19 March 2020
INDONESIA: Supportive Measures for Coronavirus-Hit Manufacturing Sector Announced
The government has announced a number of supportive measures as it looks to bolster the country’s business community in the midst of the coronavirus crisis. The move, due to come into effect on 1 April this year, is particularly targeted at the manufacturing sector, which is currently suffering from a severe shortage of raw materials on account of the outbreak. This is largely down to the fact that 20%-50% of the required inputs are imported from China, the country’s largest trading partner.
The measures include businesses being given the go-ahead to delay the payment of import duties and corporate income tax (CIT) for up to six months. In addition, companies in 19 selected manufacturing sectors will be exempt from the payment of all import duties for six months, as well being granted a 30% discount on the total CIT due for the period April-September. In a further move, the Tax Department is to fast-track the refund of overpaid taxes, while the VAT refund procedure is also set to be streamlined, particularly with regard to exports. On top of that, any manufacturing worker who earns less than Rupiah 200 million (US$13,400) per year will be exempt from the payment of personal income tax (PIT) for a period of six months.
In a related move, banks will be permitted to relax the rules related to the restructuring of loans for small and medium enterprises, while traders deemed to be in good standing are to be provided with expedited export-import processing. In addition, a number of export rules, including certification procedures, are set to be streamlined in the case of fishery and forestry products, while import licensing rules are to be relaxed for steel and certain strategic food items, notably sugar, flour and salt. The import of ceramics, soybeans, corn, textiles, footwear and food supplements has also, once again, been approved.