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Indonesia offers IFAs more than immediately meets the eye.
Yes, you most certainly are aware that it’s an exotic location, with a great climate, stupendous beaches and a very exciting night life.
But did you know that Indonesia is teeming with high net worth individuals with a significant amount of money to invest? Are you aware that, partly due to its rich natural resources, a huge and thriving expatriate community is drawn there to fill senior positions? In addition, do you know that a very large number of affluent expat retirees rate the country on the top of their most-desired-locales list?
Well, if you were not aware of these facts – most definitely, read on!
Indonesia is a country consisting of close to 18,000 islands located in the South East Asian Archipelago, and is the world's largest archipelagic nation. The islands spread across more than one tenth of the equator between Southeast Asia and Australia. Collectively, their land area covers approximately two million square kilometres.
Bordered by Papua New Guinea, East Timor, and Malaysia, Indonesia has a population of close to 250 million people, making it the fourth most populous country worldwide.
Economy
Indonesia provides an instrumental economic function in Southeast Asia. Among many key roles:
The nation is one of the six founding members of Association of Southeast Asian Nations (ASEAN), which was organized to promote common economic, social, and cultural goals.
Indonesia is a founding member of the Non-Aligned Movement (NAM), which began as an international conference of developing countries in Bandung. Indonesia served as the NAM Chairman in 1992-95.
The country has been a strong supporter of the Asia-Pacific Economic Cooperation (APEC) forum. Its efforts in 1994 were key for APEC members' agreement to implement free trade in the region by 2010 for industrialized economies and 2020 for developing economies.
In addition, Indonesia is a part of the regional trade block, ASEAN Free Trade Area (AFTA), by which ASEAN countries adopted the Common Effective Preferential Tariff (CEPT) Scheme. The CEPT is the mechanism by which tariffs on goods traded within the ASEAN region, was reduced to 0-5% by 2002/2003 for most ASEAN countries, including Indonesia.
Expatriates have been travelling to Indonesia since the early days of the spice trade for, among other reasons, to trade for rare spices, tea, rubber, and other goods. In recent decades, however, Indonesia has prospered from major investments by large multinational firms, small businessmen and individual investors alike.
Strong investor confidence has led to an increase in domestic and foreign direct investments (FDI) in Indonesia. For example, in the first quarter of 2005, FDI rose by 72 percent - to US$ 5.8 billion – over the corresponding period for the previous year.
The European Union recently became the largest investor in the region, overtaking Japan and the United States. Indonesia's steady economic recovery is set to boost the attractiveness of ASEAN as a trade partner and an investment destination. For example, China's investment in Indonesia is set to triple in the next five years.
The largest FDI industrial sector in the past couple of years was Chemical and Pharmaceuticals, with a combined total investment of close to US$4 billion per year.
Incentives
The Indonesian government provides various foreign investment incentives, including:
Import Duties: All FDI projects and FDI companies expanding their projects are granted very favourable import duty allowances.
Exemptions are given from the Transfer of Ownership Fee for ship registration deed/ certificate made for the first time in Indonesia.
The Indonesian government introduced several Tax Bills since 2000, which grant tax allowances in certain sectors and/or areas for domestic and foreign investors, including taxable income reductions for up to 30% of the realized investment over six years, accelerated depreciation and amortization, and; a 10 % (or lower in case of treaty countries) income tax on dividends.
Value Added Tax is exempt on the importation and/or delivery of Selected Taxable Goods.
In addition, incentives for exporting manufactured products include restitution of import duties on goods and materials needed to manufacture the finished products, and exemption from Value Added Tax and Sales Tax on luxury goods and materials purchased domestically.
Industries located in the ‘bonded areas’ of the country are provided with incentives such as exemption from import duty, excise tax, income tax, and Value Added Tax on luxury goods.
Other incentives are also offered for export oriented companies.
Jakarta
Jakarta is Indonesia’s capital and largest city. Located on the northwest coast of the island of Java, the city has an area of more than 650,000 square kilometres and a population of close to nine million. Jakarta serves as the country’s governmental and economic centre.
With an extremely large expat community, Jakarta is a city known for its diversity and cosmopolitan essence. In addition, due to Jakarta’s concentration of affluence and political influence, the city has a much more noticeable foreign air about than do other areas of the nation.
Leisure Pursuits
Erupting volcanoes, fauna and flora, rich jungles and oceans abundant with sea life are just the proverbial tip of the iceberg with regards to what Indonesia has to offer during your leisure hours.
Just across the water from East Java sits Bali, long the jewel in the crown of Indonesian tourism. Bali is a tiny island of elegant temples, verdant landscape and fine surf. Very well known on Bali are Sanur, with its serene, shallow sea; Kuta, with its pulsating nightlife and surfing waves; and Nusa Dua, the centre of first-class accommodations and the main tourist centre in the islands. Ubud is the cultural and art capital of Bali and no expat should leave Indonesia without at least one visit to this fascinating and colourful village.
Lombok, Bali’s slightly less developed neighbour, is another excellent destination. In addition, more adventurous travellers may want to explore further east, where the islands known as Nusa Tenggara are located – in a less discovered part of the country. Sulawesi is another captivating destination for expats interested in rugged nature and remarkable cultures.
Java has long been the cultural and political heart of the country. Java’s cultural heritage can be explored at the world-famous Buddhist complex Borobudur. Offering a view on the true Indonesian life, lush beaches in Pangandaran and astounding views over paddy-fields and erupting volcanoes are all part of the Javan experience.
In East Java, watch the sunrise over the Bromo Mountain; the moonscape around the crater in the early morning offers one of the most breathtaking views to be found anywhere.
Sumatra is renowned for its awe-inspiring scenery; and Lake Toba is a popular destination to visit, and has been so since the Dutch colonial days.
With terrific business prospects, excellent recreational activities, and extremely affordable accommodation and food, it is no wonder that Indonesia continues to be a tremendously popular destination for expat investors, employees and retirees alike.
For further information about Indonesia we recommend that you visit http://en.wikipedia.org/wiki/Indonesia where you will find many useful links and informative articles to prepare you for your move.