Indonesia arrests nearly 200 over raging forest fires

Yahoo – AFP, September 16, 2019

The fires -- usually started by illegal burning to clear land for farming -- have
unleashed choking haze across Southeast Asia (AFP Photo/ADEK BERRY)

Indonesia has arrested nearly 200 people over vast forest fires ripping across the archipelago, police said Monday, as toxic haze sends air quality levels plummeting and sparks flight cancellations.

Jakarta has deployed thousands of personnel to battle blazes that are turning land into charred landscapes and consuming forests in Sumatra and Borneo islands, where thousands of schools have been shut over health fears.

The fires -- usually started by illegal burning to clear land for farming -- have unleashed choking haze across Southeast Asia, triggering diplomatic tensions with Indonesia's neighbours.

On Monday, authorities said they had arrested some 185 people suspected of being involved in activities that led to out-of-control fires sweeping the country.

"Indonesian Police will enforce the law against anyone who is proven to have carried out forest and land burning, whether it was done intentionally or through negligence," National Police spokesman Dedi Prasetyo told reporters in Jakarta.

Indonesia's peat fires: a smouldering problem (AFP Photo/John SAEKI)

"This is a last resort. The most important thing is prevention."

Four corporations were also being investigated, he added.

Last week, Indonesia sealed off dozens of plantations where smog-belching fires were blazing, and warned that owners -- including Malaysia and Singapore-based firms -- could face criminal charges if there was evidence of illegal burning.

Some of the most serious fires occur in peatlands, which are highly combustible when drained of water to be converted into agricultural plantations.

Thick haze in Borneo -- where air quality levels have plummeted to "dangerous" levels in some areas -- caused the cancellation of about a dozen flights Sunday, national airline Garuda said.

Rival Lion Air said about 160 Borneo flights had been affected at the weekend.

Meanwhile, nearly 150,000 people have been treated for acute respiratory infections linked to the haze in recent months, according to Indonesian health authorities.

Nearly 150,000 people have been treated for acute respiratory infections 

linked to the haze in recent months (AFP Photo/Str)

While forest fires are an annual problem, the situation this year has been worsened by drier weather in Indonesia, with diplomatic tensions soaring as toxic smog drifts over to neighbouring Malaysia and Singapore.

The haze pushed Singapore's air quality to unhealthy levels for the first time in three years at the weekend.

In 2015, Indonesia suffered its worst forest fires for almost two decades, which dramatically increased its greenhouse gas emissions.

Huge fires tearing through the Amazon are also compounding concerns about the long-term impact of such blazes on keeping global temperature levels stable.

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Indonesia is battling forest fires causing toxic haze across southeast Asia with aircraft, artificial rain and even prayer, President Joko Widodo said during a visit to a hard-hit areahttps://t.co/eyIkMCRURG

— AFP news agency (@AFP) 17 september 2019

The Netherlands overtakes Switzerland in world competitiveness stakes

DutchNews, May 24, 2018

The Netherlands has overtaken Switzerland and moved into fourth place in the latest global competitiveness rankings published by IMD. 

The top five most competitive economies in the world remain the same as in the previous year, but their order changed in the 2018 rankings. The United States, third last year, returns to the top spot, followed by Hong Kong, Singapore, the Netherlands and Switzerland. 

The Netherlands’ advance reflects a ‘balanced’ path to competitiveness, ranking in the top 10 in economic performance, government and business efficiency, IMD said. Switzerland declined mainly due to a slowdown in exports and, to a lesser extent, an increase in perceptions about threats of relocation of R&D facilities. 

The IMD World Competitiveness Center, a research group at IMD business school in Switzerland, has published the rankings every year since 1989. It compiles them using 258 indicators.

‘Hard’ data such as national employment and trade statistics are weighted twice as much as the ‘soft’ data from an executive opinion survey that measures the business perception of issues such as corruption, environmental concerns and quality of life. This year 63 countries were ranked. 

The Netherlands is also currently ranked 4th on the World Economic Forum‘s list of the 138 most competitive countries, behind Switzerland, the United States and Singapore.

Jokowi Returns to Jakarta After S. Korea, Russia Trip

Jakarta Globe, Eko Prasetyo, May 21, 2016

President Joko Widodo welcomed by Vice President Jusuf Kalla at Halim
Perdanakusuma Airport, East Jakarta, Saturday (21/05). After an official visit
to South Korea and Russia, Jokowi has secured partnership agreements
and investment commitments to Indonesia. (State Palace Press Photo/Laily) 

Jakarta. After a week of meetings in South Korea and Russia, President Joko Widodo returned to Jakarta on Saturday (21/05) boasting commitments to bilateral and regional partnerships.

The five day trip resulted in a variety of agreements with South Korean and Russian private business, as well as among Asean.

