Agrofarm.co.id – The government continues to make policy breakthroughs that can stimulate the domestic business climate so as to help spur economic growth. One of its strategic steps, which in the near future will be realized, is through the provision of fiscal incentives in the form of tax discounts to the manufacturing industry sector.
“The breakthrough has been presented by Mr. President Joko Widodo in a limited cabinet meeting some time ago. Especially facilities to support exports and investment. Besides that, it will also strengthen the quality of human resources (HR) through vocational training and activate R & D activities in spurring innovation, “said Minister of Industry Airlangga Hartarto in Jakarta on Monday (6/24/2019).
According to him, the draft regulation has received approval from all ministers so that it is expected that in the next one month, namely July 2019, it can be published and immediately implemented. “The Government Regulation has been initialed by all relevant ministries,” he explained.
The Minister of Industry explained, his party had identified a number of industrial sectors that could potentially encourage the pace of investment and exports. For example, the food and beverage industry, textiles and clothing, automotive, electronics and chemistry. Based on the map of Making Indonesia 4.0, these sectors received priority development which was ready to become a pioneer in entering the industrial era 4.0.
“So, later export-oriented labor-intensive industries can also get Income Tax deductions,” he said. In addition, tax deductions will apply to companies that do import substitution. “Import substitution is possible to be given a kind of mini tax holiday and also related to the import duty, “he added.
Airlangga said, with the existence of a tax relief policy for industry players, it is expected to be able to attract more investors to invest in the country. This is believed to be able to create a chain effect, including in opening jobs and increasing state revenues.
“Fiscal incentives are needed in an effort to encourage investment and growth in the manufacturing sector, as well as to boost competitiveness in the global arena,” he said. For example the application of super deductible tax incentives for two schemes.
First, the provision of fiscal facilities in the form of a reduction in gross income of up to 200% of the total cost of work practice, apprenticeship, and learning (vocational) for domestic taxpayers (WP) who carry out these practices to encourage quality improvement in human resources.
And, second, the provision of fiscal facilities in the form of a reduction in gross income of up to 300% of the total costs incurred for certain research and development activities for domestic corporate taxpayers conducting research and development activities in Indonesia.
The provision of these facilities is provided with a note, activities carried out by corporations must produce inventions, innovations, new technologies, or technology transfer for industrial development and national competitiveness. “The implementation of this regulation is in line with the initiative towards Indonesia 4.0 and encouraging the domestic manufacturing industry through improving the quality of human resources and research,” he said.
The Ministry of Industry noted, manufacturing industry is one sector that contributes significantly to total investment in Indonesia. In the first quarter of 2019, investment from the manufacturing industry sector contributed Rp.44.06 trillion.
The four manufacturing sectors paid the largest investment value in the first quarter of 2019, namely the food industry amounting to Rp 12.77 trillion, followed by the base metal industry Rp 11.46 trillion, the chemical industry and goods from chemicals Rp3.58 trillion, and the excavated goods industry non-metal Rp.2.59 trillion.
Meanwhile, in the period January-April 2019, the food industry recorded an export value of USD8.25 billion or contributed 20.95% of the total processing export industry. Furthermore, exports from the base metal industry reached USD5.09 billion or contributed 12.65%.
The chemical industry and goods from chemicals incised its export value of USD 4.12 billion (10.46%), followed by the paper industry and paper products from USD 2.75 billion (6.98%), as well as the paper industry and USD2 paper products, 36 billion (6%).
“There are several indicators that show that our economy is going pretty well. This can be seen from the PMI (Purchasing Managers Index) of Indonesian manufactures which are still above the 50 mark or considered still expansive. So there is a significant increase in production, especially in the manufacturing sector. In addition, we see, manufacturing industry players are still optimistic and confident to continue to expand or increase investment, “said the Minister of Industry . irsa