Jokowi's Red Carpet For Investment: Tax-Free LPI!

Motor vehicle assembly activities in a domestic production facility (Photo: Ministry of Industry)

JAKARTA - The government, through the Ministry of Finance, ensures that there will be no taxes collection on the newly formed Investment Management Institution (LPI).

Deputy Minister of Finance (Wamenkeu) Suahasil Nazara said that the step was a stimulus for LPI in order to be able to absorb and manage investment quickly.

In his explanation, the Deputy Minister of Finance revealed that the government has prepared special treatment for this institution. First, the state will not collect LPI taxes from operational activities so that it can foster reserves of 50 percent of the initial capital owned.

When the 50 percent balance is reached, the government then requires the LPI to pay taxes according to the applicable regulations.

"This scheme itself is designed so that the LPI can immediately contribute to depositing its dividends to the state," he said in a working meeting with Commission XI DPR-RI, Wednesday, January 27.

Meanwhile, for the operational activities of infrastructure and asset management that are cooperated, the government still provides tax payment obligations to third parties, and not to LPI.

"So it is as if we didn't tax from the start, but we let LPI work first. If there are many projects attached, then we take the tax from the management of the LPI and the assets," said Suahasil.

As an initial stage, the government has injected IDR 15 trillion into the LPI from the total planned capital of IDR 75 trillion. In this capital support scheme, a mechanism for the participation of State-Owned Enterprises (BUMN) and BMN shares is also embedded in order to smooth out LPI's business activities.

Most recently, President Joko Widodo inaugurated and took the occupational oath of five members of the Supervisory Board of the Investment Management Institution (LPI) at the State Palace, Jakarta today Wednesday, January 27, 2021.

The five people are Finance Minister Sri Mulyani, BUMN Minister Erick Thohir, and three professional elements who have previously gone through a number of selection processes and obtained DPR approval.

The following is the complete composition of the LPI Supervisory Board inaugurated by President Jokowi:

1. Minister of Finance, as chairman concurrently serving as member;

2. Minister of State Owned Enterprises, as member;

3. Haryanto Sahari, as member for the term of office 2021-2024;

4. Yosua Makes, as member for the term of office 2021-2025; dan

5. Darwin Cyril Noerhadi, as member for the term of office of 2021-2026.