Indonesia introduces special fiscal incentives for green industrial estates

Indonesia's Ministry of Industry is set to implement a new policy requiring industrial estates to develop roadmaps for transforming into green industrial zones. This initiative aims to incentivize environmentally sustainable practices within the nation's industrial sector.

According to Tri Supondy, Director General of Resilience, Regionalization, and International Industrial Access, industrial estates that achieve "green industrial estate" status will be eligible for special fiscal and non-fiscal incentives. These benefits will not be available to estates that do not meet the green criteria, thereby encouraging widespread adoption of sustainable measures.

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If an industrial estate has green industrial estate status, then special fiscal facilities and incentives will be provided, which will not be given to industrial estates that do not have green industrial estate status.

The ministry is currently refining the details of these incentives, which are being discussed alongside the draft bill on Industrial Estates initiated by the House of Representatives. Supondy expressed hope that these fiscal incentives, such as tax breaks, and non-fiscal support, including promotion and technology transfer, will attract more investors to develop green industrial areas.

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We are trying to push for incentives such as taxation for fiscal ones, and non-fiscal ones like promotion, facilitation like this, technology transfer, and so on.

This push for green industrial transformation is being supported by the Eco-Industrial Park Center (EIP Center), a collaborative program between the Ministry of Industry and UNIDO, funded by the Swiss State Secretariat for Economic Affairs (SECO). The EIP Center will provide assistance in developing green industrial roadmaps, implement pilot projects, foster collaboration among stakeholders, and offer training on environmentally friendly practices, decarbonization, and circular economy principles.

Currently, five industrial estates are designated as pilot projects for transformation into green zones: Medan, Batam, Bekasi (MM200 and Delta Mas), and Karawang (KIIC). An additional site outside Java is also undergoing assessment. UNIDO Representative for Indonesia and Timor Leste, Marco Kamiya, believes that green industrial parks like the EIP Center will accelerate the development of green industry policies, signaling a positive step for Indonesia's industrial progress.

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This will be a positive sign for the development of countries like Indonesia.