Ministry Enacts Tax Holiday on August 15

The Ministry of Finance Ministerial Decree regarding Tax Holidays and Tax Allowances will be enacted this August 15. The regulation will be effective for five to six years, depending on the industry.

Gita Wirjawan, Head of the Capital Investment Coordinating Board, said that so far the companies that have requested for a tax holiday are those from base metal, oil and petrochemical refinery, machinery, renewable energy, telecommunications equipment, fishery, forestry and infrastructure sectors.

Sofjan Wanandi, Chair of the Indonesian Entrepreneurs Association, praises the strategy from the government to offer tax holidays to capital-intensive industries especially as new firms do not generate profit, and even suffer losses in the initial stage of business.

Gita also revealed that three large potential overseas investors say they will invest once Indonesia carries out the fiscal facility. The investors are from Kuwait, which plans to work with PT Pertamina to develop the US$ 8 billion Balongan oil refinery; South Korean Posco, to invest US$ 6 billion; and PT Caterpillar, which is interested to invest US$ 500 million-US$ 1 billion in the heavy equipment sector.

Samsung is also keen on putting in a large investment in Indonesia’s infrastructure sector, particularly to develop power plants, bridges, railway and roads.