"In the visit to Korea, there was high enthusiasm from South Korean businessmen. The resulting deals have reached around $18 billion," Foreign Minster Retno Marsudi said in a statement at Halim Perdanakusuma Airport, East Jakarta.

At least seven agreements were signed in South Korea, including in the maritime, creative industry, sports, special economic regions and corruption eradication sectors.

In Russia, Joko met with President Vladimir Putin to enhance partnerships in palm exports, fisheries and investment diversification.

"All the potential will be followed up," Retno said, adding that Russia has also committed to constructing a $13 billion oil refinery. “Also, there were five agreements on defense, fishing, culture, national archive and foreign ministry archives.”

During the Asean-Russia Summit, Joko said partnerships should be focused on energy, small-medium enterprises and connectivity, while maintaining peace and security in the region.

Joko met with the Vietnamese and Singaporean Prime Ministers to discuss the realization of the 2018 $10 billion trade target and continuing maritime delimitations.

President Joko Widodo inaugurated as Seoul's honorary citizen, during his state
visit to the South Korean capital on Tuesday (17/05). (State Palace Press Photo/Intan)

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Panama Papers showed vulnerability of whole system: Panama president

Yahoo – AFP, May 3, 2016

Panama's President Juan Carlos Varela delivers keynote address at a luncheon
during the Washington Conference on the Americas at the State Department on
May 3, 2016 in Washington, DC (AFP Photo/Mandel Ngan)

Washington (AFP) - The scandal triggered by the Panama Papers leak of information on how and where the world's wealthy stash funds to avoid detection or taxes underscored many countries' vulnerabilities, President Juan Carlos Varela said Tuesday.

Speaking at the State Department in Washington, the Panamanian president said the documents "reveal a worldwide problem, that involves many countries with legal and financial institutions" vulnerable to actions "that are not in the public interest."

Mossack Fonseca's founder lawyer Ramon

 Fonseca is a friend of Panama's President 

Juan Carlos Varela (shown here) and, until 

March, served as a senior advisor in his 

cabinet (AFP Photo/Rodrigo Arangua)

To that end, countries need to improve transparency and information sharing, Varela argued.

"We urge the international community to maintain a respectful dialogue through diplomatic channels," he added.

Panama and the United States last week signed an agreement on sharing of back account information in a step Panama's finance minister hailed as proof of his country's cooperation in fighting tax evasion.

The bilateral agreement comes weeks after the Panama Papers, a series of reports around the world revealing how one Panamanian law firm set up offshore entities to help the world's wealthy stash their assets.

Following the revelations, Panama has come under intense international pressure to open its financial sector to greater transparency or risk being put back on a global "tax haven" blacklist.

While the government has long said it is committed to that goal and has made some reforms in that direction, it has so far not signed up to an international standard on automatic sharing of tax information set by the Organisation for Economic Cooperation and Development.

Panama's President Juan Carlos Varela, left, sits with Singapore's President 

Tony Tan, right, for a meeting at the Istana or presidential palace on Friday, 

April 22, 2016, in Singapore. (AP Photo/Wong Maye-E)

Related Article:

Switzerland, Singapore join clampdown on bank secrecy (Update)

Why few Americans appear in the Panama Papers

Yahoo –AFP, Jeremy Tordjman, April 8, 2016

Issues of the German daily "Sueddeutsche Zeitung" featuring the "Panama Papers"
 with illustrations by German artist Peter M Hoffmann depicting heads of state
(AFP Photo/Christof Stache)

Washington (AFP) - From Russia to China, and Britain to Iceland, the revelations of the "Panama Papers" have tarnished officials and the wealthy over the implication that they hide riches offshore.

But one group is not there: prominent Americans. US tycoons and politicians are notably absent in the leaked files of the Panama law offices of Mossack Fonseca, which created thousands of shell companies worldwide to hide the identities of their ultimate owners, some of whom may have been evading taxes.

There is Hollywood mogul David Geffen, the Asylum Records and Dreamworks SKG co-founder. But there are no Americans comparable to Iceland's prime minister, or henchmen of the Russian president -- all in the Panama records -- at least in what has been disclosed so far.

"There are a lot of Americans, but they are more like private citizens," said Marina Walker Guevara, deputy director of the International Consortium of Investigative Journalists which coordinated the investigation and release of the Panama Papers.

However, that hardly means Americans have fully embraced financial transparency, she told AFP.

"It doesn't show that the US is outside of the offshore system; the US is actually a big player."

The Tax Justice Network's Financial Secrecy Index (AFP Photo/Alain

Bommenel, Jean Michel Cornu)

Other options

One possible reason for their small presence in the Panama documents is that US citizens hoping to hide funds and activities offshore were not drawn to Spanish-speaking Panama as a haven, when there are options like the British Virgin islands and the Cayman Islands.

