Indonesia offers tax incentives to attract investors to new capital

Jakarta - Indonesia has unveiled a host of tax breaks to attract companies and people to move to its new capital Nusantara in the heart of Borneo.

According to the local investment ministry, banks and insurers operating in Nusantara will have to pay no income tax for up to 25 years if they invest before 2035. Those investing before 2045 can get up to 20 years of tax break.

These are only one of the various incentives being offered by the government to get businesses to support President Joko Widodo’s 600 trillion rupiah (39.5 billion USD) plan to move the nation’s capital from Jakarta.

The incentives would only be offered until 2045, when Nusantara, expected to be entirely renewable-powered and technologically advanced, is set to be completed.

So far, 20 companies including local and foreign ones have shown interest in investing in Nusantara, with a few of them having signed deals, said Investment Minister Bahlil Lahadalia.

The government has begun building basic infrastructure in the new capital, including a water dam, roads and presidential and vice presidential buildings. The target is for public officials to start relocating next year.

Indonesia’s Minister of Trade Zulkifli Hasan has called for the promotion of economic cooperation between his country and the Eurasian Economic Union (EAEU), saying he expects the free trade agreement (FTA) between the two sides to be completed soon.

Indonesian president Joko Widodo said his government will soon consider halting the export of unprocessed copper ores to encourage domestic processing of raw materials in the country’s industrialisation push, following a similar policy on nickel and bauxite.

Indonesia, as the chair of ASEAN this year, is preparing a roadmap to support the full membership of Timor Leste in the regional association.