 20% foreign capital ownership for business development and expansion
Subscription based costing agency 100 % domestic capital required and 20% foreign capital ownership for business development and expansion
Community Radio Agency 100% domestic capital required for establishment and expansion and up to 20% foreign capital ownership for business development
Community Television Technology 100% domestic capital required for establishment and up to 20% foreign capital ownership for business development and expansion
Postal Services Maximum foreign capital ownership of 49%
Domestic Scheduled Air Transportation Foreign Capital ownership of 49% however domestic capital ownership should be single majority
Domestic Non Scheduled air transportation Foreign Capital ownership of 49% however domestic capital ownership should be single majority
Air Transport activities Foreign Capital ownership of 49% however domestic capital ownership should be single majority
Domestic Passenger liner and tramp activities Maximum Foreign Capital 49%
Domestic Sea Transport for tourism Maximum Foreign Capital 49%
Domestic liner and tramp sea freight for tourist Maximum Foreign Capital 49%
Domestic sea transport for special goods Maximum Foreign Capital 49%
Pioneer domestic sea transportation Maximum Foreign Capital 49%
Domestic sea transportation using public shipping Maximum Foreign Capital 49%