BKPM’s New Authority : From Permit Issuance To Various Fiscal Facilities

BKPM’s New Authority : From Permit Issuance To Various Fiscal Facilities image
The new authority granted by the president for the Investment Coordinating Board (BKPM) will now oversee the fiscal incentives, that were previously administered by the Ministry of Finance. With this new authority will add to the simplified permit process and various facilities that will provide foreign investment a freeway.

The capital investment dynamics from 2015 to 2019 show that domestic investors are more eager and dependable at investing their money locally than foreign ones. Now, the ratio between the two is very close. The president allows the chairman of BKPM to add more experts and officers to help him to do the job. According to the presidential regulation No. 24/2020, the limit for chairman’s aides is five for experts, and five other for specialized staff.

Starting February 3, 2020, the Investment Coordinating Board (BKPM) is getting more power. The regulation allowing the agency, led by the former chairman of the Indonesian Young Entrepreneurs Association (HIPMI), Bahlil Lahadalia, to grant tax holiday, the authority previously held by the Finance Ministry. The shift of authority is the result of Presidential Instruction (Inpres) No. 7/2019 on the acceleration of ease of doing business. The instruction states that BKPM will now oversee all business licensing and fiscal incentives as part of the government’s effort to streamline the bureaucracy widely known to hamper incoming investments. Meanwhile, the State Secretariat will supervise the implementation of it.

However, the agency’s authority is not only limited to tax holiday, but also tax allowances and other fiscal incentives, such as import duty. All of them will now be under the care of BKPM’s chairman. The delegation of authority will remain using the existing Finance Ministerial Regulations as the legal base. For example, the Finance Ministerial Regulation No. 150/2018 on the income tax exemption will still be the basis for the tax holiday. The only thing that will change is the person who will get the final saying on the matter, from the Finance Minister to the chairman of BKPM.

For information, the regulation lists 18 pioneering industries worthy of the tax holiday facility, from the upstream base metal industry, petrochemical industry, primary chemical industry, machinery industry, to economic infrastructures and digital economy. If investors request a tax holiday for their involvement in an industry outside of the list, BKPM and the Finance Ministry will sit down discuss the matter together.

The spirit behind the one-door policy is to offer more convenience to the investors. The regulation, combined with other fiscal incentives, hopefully, will be attractive enough for them to conduct and fund more businesses in Indonesia.
BKPM’s chairman is even ready to welcome investors planning to develop domestic industries at the airport. BKPM is also willing to allocate some budget to provide a tour around Jakarta for them, including a culinary trip to taste local delicacies. For this purpose, BKPM will form a special hospitality task force.

The president even allows the chairman of BKPM to drop his name whenever he faces an investment-related difficulty. He is also okay if Bahlil Lahadalia uses such a trick to accelerate the business permit issuance.
Additionally, the government is also bulking up the agency following the implementation of Presidential Regulation No. 24/2020 on the Second Revision of Presidential Regulation No. 90/2017 on Investment Coordinating Board. The revision allows the chairman of BKPM to get a maximum of five experts and five specialized staff.

This article is originally published in dinsights Real Estate Investment Indonesia is an Event and is not affiliated nor owned the content, you can see the full article here