• Wayne Forrest, President, American Indonesian Chamber of Commerce
• Muchammad Iqbal, Director, Indonesian Investment Promotion Center (BKPM)
• Puspitasari Sahal - Ernst & Young Indonesia Tax Desk 
• Bee Khun Yap - Ernst & Young ASEAN Tax Desk Lead

Wayne Forrest- Overview

•  US has a long and mostly positive comm ercial relationship with Indonesia going back to late 1800's. When direct and portfolio investments are included, the US is the largest foreign investor in Indonesia as well as the largest market for its manufactured products.  Given Indonesia's tropical position, fertile volcanic soils, and abundant water, the US is also a large purchaser of agricultural products it cannot grow: rubber, coffee, tea, palm oil, spices
• Currently the US is reviewing Indonesia's trade benefits in part because of a large goods deficit: US buys twice as much from Indonesia as it sells.  
• Indonesia has historically been good to investors. Generations of Ministers of Finance and Central Bank Governors have followed prudent macro-economic policies characterized by free flow of foreign exchange and a low inflation environment. Debt level is modest relative to GDP.  Weaknesses are cumbersome bureaucracy, conflicting regulations/licensing requirements, local content mandates, and rule of law/corruption issues.
• Elected in 2014 and again this year, President Jokowi is the first directly elected leader of Indonesia not from the military or political elite. A businessman, the President has concentrated on lowering logistics costs by building transportation infrastructure. He has pursued deregulation more on the front end of doing business (licensing, set-up time) rather than the back (taxation, shifting law and regulation).  

• After learning from the World Bank's Country Director in September 2019 that Indonesia is not a location for large companies relocating production out of China due to the tariff wars, President Jokowi has stepped up his efforts to reform investment procedures and the tax regime. His second term Cabinet, installed in October, led by experienced technocrats such as the Minister of Finance, Sri Mulyani, Coordinating Economics Minister Airlangga Hartarto, and newcomers such as the Minister of State-Owned Enterprises, Erick Thohir, is beginning to roll out new laws and investment procedures, the subject of today's event.

Muchammad Iqbal- Investment Policies and Procedures

•  Indonesia intends to move from #74 to #50 in the World Bank's Ease of Doing Business Index
• Investment priorities are: job creation, supporting SME development, clearing obstacles for investments in the pipeline, distributing quality investment outside Java to other islands.
• Presidential Instruction No. 7 of 2019 empowers the Investment Coordinating Board (BKPM) to take over the granting of permits from individual line Ministries, evaluate existing policies and recommend changes that would speed investment, and establish a Secretariat for this function.
• Tax Incentives include: 5-20 years of exemption depending on sector (18 priority sectors receive the most exemptions), 30% of net tax reduced over 6 years in 166 sectors, duty and VAT exemption on capital goods for production, reduction of gross income subject to taxation of up to 200% for educational activities (training, internships) and 300% for research and development.
• Many sectors open for 100% foreign ownership and more are scheduled for January 2020.
• Investment license will be granted in advance via an online single submission system (OSS)

Puspitasari Sahal- Indonesia's Proposed Omnibus Tax Law

•  18 pioneer sectors receive 5-20 years of 50-100% tax holidays including: digital economy, pulp manufacturing, aircraft and engine components, pharmaceutical raw materials, robotic components, upstream base metals, ship and train components
• Labor intensive industries receive 60% bonus tax deductions for fixed assets as well as 200% deduction for cost of apprenticeships, teaching, and internships.   Intended to improve the connection between higher education and work environment.
• Proposed new tax law will reduce the current corporate income tax of 25% to 22% and 20% after 2023 (unlisted companies). For companies listed on one of Indonesia's Stock Exchange the current rate of 20% will be reduced to 19% and 17% after 2023.

• Also, non-Indonesian citizens residing more than 183 days will no longer be taxed on world wide income, only their Indonesia-sourced income. For Indonesian citizens, they will continue to be taxed on their worldwide income if they reside in the country more than 183 days. If not, only their Indonesia-sourced income.

Bee Khun Yap- ASEAN Comparison

•  Income tax rates in ASEAN vary from lo w of 17% (Singapore) to 30% in Philippines.
• All but Singapore and Malaysia are worldwide basis for resident companies or individuals
• Singapore, Malaysia, Thailand and Philippines grant incentives if multinationals make the country a hub for various functions (manufacturing, finance and treasury, regional corporate support).
• Each country has distinct sectoral expertise and advantage: Thailand (automotive, electronics), Vietnam (electronic components/semiconductors, textile machinery and related products), Malaysia (automotive, consumer electronics), Singapore (biomedical science, medical devices), Indonesia (agribusiness, non-oil and gas commodities, automotive, textiles), Philippines (agribusiness, electronics)

• ASEAN's digital marketplace is growing rapidly based on high cellphone penetration and need for financial/payment services. Indonesia, Philippines, and Vietnam have high upside potential due to their lowest rates of financial inclusion (bank account, credit card).