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The government has reported progress in the implementation of
its recent package of policies to improve Indonesia's investment
climate.
As of May, the government had completed 23 out of 85 planned policies
it had announced last February, the Coordinating Ministry for the
Economy said in a report last week. The policies are in the areas of
investment licensing, taxation, customs, and labor.
The government is, however, still falling behind in four other policies
it had intended to complete by May, including the deliberation of a
draft revision on the country's labor law, and reducing local taxes and
user charges in the telecommunications and transport sectors.
The government claims to have had success, however, in slashing the
bureaucracy and time investors need to acquire a business license for
trading companies. Previously, investors had to submit six documents
and wait up to 10 days for them to be processed, but now only four
documents and a five day wait are required.
"The Trade Ministry has revised eight decrees relating to business
licenses for trading firms, distributors, franchise companies,
surveyors, and warehousing," the report said.
Investors can now register their business entities or holding companies
at any local office of the Justice and Human Rights Ministry.
Meanwhile, the Manpower and Transmigration Ministry has also simplified
procedures for investors and foreign employees in obtaining work
permits, cutting the processing time from seven days to four. Work
permits for foreigners have also been extended from one year to two,
with the option to further extend them through reapplications.
The Manpower and Transmigration Ministry has also issued a decree to
speed up the establishment of industrial relations and work contract
agreements.
A draft revision of the labor law, which had sparked controversy, is
now being review by experts and academics before being submitted to the
House of Representatives.
In taxation, the Home Ministry issued a decree lowering the tax base
for commercial vehicles to 60 percent of their value. It is also
coordinating with the Finance Ministry in reviewing local taxes and
user charges impeding investment.
The Finance Ministry itself has submitted its final draft revisions on
the country's three tax laws, customs and excise laws and local tax and
user charges to the House for deliberation.
"The new investment bill was also submitted in March, and it will
stress legal certainty and equal treatment for both local and foreign
investors," the report said.
The report comes at the same time as a separate report from the
Investment Coordinating Board showing how actual foreign direct
investment (FDI) in the country during the first five months rose only
5.2 percent to US$3.14 billion from the same period last year.
Approvals were down by a third to only $3.66 billion.
Domestic investment realization from January to May, however, managed
to increase by 55 percent to reach Rp 10.47 trillion.
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