Government to allow Foreign Investors to manage Special Economic Zones
The Indonesian government will allow foreign investors to operate special economic zones inside the country, as part of its latest package of stimulus measures meant to attract capital from abroad.
Under the new package, foreign nationals would also be allowed to own residential property within these economic zones and be eligible for income tax discounts of 20 to 100 percent, according to Franky Sibarani, the chairman of the Investment Coordinating Board, or BKPM.
The measures mirror those adopted earlier by Vietnam, which allows foreigners to managed enclosed zones that typically enjoy freer trade rules, lower tax rates, and better infrastructure in order to boost manufacturing and exports.
“We are looking into how far foreign investors should be allowed to manage the special economic zones, whether they can attract more manufacturers to occupy the zone,” Franky said.
Singaporean and Chinese investors have expressed interest in investing in and managing such zones, he added.
The government is also considering plans to reimburse investors for building basic infrastructure such as roads, Franky said. “After all, [infrastructure] is the government’s responsibility,” he said.
Sany Iskandar, the chairman of Industrial Zones Association (HPI), welcomed government’s plans, saying they would give provide foreign investors a greater degree of legal certainty.
“It would definitely attract investment from many countries,” Sany said.
Indonesia has introduced five policy packages in the past two months aimed at boosting trade and investment by cutting red tape. The sixth package is expected to be announced on Thursday.