Capital Investment - Guidelines for Incentives

The Government has made investment an integral part of its economic policy platform and the decentralization of certain powers to the regions means that it is necessary to put in place guidelines that stipulate the framework for the granting of incentives and the simplifying of procedures for capital investment in those regions. To this end the Government has issued Regulation No. 45 of 2008.

The primary purpose of the Regulation is to facilitate the implementation of Article 176 of Law No. 32 of 2004 which provides that regional governments may grant incentives and simplify the procedures for capital investment with a view to improving their respective regional economies.

The incentives and the simplified procedures are to be based on the following principles:

-                 legal certainty;

-                 equality;

-                 transparency;

-                 accountability; and

-                 effective and efficient.

The incentives include:

1.              reduction, lessen, and exemption of regional taxes;

2.              reduction, lessen, and exemption of regional levies;

3.              stimulus funds; and

4.              capital assistance.

The simplification of procedures include:

1.              supplying of data and information;

2.              provision of infrastructure and equipment;

3.              provision of land and locations;

4.              technical assistance; and

5.              expedited licensing procedures.

Investors must satisfy one of fourteen specific criteria listed in the Regulation. These include, among others, making a contribution to the local community; employing large numbers of people; pioneering industries, partnership with micro, small, medium enterprises and cooperatives; and innovation.

The incentives and any other facilities are to be contained in a Regional Regulation (Perda).

The Regulation has been in force since 24 June 2008.