Manilet said the country should take advantage of the potential increase in FDI flows to the Association of Southeast Asian Nations (ASEAN) members, even though Singapore was still at the top of the list of FDI recipients.
"Actually, tax incentives are common and reasonable to attract investors. But don't get caught up in (competition to impose) low tax rates with some countries, one of which is Singapore," the economist at Indonesia's Center of Reform on Economics (CORE) said when contacted here on Sunday.
According to Manilet, Singapore has imposed relatively lower tax rates compared to Indonesia.
However, he added, Indonesia should not only focus on low tax rates as it could reduce the potential of tax revenue.
Manilet opined that Indonesia needs to provide the right incentives in accordance with the characteristics of its economy.
On the other hand, he said, Indonesia needs to learn from Singapore, which is known as an international trade hub. Singapore is also relatively superior in terms of logistics efficiency, legal stability, politics and human rights.
He added that the competitiveness of Indonesia's human resources also needed to be improved to attract more FDI to the country.
Meanwhile, appropriate and consistent regulations are also important to attract foreign investment. Manilet said that there needs to be an effort to create regulations that suit the needs of investors and are acceptable to all parties.
"Consistent and acceptable means that the rule does not only apply in certain government periods but also in the medium to long term," he said.
"Do not let the regulations are good to attract investors but there are points that workers cannot accept. This is indeed a challenge, but that is a fact,” said Manilet.
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Translator: Ade irma Junida, Katriana
Editor: Sri Haryati
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