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Dear members,
The breakfast meeting was held successfully on February 6th of 2007, sponsored by AIR FRANCE / KLM at Sofitel Grand Mahakam Hotel Jakarta, featuring Mr. Darmawan Djajusman as a Deputy Chairman of Investment Coordinating Board of Republic Indonesia. The topic itself discussed the New Foreign Investment Issues, here is the resume that you could consider for your business investment in Indonesia.
The BKPM (Investment Coordinating Board) explained the two main structure of investment for foreign companies in Indonesia :
The policies :
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FDI is allowed to have 100% equity, but maximum 95% of equity for infrastructure projects
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No More mandatory for divestment
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No minimum amount investment ( in fact 100.000 US dollar but can be less if justified )
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Foreign Investor can be either companies or individuals
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Foreign Investment approval is now only 5 (five) working days
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Import duties reduction for machinery and equipment
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Import duties reduction for raw materials and supporting materials for the first two years
The procedures & Opportunities :
Several Opportunities for Investors :
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Fishery & marine product processing
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Food Industry (agro – based Industry)
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Textile and Garment
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Pulp, paper & printing industry
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Furniture (wood & rattan)
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Rubber & plastic goods industry
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Ceramics industry
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Electric motor, generator & transformer
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ICT industry
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Land transportation (railways, vehicules) industry & its supporting industry
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Power plant
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Hotel & restaurant
For the period of 1967-2006, new projects offered have the value of US$ 898.37 millions. The projects expansion are US$ 824.22 millions. For the change of status projects (acquisition by french investor) have the value of US$ 589.76 millions.
Regarding business sectors, there are 58 projects for Transportation, Storage and Communication worth by US$ 463.2 millions. Energy sector such as Electricity, Gas and Water offers 3 projects with the value of US$ 402.7 millions. In the Trade and Reparation sector, 57 projects are offered worth by US$ 343.1 millions. Construction sector counts 12 projects with the value of US$ 298.2 millions. And for the Printing and Paper industry, there are 3 projetcs available worth by US$ 154.3 millions.
Concerning the current investment policies, Foreign Direct Investment (FDI) is allowed to have 100% equity, but with a maximum 95% of equity for infrastructure projects. There are no more mandatory for divestment and there is no minimum amount of total investment. Foreign Investor can be either companies or individuals and its investment approval is now only 5 (five) working days.
There are import duties reduction for machinery & equipment and also reduction for raw materials and supporting materials for the first two years.
Regarding the terms of tax facilities, 30% of net income are reduced from capital investment amount for 6 (six) years period (equal to 5% per annum). There is an accelerated amortization & depreciation. In the other side, 10% of income tax is charged for overseas tax-payer on dividend bill or lower tariff according to the Double Taxation Agreement. There is a loss compensation with the period between 5 to 10 years with some specific stipulations.
15 Eligible business sectors
According to Mr. Darmawan, there are 15 eligible business sectors for Income Tax Facilities, such as :
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Food Industry
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Textile and Garment Industry
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Pulp and Paper Board Industry
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Chemical Industy
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Pharmaceuticals Industry
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Rubber Goods Industry
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Ceramics Industry
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Basic Iron and Steel Processing Industry
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Non Ferrous Basic Metal Industry
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Machinery Industry
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Electric Motor, Generator and Transformator Industry
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Electronic and Telematic Industry
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Land Transportation Industry
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Shipyard Industry, and
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Non Ferrous Metal Processing Industry
Four Incentives Features Under Current Regulations, such as :
1.
Investment allowance of max 30 % of invested fund divided in 6 years.
2.
Increasing income threshold from Rp 240.000 to Rp 1.000.000 a year
3.
No VAT on importation of Production Sharing Contract (PSC) capital assets since June 2005
4.
Tax free for the development projects in Bintan island and its surrounding areas
The Income Tax Law System in Indonesia :
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Tax on dividend received by individual is subject to final tax 15 %
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Surplus of income earned by non-profit organizations working in educational services .
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Scholarship income and charities received by Social Welfare Body are excluded from taxable
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New tax deductibles are contributions for scholarship, national disasters, social infrastructures, research and development, and educational facilities.
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Income tax rate for Individual who earn net income between Rp 25 million to Rp 50 million, is 5% (previously was 10%).
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The maximum tax rate for individual will be decreased to 33% in 2007 and 30% in 2010 with current rate 35%
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Corporate income tax rate is 30%. This rate will be decreased to 28% in 2007 up to 25% in 2010.
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Special tax incentives may be granted by the law for small enterprises.
The copy of Mr. Darmawan presentation file concerning on the Investment Policies, Procedure and Opportunities is available on the attached file. Just Click Here !
Should you be interested to see some of the pictures taken during the meeting
 
 
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