Indonesia’s Omnibus Law: New Provisions on Indonesia’s Trade Sector

1. The Indonesian government issued Government Regulation 29 of 2021 (GR 29/2021) in early 2021, an implementing regulation to the Omnibus Law and which makes changes on issues of trade, particularly in areas such as the distribution of goods, exports, and imports, and the activities of foreign investment companies in the retail sector, among others.

2. The government also introduced several implementing regulations to GR 29/2021, in the form of Ministry of Trade Regulation 24 of 2021 (MOT Reg 24/2021) and Ministry of Trade Regulation 17 of 2021 (MOT Reg 17/2021) which sets out the framework for the distribution of goods and the facilitation of import and export activities.

3. Companies engaged in the direct distribution of goods also require a business identification number and must meet the following criteria:
- Holds an exclusive distribution right for the products;
- Has adopted a code of conduct;
- Has a marketing plan;
- Sells directly to consumers via a marketing network approved by the sellers; and
- Recruits direct sellers.

4. Manufacturers are prohibited from distributing goods directly to consumers unless these manufacturers are classified as micro and small businesses.

Indonesia’s Omnibus Law: Provisions on Special Economic Zones

1. Indonesia’s Government Regulation No. 40 of 2021 (GR 40/2021) aims to implement the latest provisions for special economic zones (SEZ) in the country.

2. GR 40/2021 highlights the various tax incentives to attract foreign investors into operating in an SEZ. These include reductions in corporate income tax (CIT), the non-collection of value-added tax (VAT), and import duty exemptions.

3. With 12 operational SEZs in the country and another six currently in the developmental phase, Indonesia seeks to stimulate economic dynamism through investments in its economic zones.

4. Furthermore, these SEZs are spread throughout the archipelago to help address regional imbalances in economic development. For instance, Java island accounts for 60 percent of the population — making it the world’s most populous island — and 58 percent of total GDP.

The impact of BEPS on tax incentives in Hong Kong SAR

 1. As of November 4 2021, 137 out of 141 member jurisdictions of the G20/OECD Inclusive Framework on BEPS (IF) have agreed to the statement issued by the IF on October 8 2021, which set out the building blocks and key rates for pillar one and pillar two of the BEPS 2.0 reform.  

2. Many jurisdictions across the ASPAC region, including Hong Kong SAR, offer a range of tax incentives to attract business and investment. However, the introduction of a global minimum tax of 15% under pillar two raises questions as to the appeal and future of such tax incentives. 

3. The global minimum tax may reduce the effectiveness of tax incentives and disincentivise jurisdictions to introduce tax concessions if another jurisdiction can claw back that benefit.  

Ericsson IndustryLab Report Predicts Manufacturing Transformation & Enterprise Dematerialization By 2030

1. The latest Ericsson IndustryLab Future of Enterprises report predicts widespread transformation of manufacturing enterprises in the coming years, including a rapid rise in ICT-enabled production tools such as augmented reality, exoskeletons and remote control.

2. The series of reports also predicts dematerialized enterprises expect to leverage cloud and mobile technology to become more productive and sustainable by 2030.