JAKARTA (Reuters) - Indonesia President Joko Widodo is set to give final approval in the coming days to a new taxation bill that paves the way for corporate tax cuts, before it is sent to parliament, the chief economic minister said on Thursday.
The bill is one of a set of omnibus laws that Widodo is launching in a bid to revise swathes of existing legislation to improve the investment climate in Southeast Asia's biggest economy.
The bills are a new strategy for Widodo, who began his second term in office in October. In his first term his efforts to open up investment opportunities were often frustrated by red tape and vested interests.
Coordinating Minister for Economic Affairs Airlangga Hartarto told a news conference the taxation bill was on track to be sent to parliament before lawmakers enter recess on Dec. 18.
The tax bill will contain articles backing a plan to cut the corporate tax rate from the current 25% to 22% in 2021 and then to 20% in 2023, as well as rules on taxing electronic transactions among other things, said Suahasil Nazara, vice finance minister.
A second omnibus law labeled the "job creation" bill will be ready next month, Hartarto said. The bill will overrule 82 existing laws and replace some parts of the 2003 Labour Law, Hartarto said.
"The things that are still being discussed technically are working hours, work flexibility and hiring and firing," Hartarto said, noting that wages and severance compensation are also debated.
Some analysts and business leaders say Indonesia's rigid labor laws, which include some of the world's most generous severance payments, act as deterrents to investment.
The job creation bill will also allow the government to establish a land bank, so that investors looking to start a business can be allocated space, said Agrarian and Spatial Planning Minister Sofyan Djalil.