Reinventing Fiscal Policy on a Quintuple Helix Perspective Toward Indonesia-World Maritime Interaction: A Case in Batam Free Trade Zone and Lamongan, Indonesia

Abstract

The aim of this study is to examine current fiscal policy and whether it has been applied effectively and then to examine the possibility of its revitalization to support the Indonesian government vision, with Indonesia as an axis of the world maritime industry. The current situation shows that a large financing gap exists for the provision of maritime infrastructure and that the government has offered fiscal incentives to ease the burden of the maritime industry, even though fiscal incentives are not the best approach in terms of providing for the needs of a business entity. In order to provide comprehensive analysis, the quintuple helix theory was utilized, since it covers five different perspectives in examining a problematic situation: economic, politics, media, education, and environment. This study was conducted using a qualitative approach; the data was gathered through a literature study, in-depth interviews, and focus group discussions. The results show that even though a tax incentive is not the main consideration for enterprises to invest in the marine industry in Batam, for example, in shipyard building and repair, however, it contributes indirectly to the economic activity in Batam. On the other hand, these fiscal incentives also bear drawbacks because several industries construct economic transaction schemes solely to get the benefit from incentives by optimizing the loopholes on tax regulations. Therefore, the government needs to reinvent appropriate tax incentives with comprehensive monitoring. On the other hand, in Lamongan, the current local government is pursuing maximization of current fiscal incentives according to its authority and is offering other incentives such as ease of permitting and promotion of local competitiveness. However, the central government, as the main actor who shall actively participate in supporting its vision, “toward Indonesia as a world centre of the maritime industry,” has not showed a real role, unless it is in the stipulation of Lamongan as maritime industrial area. Close coordination between local government and central government must be undertaken to enhance this potential.