JAKARTA (REUTERS) - Indonesia will revise its tax incentives and offer them to a larger number of business sectors, in a bid to attract more investment, the finance minister said.
Tax allowance and tax holiday rules, last revised in 2016, had failed to attract a significant amount of investment into South-east Asia's biggest economy, Finance Minister Sri Mulyani Indrawati told reporters on Wednesday (Feb 21).
She did not give specifics, but said the government has in mind adding at least 20 business sectors to the 145 currently qualifying for allowances.
Boosting investment has been an economic priority for President Joko Widodo, particularly since sluggish consumption has capped annual economic growth at around 5 per cent for several years.
Mr Thomas Lembong, head of Indonesia's investment board, said many manufacturing companies sought tax incentives before investing in Indonesia.
"Competitor countries are very responsive to issues like this. If we can execute this, there will be incoming (investment)," Mr Lembong said on Tuesday.
Last month, he warned that Indonesia was losing out to peers such as the Philippines, Thailand and Vietnam in attracting investment, due to regulatory uncertainties.
The government is planning to change the minimum investment required to get a tax holiday, she said. At present, the minimum ranges between 500 billion rupiah (S$48.5 million) and 1 trillion rupiah.
Other revisions would include clarifying how tax holidays work.
"Things like this will be defined more clearly so that investors can have certainty over the incentives they can get," she said.
Rules of the finance ministry might be revised this month, while the presidential regulation could take another month to issue, Ms Indrawati said.