"Americans have so many tax havens to choose from," said Nicholas Shaxson, author of "Treasure Islands: Tax Havens and the Men who Stole the World," a 2011 book on secretive centers for hiding money.

Indeed, Americans do not have to go abroad to hide funds and activities behind anonymous corporations: they can create them at home.

States like Delaware and Wyoming allow the creation of such companies, for just a few hundred dollars, that conceal their ultimate financial beneficiary.

And while US banks are normally required to "know their customers," they can bypass that rule and open accounts for shell companies, ensuring total discretion for someone who wants to move money around quietly.

The US Treasury is moving to stop the practice, which can be used by arms and drug traffickers to launder funds and lands the United States in third in the Tax Justice Network's ranking of the world's least transparent countries, well above Panama.

"We're in the last stages of drafting the final rule," a Treasury official told AFP.

The most popular tax havens (AFP Photo/Laurence Saubadu, Jonathan Jacobsen)

'Very frightened'

But there is another possible reason that Americans are not so visible in the Panama Papers.

Spurred by the need to halt huge, blatant tax evasion by Americans using foreign banks, Washington in recent years has cracked down with lawsuits, arrests and tighter laws that have targeted both the banks offering safe haven and those hiding money in them.

Swiss banks were hit in particular. UBS and Credit Suisse, respectively, had to pay fines of $780 million and $2.6 billion for having helped US citizens hide money.

The result, Shaxson said, is that now "there are a few tax havens around the world that are very frightened of American clients, because they know that the US can hit them."

Nevertheless, the seeming absence of Americans from the Panama Papers has fed conspiracy theories, such as claims the leak of the files was orchestrated by the CIA to destabilize Russia and other countries.

But Walker Guevara said there is still a lot to be examined in the trove of 11.5 million documents that make up the Panama Papers, and there could be more about Americans in there.

"It's a huge trove of documents and maybe there's something hiding there that we haven't found yet. It's a work in progress."

"@USTreasury has taken new action to prevent more corporations from taking advantage of one of the most insidious tax loopholes" —@POTUS

— The White House (@WhiteHouse) April 5, 2016

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Tax Office Wants to See Your Credit Card Bills

Jakarta Globe, Tabita Diela, March 29, 2016

Finance Minister Bambang Brodjonegoro is looking for ways to boost tax revenue.
(Antara Photo/Irfan Anshori)

Jakarta. The tax office seeks to access millions of Indonesian credit card bills as part of its attempt to boost tax revenue and fund the 2016 state budget, Finance Minister Bambang Brodjonegoro told reporters on Tuesday (29/03).

The Directorate General of Taxation revealed its plans to access data on bank customer's savings accounts last year, prompting bankers to retort with protection measures as part of bank secrecy laws passed in 1998.

As a result, the government is in the process of revising regulations that will impose a mandatory requirement for banks to provide customers' credit card bills to the tax office, Bambang added.

At present, the tax office solely relies on taxpayers to file a self-assisted tax return using their tax registration number (NPWP). However, these often lack relevant details and other information the tax office needs to verify whether a would-be taxpayer has indeed paid all taxes.

"Without enough data, we are basically going to war without any weapon. Our weapon is data, but we still need [the requisite authority and] more access to banks and [Communication and Information Technology] Ministry data," Bambang said.

Mind the gap

According to the 2016 state budget, the tax office must collect at least Rp 1,360 trillion ($100 billion) in taxes this year, which is 28 percent higher than last year's tax revenue realization of Rp 1,061 trillion, as the government needs more money to fund more infrastructure projects.

Last year, the government only collected Rp 9 trillion in income tax from 900,000 individual taxpayers. Only 9.8 million of the total of 27,571,471 registered individual taxpayers filed tax returns, when there should be more than 120 million in the population of around 250 million.

Other measures

The tax office has also taken steps to cooperate with the Attorney General's Office (AGO), the State Intelligence Agency (BIN) and the National Police in order to gather information on high net worth individuals.

The tax office also seeks to tighten supervision of Indonesia's growing e-commerce sector, with particular attention to payment of value added tax for each transaction over the Internet.

It has also officially introduced, in January, an online payment system that is expected to boost transparency and eventually replace the current manual method of record keeping.

Not so secret

Meanwhile, Singapore has said it would automatically start sharing information with foreign tax authorities from 2018, in line with an agreement signed by more than 51 countries in 2014 that seeks to put an end to tax evasion. As a result, the days of undisclosed assets held offshore may become a thing of the past.

For local banks in Indonesia and elsewhere, the pressure on Singapore is opening up opportunities at home.

