INSIGHT
Newsletter - Doing Business During The Pandemic: Indonesia’s Government Support in Countermeasuring The Corona Virus Disease-19 (“COVID-19”) Outbreak
Author: Corporate and Investment Practice Group
The spread of COVID-19 outbreak has significantly disrupted the economic stability of almost all nations around the globe, not excluding Indonesia. Shortly after the first two cases of COVID-19 in Indonesia were confirmed by the Government of Indonesia (“GoI”) back in March 2020, the GoI declared the COVID-19 outbreak as: (i) the public health emergency through the Presidential Decree No. 11 of 2020 on Stipulation of Public Health Emergency COVID-19 (“Presidential Decree No. 11/2020”); and (ii) the non-natural national disaster through Presidential Decree No. 12 of 2020 on Stipulation of Non-natural Disaster of the Spread of COVID-19 as National Disaster (“Presidential Decree No. 12/2020”). Following the health emergency in Indonesia, the GoI implemented the Large Scale Social Restrictions (Pembatasan Sosial Berskala Besar – “PSBB”) which has caused most business sectors to down-size and/or shut down as well as implement travel restriction within, from and to Indonesia. To date, the GoI has implemented less restriction of activities by introducing the concept of PSBB transition (PSBB transisi). However, it must be noted that the status of public health emergency and national disaster have not been revoked by the GoI to date.
In anticipation of a prolonged turndown in economic activities due to COVID-19 outbreak, the GoI has launched numerous stimulus packages in various business sectors to respond the current economic situation in Indonesia. This article will briefly elaborate the GoI’s incentives to the investment, industrial, and taxation related sectors since the occurrence of COVID-19 outbreak in Indonesia.
- EASE OF BUSINESS LICENSING IN CERTAIN SECTORS
The Investment Coordinating Board (Badan Koordinasi Penanaman Modal – “BKPM”) has issued the Decree of the Head of BKPM Number 86 of 2020 on Providing Ease of Business Licensing for Certain Business Fields Related to the Handling of COVID-19 (“Decree of Head BKPM No. 86/2020”), which has given an ease in business licensing on certain business fields, i.e. industry of medical devices and pharmaceuticals, in the form of:
- Reduction and/or simplification on the requirements of business licensing;
- Acceleration on the process of business licensing; and
- Special assistance services.
The Decree of Head BKPM No. 86/2020 has been effective as from 1 April 2020 and will be valid until the end of the emergency response status of COVID-19 to be declared by the Indonesian National Disaster Management Agency (Badan Nasional Penanggulangan Bencana – “BNPB”). In this regard, it its necessary to take note that based on the Circular Letter Head of BNPB No. 6 of 2020 on the Status of Emergency Situation Non-natural Disaster COVID-19 as National Disaster, the status of non-natural emergency situation will be ended once the Presidential Decree No. 12/2020 has been revoked.
- OPERATIONAL OF BUSINESS INDUSTRIES WITH COVID-19 HEALTH PROTOCOL
The Ministry of Industry Republic of Indonesia (“MoI”), under the MoI’s Circular Letter Number 7 of 2020 on Guidelines on the Submission of Applications for Licenses for the Implementation of Industrial Activities During a Public Health Emergency of COVID-19 (“Circular Letter No. 7/2020”), has allowed the industry companies and companies within the industrial zones to resume its business activities during the COVID-19 outbreak, provided that such companies must comply with the following requirements:
- Obtain the Industrial Operational and Mobility License (“IOM License”) which shall be submitted through the National Industry Information System (Sistem Informasi Industri Nasional – “SIINas”). The IOM License covers activities conducted within the industrial zones, among others office administration and industrial mobility activities related to raw materials, supporting materials, finished goods, and/or manpower. The Circular Letter No. 7/2020 further stipulates that the IOM License will be valid during the community emergency period due to COVID-19 outbreak; and
- Obtain the Industrial Operational and Mobility License (“IOM License”) which shall be submitted through the National Industry Information System (Sistem Informasi Industri Nasional – “SIINas”). The IOM License covers activities conducted within the industrial zones, among others office administration and industrial mobility activities related to raw materials, supporting materials, finished goods, and/or manpower. The Circular Letter No. 7/2020 further stipulates that the IOM License will be valid during the community emergency period due to COVID-19 outbreak; and
- Comply with the obligations required under the MOI’s Circular Letter Number 4 of 2020 on the Implementation of Factory Operational During a Public Health Emergency of COVID-19, among others the initial screening of the workers’ body temperature, ensuring good air circulation and proper cleaning facilities. In addition, the MoI also provides obligations to be complied with the workers, among others to always wearing face masks and gloves in the factory area, practicing the physical distancing, and avoiding any physical contact.
- TAX INCENTIVES
The Ministry of Finance Republic Indonesia (“MoF”) issued the MoF Regulation No. 86/PMK.03/2020 on Tax Incentives for Taxpayer affected by COVID-19 Pandemic as amended with the MoF Regulation No. 110/PMK.03/2020 on the Amendment of MoF Regulation No. 86/PMK.03/2020 on Tax Incentives for Tax Payer affected by COVID-19 Pandemic (“MoF Regulation No. 86/2020”). The MoF Regulation No. 86/2020 supersedes the two previous MoF regulations regarding tax incentives that had been issued during COVID-19 pandemic, namely: (i) the MoF Regulation No. 23/PMK.03/2020 on the Tax Incentives for Taxpayer affected by Corona Virus Outbreak; and (ii) the MoF Regulation No. 44/PMK. 03/2020 on the Tax Incentives for Taxpayer affected by COVID-19 Pandemic. Under the MoF Regulation No. 86/2020, the GoI has continuously granted several taxes incentives, among others as illustrated in the table below:
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Tax |
Remarks |
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Article 21 Income Tax (“Income Tax 21”) |
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Article 22 Import Income Tax (“Import Income Tax”): |
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Value Added Tax (“VAT”) |
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Note:
This article is designated to provide only general information and is not intended to be a comprehensive advice; and the reader may not act on the basis of any information contained in this brochure without seeking professional advisor.
