Lawmaker Proposes Tax Incentive for Labor‑Intensive Industries

Novita Hardani, a member of Commission VII of the House of Representatives, proposed a special tax incentive for labor‑intensive industries on Thursday, 11 December 2025, in Jakarta. The proposal includes PPh reductions, investment‑credit subsidies, and a ban on used‑clothing imports.

She noted that garment and footwear sectors face pressure from illegal and legal imports of second‑hand clothing, which undercut local prices. The government has already issued Regulation No 16/2020, granting a tax allowance that reduces net income by 60 % of the fixed‑asset investment for up to six years, provided the company employs at least 300 Indonesian workers. An additional credit facility of Rp20 trillion is earmarked for loans ranging from Rp500 million to Rp10 billion with lower interest rates and tenors of five to eight years.

If adopted, the measures could lower companies’ fiscal burden and help prevent layoffs. Tightening the ban on used‑clothing imports aims to protect domestic manufacturers. Authorities will review fiscal policies, including PPh and VAT, for environmentally friendly and labor‑intensive sectors.