Regional Investment Potential
Online Single Submission (OSS)
Why Indonesia?
Why Indonesia's Economy Matters and Its Unexpected Growth
Indonesia has become the shining star of Southeast Asia, a rapidly industrializing economy that continues to defy expectations. With an average growth rate of 5%, it's solidifying its position as an 'upper-middle-income country.
by ECON
Investment Outlook
Pro-Business Approach/Policy
All business activities are open for 100% foreign ownership, except 37 business activities with certain requirements listed in the Presidential Regulation 49/2021. The revised regulation evoked restrictions in 350 business activities for FDI, including ICT, health, transportation, energy and mineral resources, plantation, and agriculture, also construction.
I'M AN ORIGINAL CATCHPHRASE
I’m a paragraph. Double click here or click Edit Text to add some text of your own or to change the font. This is the place for you to tell your site visitors a little bit about you and your services.
Investment Incentives
More Progressive, More Inclusive
Tax Holiday
An exemption of corporate income tax (CIT) offered to eligible pioneer sectors for 5-20 years (up to 25 years in SEZs) depends on the investment size started at IDR500 billion (~US$36 million). For smaller scale investment, government offers mini tax holiday, a 50% reduction of CIT for 5 years. Both tax holiday and mini tax holiday can be extended with 2- year of CIT reduction.
Tax Allowance
30% reduction of CIT from capital investment for 6 years (5% per year) offered to 183 business fields. It also includes accelerated depreciation, reduced dividend withholding tax rate, and extended tax loss carry forward up to 10 years.
Super Tax Deduction
Aimed at boosting investment, R&D, and the participation of businesses in improving human resources. They include reduction of gross income subject to CIT up to 300% of the cost of R&D activities or up to 200% of the cost of educational activities, also 60% reduction of CIT from capital investment for labor-intensive industries.
Import Duty Facility
Exemption of import duty on imported machines, goods, and material for production applied for 3 years. VAT exemption is applicable in FTZs and bonded zones. Indonesia is also included in the US General System Preferences (GSP) that benefits companies to have a lower import tariff to enter US market covering 3,500 products.
Simplified Investment Regulation & Licensing
Breakthrough in Legal System
An FDI company is required to establish a limited liability (PT) with a minimum capital of IDR10 billion (~US$700,000). n 2020, Indonesia issued Job Creation Law, a breakthrough in the country’s legal system, which revised 77 laws through a single law (“omnibus law”). It aims at creating vast job opportunities by improving investment climate and legal certainty, harmonizing central- regional policies, and simplifying regulation. To implement the law, several regulations have been issued, including Presidential Regulation 49/2021 that revoked the so called “negative investment list”.
Demography
World's Biggest Archipelago
On the consumer side, Indonesia has 273 million of population (2021) and is a home for 64 million of middle affluent class, 1.7x total population of Canada (2018). It is also the gateway to 650 million of population in Southeast Asia, the world’s 3rd largest market. The country is also a production base for export with FTAs with 22 countries, including the largest trading bloc, RCEP.
Large Domestic Market
The Largest Economy in SE Asia with Stable Economic Growth
Indonesia is currently the world’s 16th largest economy with more than US$1 trillion of GDP. It is estimated to be the 7th largest economy in the world in 2030 by McKinsey & Company. The only member of G20 from Southeast Asia, Indonesia’s economy had been growing relatively stable at >5% p.a. in the last two decades. Amidst the Covid-19 pandemic in 2020, the economy contracted at -2.07%, the first time since the Asia’s financial crisis in 1998, grew at +5.72% in the third quarter of 2022.
Political & Economic Stability
East Asia Pacific’s Most Vibrant Democracies
The politics of Indonesia take place in the framework of a presidential representative democratic republic whereby the President of Indonesia is both head of state and head of government and of a multi-party system. Executive power is exercised by the government. Legislative power is vested in both the government and the bicameral People’s Consultative Assembly. The judiciary is independent of the executive and the legislature.
Having maintained political stability, Indonesia is one of East Asia Pacific’s most vibrant democracies. As the third largest democracy in the world, Indonesia continues to uphold the values of democracy and Pancasila. To maintain it, the Government of Indonesia measures the Indonesian Democracy Index (IDI). Indonesia scored 78.12 points out of 100 in the 2021 democracy index, categorized as “medium” category.
The Indonesian government continues to strive to create economic stability and an attractive investment climate for investors. This effort has received international recognition. Based on the ranking results of three international rating agencies, Indonesia is categorized as an investment-worthy country.