ANNOUNCEMENT 16 Nov 2018
On 16 November 2018, the Indonesian government announced its 16th economic stimulus package.
NUMBER OF INTERVENTIONS
Indonesian Coordinating Ministry for Economic Affairs press release (in Bahasa Indonesia)
Ministry of Finance regulation 150/PMK.010/2018 (in Bahasa Indonesia)
Secondary Sources (in English)
As the first major point of the stimulus package, the Coordinating Ministry for Economic Affairs announced that it will expand its scope of corporate income tax reductions for new investments in Indonesia.
The Minister was cited saying "In order to further increase the value of investment in Indonesia, the government considers it necessary to expand the scope of the Indonesian Standard Classification of Business Fields (KBLI) which can be given tax holiday facilities".
The details were later on published in regulation 150/PMK.010/2018 by the Ministry of Finance on 26 November 2018. The regulation expanded the scope of eligible industries to 18, made it easier to apply for the tax reductions via the Online Single Submission system ("OSS"), and reduced the threshold for reductions for investment from the prior 500 billion IDR to 100 billion IDR (ca. 7.2 million USD).
The regulation came into force on 27 November 2018. It revokes previous regulation 35/PMK.010/2018 (see related state acts).
The second major announcement of the 16th economic stimulus package was the revision of the Negative Investment List, which was last updated in 2016 (see Related State Acts). The initial revision would improve the access for foreign investments for over fifty sectors.
However, since making the announcement, the government has been heavily criticised over the plans, particularly those opening up foreign investors to Indonesian SMEs. After initially insisting to go ahead with the plan, on 24 November 2018, the Indonesian Coordinating Minister for Economic Affairs announced a suspension to the reform pending consultations with the business associations.
Given that the implementation and scope of the revision of the Negative Investment List remains unclear, no sectors have been chosen as affected.
As a third step, the 16th economic stimulus package introduces tax incentives for companies that repatriate their export earnings. For example, an exporter who keeps at least 90 percent of his export earnings on Indonesian deposit accounts will entirely be freed from the income tax.
In the official press release, the Indonesian Coordinating Minister for Economic Affairs was quoted saying "The government wants to control foreign exchange by providing incentives for DHE [export earnings repatriation] placed in the Indonesian Financial System (SKI)" (own translation).