Previous Review:
As the fourth-largest economy in East Asia (by purchasing power parity), Indonesia is accelerating towards its goal of becoming the world’s seventh-largest economy by 2030. Its ongoing structural reforms and resource advantages create multidimensional value growth points for international capital.
I. Institutional Innovation: Breakthrough Business Reforms
The promulgation of the Omnibus Law in 2020 marked a historic turning point in Indonesia’s investment policy. This top-level design, covering 75 regulations, reshaped the business ecosystem through the following key measures:
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Shift from Negative to Positive List: Breaking away from the 40-year-old foreign investment access framework, all industries are now 100% open to foreign investment by default (except for specially restricted sectors), achieving a milestone in investment liberalization.
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Upgraded Administrative Efficiency: The licensing approval process has been streamlined by 50%, and an interdepartmental regulatory coordination mechanism has been established to enhance the government’s responsiveness to global changes.
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Alignment with Global Standards: The immigration policy, environmental standards, and labor regulations have been simultaneously optimized to build a more internationally compatible regulatory system.
II. Tax Leverage Drives Strategic Investment
Corporate Income Tax Incentives: For 246 national key development areas (such as the digital economy and new energy), the following incentives are provided:
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Tiered preferential tax rates of 5%–20% (the standard rate is 22%)
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Corporate income tax exemption periods of up to 20 years
Special Economic Zone Policies: For companies located in these zones:
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Full exemption from corporate income tax
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Exemption from import tariffs and consumption taxes
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Reduction in value-added tax on luxury goods
Non-Fiscal Support Measures:
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Priority allocation of land development rights
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Accelerated depreciation of assets
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Facilitation of cross-border capital flows
III. Demographic Strategy: Structural Labor Advantages
1. Quantity and Quality of Human Resources
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Population Base: With a total population of 275 million, Indonesia has the fourth-largest labor force in the world, with 130 million people of working age.
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Age Structure: 60% of the population is under 40 years old, with an average age of 30, providing a natural impetus for the upgrading of manufacturing.
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Skill Enhancement Programs: The government encourages companies to conduct vocational training through tax deductions, with a target of training 100 million skilled workers by 2030.
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2. Cost Competitiveness
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Provincial differentiated minimum wage system (around $300/month in Jakarta)
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Maturity of labor-intensive industries: Among the top ten global textile exporters and the ASEAN automotive manufacturing hub
3. Resource Dominance: Global Hub of Critical MineralsStrategic Resource Reserves-
Energy: The world’s largest exporter of thermal coal, with oil and natural gas reserves exceeding 3.7 billion barrels of oil equivalent
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Industrial Metals:
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Nickel: Accounts for 30% of global production (16,700 metric tons in Q1 2023)
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Tin: Continuously consolidating its dominant position in the supply chain
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Copper/Gold: The Grasberg mine, which has the world’s second-largest copper deposit and the largest gold reserve
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Economic Contribution-
Mining accounts for over 10% of GDP
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Mineral exports account for 25% of foreign exchange earnings
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The nickel processing industry cluster attracts the global new energy industry chain layout
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