Over the past years, Indonesia’s foreign direct investment (FDI) has grown multi-fold, contributing to Indonesia’s unceasing economic growth. Therefore, in order to further facilitate investment and development of various regions for entrepreneurs doing business in Indonesia, the government of Indonesia has recently issued the Regulation No. 24 of 2019 (Regulation 24/2019) on the Granting of Investment Incentives and Facilities in Regional Areas.
Regulation 24/2019 will be used to replace Regulation 45/2008 on Guidelines for the Granting of Investment Incentives and Facilities in Regional Areas. This article mainly provides you with an update of this new regulation and certain changes that have been made.
The new regulation 24/2019 covers the following matters:
Investment incentives and facilities will only be granted to businesses that meet the following requirements, by regional governments in Indonesia:
However, the following business sectors will also be considered and prioritised for incentives and facilities:
1.Micro and small enterprises
2.Businesses that meet the requirements of the following elements:
3.Businesses prioritising regional benefits
4.Businesses that have acquired facilities for investments from central government
Investment incentives and facilities are granted in various forms depending on the regional laws, regulations and capabilities. The types of incentives and facilities are listed in the following:
1.Regional tax relief, deductions, or exemptions
2.Regional levy relief, deductions, or exemptions
3.Regional micro and small businesses’ aid
4.Low interest loans
Now with the new regulation, the investment and facilities for vocational training, research and development aid, and low-interest loans are available:
The granting of incentives and facilities is performed by regional government by complying to regional regulations. The difference is mostly related to the time and length of the procedure.
Regional heads of regional governments must undertake the following steps to grant the incentives and facilities:
Regulation 24/2019 has been effective and enforced starting from April 2, 2019. Granting processes that were approved before April 2, 2019 and are still in progress must follow the procedures that were set out in the previous Regulation 45/2008.
On top of that, incentives and facilities currently granted under Regulation 45/2008 remain effective until their validation dates expire.
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