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Indonesia Sustainable Human Capital Development for Inclusive Innovation

Highly educated and well trained human resources are critical for an innovation driven economy and for Indonesia to sustain its future economic growth and to improve social welfare, the government has issued regulations, in which domestic taxpayers who conduct research and development (R&D) could obtain a gross income as high as 300% of the cost of their R&D activities, though the R&D activities must be conducted in Indonesia and produce new inventions, innovations, new technology and/or a transfer of technology to develop industries.

Also, domestic taxpayers who open a new business or expand their existing businesses in labours intensive sectors could enjoy a net income tax deduction of 60% of the capital they invested as fixed assets and local taxpayers who organize working programs, internships and/or educational activities to develop human resources based on a certain competency could obtain a gross income as high as 200% of the funds they had spent for the activities. Indonesia is learning from Singapore and South Korea, which have strong and committed governments that proactively set policy and provide incentives to push human capital development.

They strongly believe that high-quality human capital is key to maintaining their global competitiveness and to sustain growth.

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