Jakarta,
July 14 (Antara) - Following the endorsement by the House of
Representatives (DPR) of the Tax Amnesty Law recently, the government is
preparing projects to accommodate the repatriation of funds so far
parked abroad.
Finance
Minister Bambang Brodjonegoro had previously forecast that taxpayers
registering to avail the tax amnesty program would declare their
overseas assets, estimated to be around Rp4 thousand trillion, while an
amount to the tune of Rp1 thousand trillion is expected to flow in as
repatriated funds.
The
government hopes to mop up Rp165 trillion in taxes from tax redemptions
and asset declarations prompted by the repatriated money.
To
absorb the funds, the Office of the Coordinating Minister for Economic
Affairs will soon decide upon certain priority projects backed by the
government.
"We
will hold a meeting with the State-owned Enterprises (SOE) to carefully
formulate projects and set criteria to ensure that those placed best
can receive these funds through sale of shares and the issuance of bonds
or securities," Chief Economic Minister Darmin Nasution said in Jakarta
on Thursday.
The
minister said that besides opting to invest in the government's
projects at home, taxpayers availing of the tax amnesty program could
also opt to use their own funds to expand their private businesses in
the country.
The
government is also in the process of identifying activities in which
tax amnesty participants could utilize their repatriated funds, such as
by investing in business within the Special Economic Zone (SEZ).
According
to Law No. 39/2009, an SEZ is a zone with certain borders and
facilities inside Indonesia designed to carry out economic activities.
Besides,
the privatization of SOE companies could also become investment
instrument for tax amnesty program participants who want to park their
funds there. "There are companies that opt for right issues. Even in the
coming one week, we will see the issuance of bonds, securities and real
estate investment funds (DIRE)," Darmin said.
Regarding
DIRE, the office of the Coordinating Minister for Economic Affairs will
invite concerned regional governments and will offer them a cut on the
cost of obtaining land and building rights (BPHTB), particularly for
infrastructure and property businesses which need large swathes of land.
Regarding
the issuance of bonds to accommodate the repatriated funds, the
state-owned electricity company PLN has expressed interest to issue
bonds.
According to PLN President Director Sofyan Basir, PLN is ready to issue bonds to take advantage of the tax amnesty fund.
"The
SOE ministry has asked PLN to take part in the efforts to absorb the
repatriated funds that will flow in once the Tax Amnesty Law is
implemented. We (at the PLN and other SOE companies) have been asked to
gather finance directors to discuss the matter with Mr Aloysius (the
deputy minister of SOE for restructuring and business development),"
noted Sofyan.
However, Sofyan did not disclose the value of the bonds and when these would be issued.
"We
have not taken a decision yet. This is because PLN financing could also
be obtained from deposits and equity, including short term loans," he
said.
He
said the PLN would issue the bonds before the end of the Tax Amnesty
period on March 31, 2017. After all, PLN has many power generating
projects, and a decision has to be made about which ones can be financed
through loans and which ones through bond sale yields.
In
the meantime, state-owned construction company PT Waskita Karya has
also expressed its willingness to use the repatriated funds by issuing
bonds.
"We
have set a target to attract Rp5 trillion from the repatriated funds
through the sale of bonds. We hope we can realize it this year (2016),"
President Director of Waskita Karya M. Choliq said in Jakarta on
Thursday.
Choliq
said the repatriation of the funds from tax amnesty would be very
useful for the company which could access these funds through various
investment instruments.
He
explained the government's policy to facilitate the repatriation of the
funds through the tax amnesty policy and channel these for
infrastructure development and called it a good step.
"Infrastructure
SOEs badly need capital for investment. The repatriation of funds is
expected to help support the success of national development programs,"
said Choliq.
He
said Waskita Karya'sneed for capital expenditure to finance its
contracts in 2016 is in the range of Rp100 trillion. "The options to
obtain financing can be through initial public offering (IPO) and stake
sale, in this case the issuance of bonds," he said. Indonesia Bond Pricing Agency (IBPA) predicted the country's bond market would be brisker following the tax amnesty policy.
"Tax
amnesty would have a significant effect on the bond market in the
country as a result of the expectations that huge amount of funds will
be repatriated into the country," IBPA director Wahyu Trenggono said
here on Thursday.
The
House of Representatives approved and passed tax amnesty bill into law
last month, and this is expected to trigger large scale repatriation of
funds by many rich Indonesians who had parked these abroad. Wahyu said investors would look for investment instruments, such as bonds which give good yield with less risk.
"After
the Brexit sentiment, the bond yield continued to decline to 7.6
percent. When the tax amnesty law was approved, the yield was 7.2
percent," he said.
The decline in bond yield shows the market has developed better confidence, he added.
"This
shows that both foreign and domestic investors see the tax amnesty
policy is having a positive impact and the sentiment would last quite
long," he said.
He said the IBPA has predicted that bonds worth Rp70 trillion are likely to be issued in 2016.
So
far, 28 bonds, including Sharia bonds, have been issued this year,
accounting for a value of Rp43.8 trillion. These were issued by 23
issuers, he said.
Earlier, before the tax amnesty law kicked in, corporate bonds were already on the rising trend, he said. ***3***A014/INE)EDITED BY INE(T.A014/A/BESSR/A. Abdussalam) 14-07-2016 23:49:4 |
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