Analysis of Fiscal Incentive Policies in The Electronic Industries Using Regulatory Impact Analysis (RIA)

Abstract

As one of the sectors that are the focus of the development of Making Indonesia 4.0, the electronics industry is one of the sectors that must accelerate itself in facing high competition in the era of the industrial revolution 4.0, where the development of digital technology and global needs for various technology support instruments are very high. The competitiveness of the electronics industry must be a concern; for this reason, this research will analyse the fiscal incentives applied to the electronics industry sector, especially the Government Borne Import Duty (BMDTP). The implementation of RIA supports the policy-making process by including valuable empirical data for a policy decision and constructing a rational decision framework to examine the potential implications of regulatory policy choices.
 Based on the analysis conducted, the data shows that the BMDTP policy is to encourage the ease of importing raw materials that can increase industrial competitiveness; the application of the BMDTP policy is clear and understandable; only inconsistencies in the timing of its implementation, and the performance of the electronics sector industry shows the benefits of implementing the BMDTP policy.

The Electronic Industry Intra-Industry Trade Analysis in 10 Indonesian Trading Partners

“…2021, the trade surplus persists, while the current account deficit is growing to around 0.8% of Gross Domestic Product (GDP) in 2021 and 1.3% in 2022. The small surplus in the balance of payments increased portfolio inflows and foreign direct investment (Vierke et al, 2023). The Ministry of Industry noted that in 2020, the Electronics Industry (Computer Industry, Electronic Goods, Optics, and Electrical Equipment) experienced an increase in export value of 2.49%, from USD 11.38 billion in 2019 to USD 11.66 billion in 2020, while in 2019 the export value of this industry decreased by 0.04%.…”

Enhancing Economic Growth through BMDTP Policy Interventions in the Electronics Industry

“…As governments around the world use tax incentives to stimulate investment in research and development (R&D) [1], Indonesia is at a crossroads as it seeks to harness the potential of these incentives for its electronics industry [2], [3]. In the context of increased global competition and the Fourth Industrial Revolution, the growth of the electronics sector is of paramount importance.…”

“…However, delivering support, particularly to vulnerable firms such as small and medium-sized enterprises, poses significant administrative challenges (O'Reilly et al, 2020) [8]. In such uncertainties, the BMDTP policy emerged as a critical tool for sustaining growth during the pandemic, underscoring its potential to promote economic stability [2].…”