By:
Team of Hukumindo
After the COVID-19 pandemic, the Indonesian economy has succeeded in showing its resilience, marked by economic growth in 2022 reaching 5.31 percent. This value is higher than economic growth in 2021 which reached 3.70 percent. Realization of foreign direct investment (PMA) also managed to reach IDR 654.4 trillion. The flow of investment into Indonesia will certainly bring in new capital to help finance development, create jobs and transfer technology. Realizing the importance of investment for the stability of the Indonesian economy, President Joko Widodo has made efforts to increase the entry of foreign investment into Indonesia. One of the efforts being considered to attract foreign investors is the plan to implement the Golden Visa policy. Currently, plans for implementing the Golden Visa policy are still being formulated by the relevant ministries/institutions, after previously discussing them with the President. In his thanksgiving speech for the 73rd Immigration Service Day on January 26 2023, the Minister of Law and Human Rights (HAM) specifically asked the ranks of the Directorate General of Immigration to carry out thorough research and make comparisons with other countries before determining the Golden Visa policy.[1]
General Description of Golden Visa
Based on the OECD definition, the Residency by Investment and Citizenship by Investment schemes, or often referred to as 'Golden Visa' and 'Golden Passport", are policies implemented by a country through a mechanism for providing permit facilities. residence or citizenship for foreign nationals (WNA) through investment or paying certain fees. Several countries use various terms in naming the Golden Visa. Indonesia could use other terms, for example Visa or Limited Stay Permit. Golden Visa holders will enjoy exclusive benefits that are not received by visa holders in general, including easier and faster procedures and requirements for visa applications and immigration matters, mobility with multiple entries, longer stay periods, the right to own assets in the country, as well as being a fast track route for applying for citizenship.[2]
The Golden Visa scheme is expected to attract more foreign investment in various instruments, whether in investment funds, government bonds, company shares or property. In 2018, Transparency International conducted a study and estimated that in the 2008-2018 period, the European Union received around EUR 25 billion (Rp. 407 trillion) in the form of PMA thanks to the implementation of the Golden Visa scheme in its member countries. Although the Golden Visa is associated with investor visas, some countries also open opportunities for non-investor individuals with special skills to obtain a Golden Visa.[3]
By 2022, it is estimated that more than 60 countries will have implemented investment-based residency and citizenship policies. The practice of granting residence permits and investment-based citizenship was first carried out by the country of Saint Kitts & Nevis, a small country with two islands in the Caribbean region, in 1984. By providing a minimum donation of 150 thousand US dollars (Rp. 2.2 billion) to the Sustainable Growth Fund instrument or have investments in the real estate sector worth at least 200 thousand US dollars (Rp. 3 billion), a foreigner can obtain Saint Kitts & Nevis citizenship. In 1986 Canada began implementing a policy of granting investment-based residence permits through the Immigrant Investor Program (this program was discontinued in 2014), followed by the United States in 1990. The United States, through the EB-5 Immigrant Investor Program, provides conditional residence permits for 2 years and can be extended for foreign investors with a minimum investment value of 1.05 million US dollars (Rp. 16 billion).[4]
The global financial crisis that occurred in 2007-2008 made the practice of granting Golden Visas increasingly common among European countries in the context of economic recovery. The Spanish government through the Investor Visa provides residence permits for investors who (i) make an investment of 500 thousand euros (Rp. 8 billion) in the real estate sector, (ii) hold company shares or bank deposits with a minimum value of 1 million euros (Rp. 16 billion), ( iii) invest in government bonds of at least 2 million euros (Rp. 32 billion); or (iv) starting a specific type of business in Spain that creates jobs, has a socio-economic impact on local communities, or provides technology transfer.[5]
Not only countries in the Americas and Europe have the Golden Visa program, developing countries in the Asia Pacific and Africa regions also see the Golden Visa as an opportunity to boost incoming foreign investment. The United Arab Emirates (PEA) government provides Golden Visas for 5 or 10 year residence permits for investors, entrepreneurs, humanitarian workers, outstanding students and graduates, as well as individuals with special skills such as doctors, scientists or arts workers. The Thai government, through the Elite Residence Program, provides exclusive residence permits to foreigners for 5 years by paying a fee of 600 thousand baht (Rp. 265 million) or for 20 years by paying a fee of 1 million baht (Rp. 442 million).[6]
