Background

Government issued new regulations namely Government Regulation No. 96 Year 2015 on Facilities and Convenience in the Special Economic Area ("Regulation 96/2015"), which came into force since December 28, 2015. PP 96/2015 is as an implementing regulation specifically on facilities and convenience in the special economic area.

Special Economic Area

Special Economic Area ("KEK"), is an area with certain boundaries within the territory of the Republic of Indonesia stipulated to perform the functions of the economy and has certain facilities, among others:

  1. Taxation, customs and excise form; (i) the income tax; (ii) value added tax or value added tax and sales tax on luxury goods; and/or (iii) customs and/or excise.;
  2. traffic of goods;
  3. Manpower;
  4. Immigration;
  5. Land; and
  6. License and Non-license

Facilities and Convenience of Taxation, Customs and Excise

Business entities and entrepreneurs may be given the facility of taxation, customs and excise with the following conditions;

  1. Determined as business entity to build and/or manage the KEK of the provincial government or regency/city government or the ministry/agency non-ministry government in accordance with its authority;
  2. Has a development agreement and/or management of KEK between business entity and the provincial government or regency/city government, or the ministry/agency non-ministry government in accordance with its authority;
  3. Make certain boundary area KEK activities;
  4. A corporate taxpayer in the country;
  5. Have obtained principle license of the administrator KEK; and
  6. Has information systems that are connected to the Directorate General of Customs and Excise.

Facilities and Convenience of Flows of Goods

Prohibition provisions of import and export in KEK is applicable in accordance with the prevailing regulation in the field of prohibitions and restrictions on imports and exports. Outflow of imported goods to be used from the KEK to other area within the customs area ("TLDDP"), regulations in the field of import restrictions prevail, unless already fulfilled at the time of importation. Goods subject to import restrictions and export may be granted exemption and/or facilities.

Export comes with a Certificate of Origin ("SKA") issued by institutions issuing SKA. Goods released to TLDDP comes with a certificate of local value content published by institutions issuing SKA. Use of SKA issued by the country of origin from abroad may be applied to outflow of goods from KEK to TLDDP. The SKA will be used for partial outflow from KEK to TLDDP using quota cuts.

Facilities and Convenience of Manpower

Governor establishes the Remuneration Council of KEK and Special Tripartite Cooperation Institution KEK consisting of local government, labor union and employers' associations in KEK for communication, consultation, early detection of an issue of employment issues by providing advice and consideration on steps to resolve the issue.

Business entities and businessman in the KEK as an employer who will employ Foreign Workers ("TKA") they must have a plan to use the foreign workers and license to employ foreign workers. Collective labor agreements between the labor union and businessman registered to the KEK administrator and be published not more than 4 days.

Facilities and Convenience of Immigration

For foreigners who will make a visit to KEK may be given a visitor's visa for one (1) trip and a few trips in order to that the foreigners perform the duties of government, business, and/or families.

Immigration officials at KEK may approve limited residence visa to foreigners who intend to stay temporarily for:

  1. Capital investment;
  2. Working as an expert;
  3. Following the husband/wife holding limited stay license;
  4. Following legitimate parents for children under the age of 18 (eighteen) years; or
  5. Has a house.

For foreigners who work in KEK and has a temporary residence license, shall be granted permanent residence license, with provisions as follows:

  1. As manager of business entities or businessman are investing at least 1,000,000,000.00 (one billion Rupiah); or
  2. Investing at least Rp1,000,000,000.00 ( one billion Rupiah)

For elderly foreign tourists and having obtained a temporary residence license, may be granted permanent residence license.

Facilities and Convenience of Land

Procurement of land in KEK refers to permit of the location or locations that have been defined in the determination of KEK.

If the location of the KEK proposed by ministry/agency, provincial government, district/city government, state owned/regional owned enterprises and the land has been relinquished, right to build or right of use can be granted over right of management. Right to build are granted a period of 30 (thirty) years and may be extended for a period of 20 (twenty) years and renewed for a period of 30 (thirty five) years and for right of use granted for a period of 25 (twenty-five) years and may be extended for a period of 20 (twenty) years and renewed for a period of 25 (twenty five) years. The extension and renewal is given at businesses operating commercially.

Foreigners/foreign business entities in the KEK tourism may own residential/property build on plots of land occupied by agreement with holders of land rights such as;

  1. Right of use for 25 (twenty five) years and renewed on the basis of an agreement set forth in the agreement; or
  2. Condominium unit on right of use.

Facilities and Convenience of License and Non-License

Issuance of the principle license, principle license for change, principle license for expansion, principle license for merger, cancellation, and revocation are conducted by Administrator KEK through One Stop Services.

In order to speed up the issuance of principle license, Administrator KEK may provide an investment license to business entities or businessman no later than three (3) hours of receipt of the complete and correct application. Entities or businessman having the investment license may carry out construction activities while simultaneously taking care of license required in the implementation of the construction such as building construction license and environmental license.

Its operations are located in the KEK does not require the nuisance license (Hinder Ordinance).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.