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Govt to allow more self-managed bonded zones to boost exports, investments

Posted by on 24 September 2019

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The government is seeking to build more self-managed bonded zones to realize President Joko “Jokowi” Widodo’s wish to boost exports and investments by providing fiscal incentives and easing bureaucratic processes.

The Finance Ministry on Sept. 19 announced that as many as 119 of the total of 1,372 bonded zones in the country have been granted licenses to self-manage in a bid to attract investments and boost exports.

Deputy Finance Minister Mardiasmo said that in self-managed bonded zones firms could independently run import and export businesses without having to involve customs officers. It is expected to help companies do business, better manage their costs and, in turn, increase their operational income and therefore trade capacity.

“The ultimate goals are to boost exports and investments; this [policy] is a historic breakthrough that links and matches businesspeople to make them more efficient,” Mardiasmo said at a press briefing in Jakarta.

A bonded zone is an economic concept designed to boost exports by allowing manufacturing companies to bring in basic or intermediate materials without paying import duty, value-added tax (VAT) and other indirect taxes.

Self-managed bonded zones would enjoy the same incentives, as well as the ability to independently manage the import and export of goods without having to seek Customs and Excise Office approval.

The government is in the process of identifying all of its rules deemed to impede investors and exports, which would be simplified or annulled in an omnibus law with the aim of attracting more investments and boosting growth.

Indonesia’s economy grew the least in two years in the second quarter this year at 5.05 percent year-on-year, with the World Bank projecting the country’s gross domestic product (GDP) growth potentially slowing to 4.9 percent next year and sliding further to 4.6 percent in 2022 amid intensifying global economic risks.

The Finance Ministry’s director general for customs and excise Heru Pambudi said there were three requirements for manufacturing companies to be able to qualify for a license to become a self-managed bonded zone. 

“First, the primary requirement is that they should comply with tax policy and customs. Second, their IT inventory record should be connected real-time to the customs and excise system named CEISA to be able to detect irregularities [concerning business activities],” Heru told reporters.

The customs and excise office has already installed CCTV cameras as a substitute for human supervision to monitor activities in self-managed bonded zones.

Heru said that through self-managed bonded zones, the government had given businesses incentives of clearance and service certainty on top of existing fiscal incentives.

“The self-managed bonded zone has increased efficiency by 30 percent, which consists of the zone’s total export of Rp 86 trillion [US$6.1 billion], an increase of Rp 25.8 trillion,” added Heru.

The Indonesian Textile Association (API) welcomed the policy as it allowed the industry to make deliveries at any hour, adding that the policy made businesses far more efficient.

“Indonesia desperately needs this facility as the Indonesian textile road map will increase eight times thanks to the government’s deregulation,” API vice-chairman Anne Patricia Sutanto said.

Textiles and textile products are among the top priority sectors President Joko “Jokowi” Widodo wants to support as Indonesia seeks to revive a manufacturing industry that has lost 20 percent of its share of GDP from almost a third years ago during its heyday.

The effort was taken to jack up economic activities as Indonesia’s economic growth slowed to a two-year low in third quarter at 5.05 percent year-on-year. (awa)