SCHEMES IN PLACE TO ATTRACT FUNDS STASHED ABROAD FOR INVESTMENT by Fardah

Jakarta, July 31, 2016 (Antara) - The Indonesian government is optimistic that funds that has so far stashed abroad by rich Indonesians, will be repatriated following incentives offered through tax amnesty program.

         Last month the House of Representatives (DPR) approved and passed a tax amnesty bill into law, which is expected to result in returning of big funds parked abroad to evade tax.  
    The funds are expected to help increase the state revenues needed to finance economic development and improve domestic financial liquidity amid the global slump.  
    Officially launched on July 1, the tax amnesty program is effective from July 18, 2016 until March 31, 2017.

         To lure parts of the funds, Indonesia's Capital Investment Coordinating Board (BKPM) has prepared an investment scheme.

         "BKPM has a role in accelerating investment by preparing investment scheme for those wanting to use their funds for direct investment," the then head of BKPM Franky Sibarani said recently.

         He said he was confident that the investment scheme would attract those utilizing the tax amnesty policy to invest in Indonesia.

         "The scheme is expected to help the government reach its investment target of Rp594.8 trillion this year," he said.    

    The plan is to combine the investment scheme with a number of other initiatives to simplify investment license such as 'three-hour investment service', import duty facility, green track acceleration, tax allowance and tax holiday," he said.

         "BKPM will propose investment procedure in the real sector based on the government's priority scheme and other forms of investment in line with the law," Sibarani, who is currently deputy minister of industry.

         "The combination of the incentives is expected to have significant strength in attracting the interest of those utilizing the tax amnesty policy," he added.

         The tax amnesty law guarantees the fund owners protection from being charged with tax fraud and releases from obligation to settle unpaid tax so far.

         The fund owners are required only to pay a certain redemption and to be transparent with their taxable assets. 
    In general, the Board is putting in place three schemes to improve the services it renders to the investors.

     
The three schemes include an investment mediation center, an investment scheme for the diaspora, and a special service for those availing of the tax amnesty offer.

         "The government is putting in place a scheme to resolve investment-related issues through the Investment Mediation Center. We are expecting it to in place by early September this year," he noted.

         The idea of having such a center was proposed by businesses and ambassadors actively in touch with the board.

         The Investment Mediation Center has been proposed due to the large number of investment-related disputes between the businesses and the government.

         A number of law firms have welcomed the plan to set up this investment mediation center, he added.

         Furthermore, the investment scheme for the Indonesian diaspora will help them to in developing their businesses. There are eight million members of Indonesian diaspora around the world.

         "This eight million strong community can invest an estimated amount of one hundred million rupiah per head in Indonesia. However, since they do not have national ID cards and taxpayer identification numbers, the diaspora cannot invest, buy properties or undertake other business related activities," Franky Sibarani explained.

         In the meantime, during the first semester of 2016, the Board recorded the domestic investment value at Rp102.6 trillion, compared with that in the same period of 2015, amounting to Rp85.5 trillion.

         "The domestic investment increased by 32.9 percent to 34.4 percent from the first semester of 2015 to the same period of 2016," the Deputy of Investment Implementation Control at the Board, Azhar Lubis, said recently.

         The domestic investment is mostly dominated by five sectors namely food industry; transport, storage and telecommunications; food crops and plantations; and nonmetallic minerals industry; in addition to basic chemical industry, chemical goods and pharmaceutical.

         "Overall, the industry has contributed Rp50.7 trillion or 49.5 percent of the total domestic investment," Azhar noted.

         Meanwhile, the foreign investment in the first semester of 2016 has reached Rp195.5 trillion.

    
The five main sectors of foreign investment are the paper industry, industrial goods from paper and printing; base metal industry, metal goods, machinery and electronics; basic chemical industry, chemical and pharmaceutical goods; and transport equipment industry and other transportation, in addition to the food industry.

         The top five countries investing in Indonesia in the first half of 2016 are Singapore, Japan, Hong Kong, and China, apart from the Netherlands.

         The development of domestic investment is important to show trust with foreign investors about the positive investment climate in Indonesia.

         "The foreign investors will see first, whether or not the Indonesians develop investment in the country. If we do not invest, then the foreigners will not invest. The positive condition in the country will spread to the foreigners," he added.

         The Coordinating Investment Board recorded the investment realization in the first semester of 2016 at Rp298.1 trillion.

         This amount is 50.1 percent of the national investment realization target of Rp594.8 trillion, consisting of Rp102.6 trillion of domestic investment and Rp195.5 trillion of foreign investment.

         A member of the vice president's expert staff, Sofyan Wanandi, confirmed that the Indonesian government has set up a special working group to expedite settlement of legal cases impeding investment inflows into the country.

         The working group led by Law and Human Rights Minister Yasonna Laoly and includes representatives from 32 ministries and government institutions, Sofyan stated.

         The team will start working in August 2016 and will focus on resolving all problems that investors have frequently complained about, he added.

         The deputy chairman of the working group, Purbaya Yudhi Sadewa, who is also a member of the special staff of the Coordinating Minister for Political, Legal and Security Affairs, noted that the team will write to relevant ministers if their regulations are found contradicting the president's policy.

         The same measures will also be taken if regional regulations are found in conflict with ministerial regulations at a national level, he mentioned.

         "For instance, if a regional regulation requires extending business permits once every five years but the Trade Ministry states that the permits are valid forever, then we will report the case to the Home Affairs Ministry to ask the relevant minister to remind the regional head concerned," he emphasized. ***3***
(f001/b003/B003)

 31-07-2016 20:31:01