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Home arrow Latest News arrow The Central Government Will Develop Manufacturing Locations in Central and East Java

The Central Government Will Develop Manufacturing Locations in Central and East Java PDF Print E-mail
Written by Maizer   
Tuesday, 09 July 2019

The Central Government plans to make Central and East Java a new investment location for the domestic manufacturing industry. There is great potential in the two provinces, starting from labor, land availability, to tourism locations.


Minister of National Development Planning (PPN) / Head of National Development Planning Agency Bambang Brodjonegoro mentioned three locations, both in Central and East Java, which would be the focus of development.


The three regions in Central Java are the Kubangwungu Industrial Zone in Brebes, the Kendal Industrial Zone, and the Borobudur Tourism Area.


While the three focuses in East Java are the completion of an oil refinery in Tuban, the development of the Bromo-Tengger-Semeru (BTS) tourism area, and the development of Surabaya and surrounding metropolitan cities or Gerbangkertasusila (Gresik, Bangkalan, Mojokerto, Surabaya, Sidoarjo, and Lamongan).


At Bogor, Bambang explained, the purpose of developing these two provinces was part of the government's efforts to diversify the manufacturing industry which had been focused on DKI Jakarta, Banten and West Java.


Whereas in its monitoring, Central and East Java have the potential to attract more investment from three other provinces on Java.


Bambang helped ensure that the development budget for these two provinces would not be fully borne by the State Budget (APBN).


In practice, government will provide opportunities for state-owned companies to collaborate with private parties - domestic and foreign. In addition, access to direct investment from the private sector will also be opened.


"For example, for the expansion of Tanjung Mas Port — to support the Kendal industrial area — PT Pelindo and the private sector will be proposed. So, there is no business with the APBN, "Bambang said.


Not only that, to fund the development of metropolitan city of Surabaya and Gerbangkertasusila, it will also use part of the loan money disbursed by the World Bank to 13 cities in Indonesia in the National Urban Development Project (NUDP) program.


Jumbo tax incentives


To be known by President Joko "Jokowi" Widodo signed Government Regulation Number 45 of 2019 concerning tax facilities for investors in labor-intensive industries.


Article 29A in this Government Regulation regulates, domestic taxpayers who make new investments or business expansion in labor intensive industries and have not received tax facilities, can be given income tax facilities.


The incentives are in the form of reducing net income by 60 percent of total investment in the form of tangible fixed assets including land used for main business activities, which are charged for a certain period of time.


Meanwhile, in Article 29B it is stated that domestic taxpayers who carry out work practices, apprenticeship and / or learning activities in the framework of developing and developing certain competency-based human resources can be given a reduction in gross income of a maximum of 200 percent of the total costs incurred for activities work practices, apprenticeship, and / or learning.


Domestic taxpayers carrying out certain research and development activities in Indonesia can be given reduction in gross income of a maximum of 300 percent of the total costs incurred for certain research and development activities in Indonesia which are charged within a certain period of time.


Regional specific requests


Realizing this discourse is certainly not as easy as turning the palm of the hand. Central Java Governor Ganjar Pranowo mentioned four development challenges in Central Java that must be resolved by all stakeholders.


First, there are tax incentives to invite investment. One of the proposals is the provision of a tax holiday.


Second, simplification of permits. Third, the development of supporting infrastructure. Fourth, the development of human resources (HR) through educational programs that focus on industry.


"Central Java itself has three good things and we ask for support: food products, textiles and textile products, and finally furniture. We want Central Java to become an Indonesian furniture center, "said Ganjar.


Not much different from Ganjar, East Java Governor Khofifah Indar Parawansa also hoped the government would help prepare the infrastructure that supports inter-political connectivity in the region.


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