The Investment Coordinating Board, or BKPM, is counting on its one-stop integrated service centers and tax allowance to attract more investment from Southeast Asian countries in order to reduce a risk of Indonesia becoming merely a market amid freer movement of goods, capital and labor in the region.
Having launched in March, the one stop service, or PTSP, allows investors to secure business permits from 23 ministries and government institutions in just one place, reducing red tape and saving investors time, while improving transparency.
Prospective investors will also be able to apply for tax cut eligibility at PTSP and to learn of the outcome within three days.
The government plans to implement the tax application procedure in May, a delay of a month from its initial plan.
Franky Sibarani, the BKPM chief, said the initiatives should help attract investment from Association of Southeast Asian Nations (Asean) member countries, which account for about a third of total foreign direct investment.
But, investors will have the option to set up business elsewhere in the region as Asean Economic Community will start at the end of this year, opening up regulation barriers allowing more trade and investment across Southeast Asia, Franky said.
“One of the critical points in the implementation of AEC is the concern that Indonesia will only be a big market for Asean products because Indonesia accounts for 40 percent of Asean population,” said Franky.
Investment from Asean countries grew to $7.9 billion in 2014, up 44 percent from $5.5 billion in 2013, BKPM data showed. The investment was $5.46 billion in 2012.
“Even so, we can still boost the potential due to relatively small investment ratio,” said Franky, referring to a ratio which reflects percentage of realized investment over the committed amount.
Singapore realized 54 percent of its $63 billion investment plan from 2005 to 2014 in Indonesia. During the period Malaysia only invested 28 percent of its $16 billion investment plan.