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Indonesian Ministry of Industry

Indonesian Ministry of Industry Encourages Enhanced Industrial Cooperation with China

Jakarta, May 16, 2024, The Europe Today: The Ministry of Industry is advocating for increased cooperation in the industrial sector with the Chinese government to enhance the competitiveness of supply chains between the two countries.

Eko Cahyanto, Secretary General of the Ministry of Industry, emphasized the importance of this collaboration during the Indonesia-China Trade and Industrial Cooperation Seminar held in Jakarta on Thursday.

“We also encourage stronger cooperation between business players in Indonesia and business players in China to bolster not only things related to business development but also streamlining supply chains,” Cahyanto stated.

Highlighting the robust partnership between Indonesia and China over the past two decades, Cahyanto noted that from 2019 to 2023, China’s investment in Indonesia amounted to USD 28.4 billion. The manufacturing sector was the primary beneficiary, attracting approximately 54 percent of this investment.

To further enhance cooperation with China, the Indonesian government has introduced a range of incentives, both fiscal and non-fiscal, alongside developing an adequately skilled industrial workforce.

“The Ministry of Industry has also created a substantial number of industrial workers to support new investments, especially pioneer investments,” added Cahyanto.

Key incentives prepared by the government include:

Tax Holidays: Corporate income tax exemptions for 5 to 20 years for pioneer industries with significant and strategic investments.
Tax Allowances: A reduction in company income tax by 30 percent of the investment value for six years.
Import Fee Exemptions: A two-year exemption from import fees for machinery, equipment, and raw materials.
Super Tax Deductions: Up to 200 percent for business players engaged in vocational activities and up to 300 percent for those involved in research and development in Indonesia.
These measures are designed to attract and support Chinese investments, particularly in sectors that can drive significant economic growth and technological advancement in Indonesia.

The seminar underscored the ongoing commitment of both Indonesia and China to foster a mutually beneficial industrial relationship, leveraging their collective strengths to build more resilient and competitive supply chains.