Negative Impacts That May Arise
For countries that implement the Golden Visa granting policy, this policy provides economic and fiscal benefits through encouraging private sector investment and increasing state fiscal revenues. However, granting a Golden Visa also does not rule out the possibility of negative implications, particularly causing fiscal and macroeconomic risks such as rapid economic fluctuations (boom and bust cycles) and property bubbles. Investment flows coming from the Golden Visa granting mechanism tend to be vulnerable and easily influenced by external factors, for example if a more attractive investment scheme is offered by another country, it does not rule out the possibility that investors will withdraw their investment from one country and move their investment to another country. which has a more attractive investment scheme.[7]
The policy of granting residence permits and investment-based citizenship has also received criticism because the policy is associated with selling citizenship. International law recognizes two principles related to citizenship, namely jus soli (citizenship is determined by place of birth) and jus sanguinis (citizenship is determined by blood ties). Granting citizenship based on investment is considered to deviate from these two principles.[8]
Apart from that, the Golden Visa scheme also poses a risk of misuse of residence and business permits, tax evasion, money laundering and funding of terrorist groups.[9] The negative implications of the policy of granting residence permits and investment-based citizenship are also not only worried by the granting country, but also by third party countries. In January 2022, the European Commission proposed terminating the bilateral agreement regarding the visa-free program with Vanuatu due to abuse of Vanuatu's Citizenship by Investment Program. To attract investors, the Vanuatu government is promoting the Citizenship by Investment program with the promise of providing visa-free access to the European Union, even though the bilateral agreement between the European Union and Vanuatu is not intended to provide an opportunity for foreigners who obtain Vanuatu citizenship to avoid the Union's visa requirements. Europe.[10]
Possible Implementation of the Golden Visa in Indonesia
Based on Law (UU) Number 6 of 2011 concerning Immigration and Government Regulation (PP) Number 31 of 2013 and its amendments, as well as Permenkumham Number 29 of 2021 concerning Visas and Stay Permits, foreigners who make foreign investments in Indonesian territory can apply for a Visa Limited Stay and Limited Stay Permit. The Ministry of Law and Human Rights has officially implemented the Second Home Visa as a form of new facility for global investors who wish to stay longer in Indonesia. A Second Home Visa is given to foreigners to stay in Indonesian territory for a period of 5 years or 10 years. Foreigners holding a Second Home Visa can carry out activities, including as investors, tourists and elderly/retired tourists. A Second Home Visa can also be applied for family members of the main Second Home Visa holder, namely children, husband/wife, or parents.[11]
Based on regulations at the level of the Directorate General of Immigration, Ministry of Law and Human Rights, applications for Visas and Limited Stay Permits for Second Homes are submitted by Foreigners or Guarantors by attaching Proof of Funds in the form of (i) an account belonging to the foreigner concerned at a State-Owned Bank with a value of at least IDR 2 billion or proof of property ownership in Indonesia in the luxury category. The fee charged for applying for a Second Home Visa is IDR 3 million per person for the Main Visa Holder and IDR 2 million per person for participating family members. Regarding plans to implement the Golden Visa policy, Indonesia is currently reviewing so that the Golden Visa policy can perfect the Second Home Visa policy that has been launched, and is expected to attract international target investors and business people, global talents and elderly international tourists who meet the requirements. It is hoped that the Golden Visa can become a 'golden ticket' for potential individuals from various countries to develop their capital and abilities in order to help increase employment opportunities and develop Indonesia's national economy.[12]
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*) For further information please contact:
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Jakarta - Indonesia.
E-mail: mahmudkusuma22@gmail.com
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References:
1. "Golden Visa: Keuntungan, Kerugian, dan Kemungkinan Penerapannya di Indonesia", https://setkab.go.id/, Lusia Novita Sari, 2 April 2023, Diakses pada tanggal 8 Maret 2024, Link: https://setkab.go.id/golden-visa-keuntungan-kerugian-dan-kemungkinan-penerapannya-di-indonesia/
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid.
6. Ibid.
7. Ibid.
8. Ibid.
9. Ibid.
10. Ibid.
11. Ibid.
12. Ibid.
