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INDONESIA: Government Mulls New SEZs and New Investor Incentives

The government is to offer enhanced tax incentives schemes for overseas investors in the country’s Special Economic Zones (SEZs), while also looking to increase the overall number of such sites. Under the new incentive regime, the overall value of an SEZ investment project is to be the sole criterion. This would see, for instance, SEZ projects valued at Rupiah 20 trillion (US$1.4 billion) or more eligible for a 20-year CIT exemption. While non-SEZ FDI-backed projects of a similar value may also qualify for the same exemptions, they would be subject to additional scrutiny.

In terms of new SEZs, the government is planning to develop at least seven new sites with the aim of bringing up the total number to 20 by the end of 2020. This will include re-designating Batam Island’s Nongsa Digital Park and Central Java’s Kendal Industrial Estate as SEZs, with the latter set to exclusively focus on a number of export-processing sectors, including auto parts, electronics and chemicals.

In related developments, it has also been announced that 100% overseas ownership will be permitted for any health/education business located within an SEZ, while a dedicated apparel export-processing zone for overseas investors is to be established in the Central Java region.

Content provided by Picture: HKTDC Research
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