Indonesia Marine and Fisheries: Tax Strategies for High-Value Investments

Indonesia’s marine and fisheries sectors are important to the country’s economy. The sectors contribute to the nation’s GDP, job availability, and food security.  

Looking at it, the government now improves its support for sustainable practices and infrastructure improvements. Therefore, now is the perfect time for you to explore investment opportunities in the growing industry.

The Potential of Indonesia’s Marine and Fisheries Industry

The Ministry of Maritime Affairs and Fisheries (KKP) sees immense potential in Indonesia’s marine and fisheries sector for local and international investors. In 2024, the sector’s investment value is projected to grow by 8%, reaching IDR 12 trillion.

Investment Realizations and Contributions

Minister of Maritime Affairs and Fisheries Sakti Wahyu Trenggono reported that from January to September 2023, Indonesia’s marine and fisheries sector secured a total investment of IDR 9.56 trillion.

This comprised IDR 5.32 trillion from domestic investment, IDR 1.4 trillion from foreign investment, and IDR 2.84 trillion through investment credit. Significant contributions came from countries like China (IDR 370.74 billion), Malaysia (IDR 240.7 billion), and Switzerland (IDR 152.89 billion).

Among the key priority areas, the fish processing sector attracted the largest investment, at IDR 3.65 trillion, followed by fish cultivation, at IDR 2.6 trillion; marketing, at IDR 1.95 trillion; and fish catching, at IDR 1.18 trillion.

These figures highlight the growing appeal and potential of Indonesia’s marine and fisheries industry for both local and international investors.

READ MORE:

• How Indonesia Plans to Lead Global Maritime Economics
• Aquaculture in Indonesia: How to Start Digitalized Fisheries
• Exploring Batam’s Maritime Industry Landscape

Investment Opportunities in Indonesia’s Marine Sector

Indonesia is one of the world’s leading producers of tuna, with an annual output of 334,000 tons, including bluefin, yellowfin, and bigeye tuna. This production is entirely wild-caught, but efforts are underway to develop sustainable tuna farming, reflecting the country’s broader focus on sustainable practices.

Beyond tuna, Indonesia’s marine and fisheries sector offers diverse investment opportunities across multiple areas:

• Conservation: Managing marine protected areas for ecological sustainability.
• Capture Fisheries: Upgrading shipyards, docking facilities, and eco-friendly fishing gear.
• Aquaculture: Expanding shrimp, lobster, tilapia, crab, and seaweed farming.
• Fisheries Processing: Developing cold storage, ice factories, and processing facilities.
• Marine Technology: Introducing tools for fisheries monitoring and water quality management.
• Education and Training: Enhancing local skills in sustainable fisheries practices.
• R&D: Advancing ecosystem studies and sustainable fishing methods.

Major Investment Areas in Fisheries

Foreign investment is being actively promoted, particularly in downstream fisheries activities. Key investment opportunities include:

• Shrimp: Kebumen, Cilacap, Waingapu.
• Seaweed: Wakatobi, Southeast Maluku, Rote Island.
• Tilapia: Karawang, Pati.
• Lobster: Mataram and nearby locations.
• Blue Swimmer Crab: Multiple regions.

Integrated Fishing and Processing Zones

The government is also promoting investments in integrated fishing and processing hubs across three strategic zones:

• Zone 1 (Natuna waters)
• Zone 2 (Pacific Ocean waters)
• Zone 3 (Arafura region)

Benefits of Investing in Indonesia’s Fisheries and Marine Sector

Indonesia’s marine investments are advantageous thanks to abundant resources, strategic locations, and government initiatives to strengthen the fisheries sector. Below are some of the key highlights driving the sector’s growth.

Three Largest Fishing Ports

Indonesia boasts three largest fishing ports and vital marine and fisheries industry hubs. These are:

Lamongan Harbor, East Java

• Coastline: 47 km
• Infrastructure: 3,423 vessels, 52,269 fishing gear, five landing bases, and a fish auction.
• Annual production: 76.7 million tons of fish valued at IDR 1.2 trillion (2020).

Banyuwangi Port, East Java

• It covers 960 square miles of water in the Bali Strait and the Indonesian Ocean.
• Contributes significantly to local revenue through fishing and marine trade.

Cilacap Regency, Central Java

• It is located along the Indian Ocean with a fishery potential of 72,000 tons annually.
• Current harvest: Only 15,000 tons, or 20.78% of its potential, leaving room for growth.

Government Incentives and Efforts

The Indonesian government is actively enhancing the marine sector through several initiatives, such as:

• Focusing on water conservation and quota-based catch regulations to ensure ecological balance.
• Promoting Indonesian marine products globally to increase exports.
• Restoring damaged areas to improve marine biodiversity and productivity.
• Supporting the farming of high-value commodities such as shrimp, lobster, crab, and seaweed for export markets.

Tax Incentives Available for The Marine and Fisheries Sector

Through Government Regulation 78 of 2019 (GR 78/2019), the Indonesian government offers various tax incentives to support investments in the marine and fisheries industries. Below are the key facilities made available:

Deduction on Net Income

Investors can claim a deduction of 30% of their total investment value over six years, with a 5% annual deduction. This applies to intangible assets, such as land, provided they are used for the main business activities.

Accelerated Depreciation for Tangible Fixed Assets

The government offers faster depreciation rates for tangible assets, which helps reduce taxable income. The rates depend on the asset category and depreciation method, as shown below:

Accelerated Amortization for Intangible Assets

Similar to depreciation, intangible assets can also be amortized at an accelerated pace:

Loss Compensation and Reduced Tax on Dividends

Businesses can claim compensation for losses for up to 10 years, extending beyond the standard 5-year limit. Additionally, the income tax on dividends is reduced to 10%. If a double tax avoidance agreement (DTAA) is in place, further tax reductions may be possible.

Criteria to Obtain Tax Incentives in Indonesia’s Marine and Fisheries Sector

Investors must meet specific conditions to qualify for Indonesia’s marine and fisheries tax incentives. These ensure that investments contribute to economic growth, sustainability, and local employment.

Investors can qualify by:

• Investing in specific business sectors within the marine and fisheries industries.
• Investing in designated regions in Indonesia.

Additionally, investments must:

• Be high-value or focused on exports.
• Create jobs for local workers.
• Use locally sourced materials where possible.

Embrace the Opportunities in Indonesia’s Marine and Fisheries Sector

Indonesia’s marine investments present many opportunities for both domestic and international businesses. Although establishing a business in Indonesia and dealing with tax regulations in this sector can be complicated, you don’t have to face it alone. InCorp can assist you in simplifying the process and maximizing your benefits.

• Business Setup: Let us help you establish your company and manage compliance seamlessly.
• Tax Consulting: Take advantage of Indonesia’s tax incentives while ensuring smooth operations.

Start your journey in Indonesia’s marine and fisheries sector by completing the form below.