To yield greater payment of taxes in Indonesia, a Tax Amnesty bill is currently being deliberated by the House of Representatives with the hope that money parked in offshore accounts will be repatriated to Indonesia.

Indonesia is Singapore's main source of wealth assets, where some $225 billion is believed to be parked in Singapore alone.

"Indonesia accounts for 30-50 percent of business for private banks in Singapore," a Singapore-based banker at a top global wealth manager told Reuters last year.

Editing by Mika Vaswani

Indonesia punishes firms over deadly forest fires

Yahoo – AFP, December 22, 2015

Indonesia is punishing more than 20 companies in an unprecedented move for
starting deadly forest fires that killed 19 people (AFP Photo/Adek Berry)

Jakarta (AFP) - Indonesia is punishing more than 20 companies in an unprecedented move for starting deadly forest fires that killed 19 people, a government official said Tuesday.

Three companies have been shut down permanently after having their licences revoked over their role in the blazes that choked vast expanses of southeast Asia with acrid haze and cost Indonesia $16 billion.

It is the first time the government has revoked company licences over forest fires, an annual occurrence caused by slash-and-burn land clearance.

The environment ministry also froze the operations of 14 companies and said they face closure if they do not meet the government’s demands over fire prevention.

Several other companies have been given a strong warning and will be put under close supervision.

"We have sanctioned 23 companies in total, ranging from administrative sanctions to license revocation, while 33 others are still in the process, they could have their licenses revoked too if they are found guilty," environment ministry official Kemal Amas told AFP.

The ministry has been investigating 276 companies in total since the fires broke out in September.

Three companies have been shut down permanently by Indonesia after having

 their licences revoked over their role in the blazes that choked vast expanses of 

southeast Asia with acrid haze (AFP Photo/Adek Berry)

"We need firmer law enforcement so that this catastrophe does not repeat itself, it’s been going on for 18 years but nobody has learnt their lesson," Amas said.

Amas said the ministry was also working hard to restore the forests and farmland destroyed in the fires.

Activists welcomed the government’s new commitment to punish firms.

The Indonesian Forum for Environment said it was unheard of for the government to revoke licences, as many companies previously avoided facing trial.

"The minister has the courage to not only freeze the companies' operation but also chase the owners in a civil case, this is great and this must be guarded carefully," Kurniawan told AFP.

"In the past some people were named suspects, but for them to actually lose their licenses, this is the first time," he said.

More than half a million people suffered acute respiratory infections in Indonesia because of the haze, while many in neighbouring Singapore and Malaysia also fell ill.

Joko Cuts Short US Trip to Deal With Fire, Haze Crisis

Jakarta Globe, Basten Gokkon, October 27, 2015

President Joko Widodo inspects a firefighting operation on burning peat forest in
Pulang Pisau district, Central Kalimantan, on Sept. 24. The president has cut short
 his inaugural visit to the United States to coordinate a response to the worsening
forest fires. (AFP Photo/Romeo Gacad)

Jakarta. President Joko Widodo has decided to cut short his first official visit to the United States as a forest fire crisis blazes out of control back home.

“The president has received recent updates from the minister for politics, legal and security affairs minister regarding the haze that has affected more Indonesian people,” Arrmanatha Nasir, a spokesman for the Foreign Ministry, told the Jakarta Globe late on Monday.

He said Joko and part of his delegation would immediately return home on Tuesday after attending scheduled events in Washington, D.C., where the president met with President Barack Obama, congressmen and US executives on Monday.

Joko’s return means he will not attend much-anticipated meetings with technology executives from Apple, Google and Microsoft, among others. Representing him in Silicon Valley instead, Arrmanatha said, will be the communications and trade ministers, as well as the head of the Investment Coordinating Board (BKPM).

Arrmanatha said the president would fly to either South Sumatra or Central Kalimantan once he arrives back in the country. Both provinces are among the hardest hit by forest fires generating intense volumes of health-threatening haze.

A top legislator earlier on Monday lashed out at the president for going abroad just as the fire and haze crisis worsens. Up to three-quarters of Indonesia is affected to varying degrees by the haze.

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Indonesia fires can't be put out, Malaysian minister warns
Singapore banks urged to curtail loans to haze-linked firms

#INFOGRAPHIC Updated map and pollution data on the Southeast Asian haze @AFP pic.twitter.com/rIWRmxjas1

— Agence France-Presse (@AFP) October 27, 2015

Singapore banks urged to curtail loans to haze-linked firms

Yahoo – AFP, Martin Abbugao, 9 Oct 2015

A worker waters a field as downtown buildings are shrouded in smog in
Singapore on October 5, 2015 (AFP Photo/Roslan Rahman)

Singapore (AFP) - An umbrella group of local and foreign banks in smog-hit Singapore has urged members to make "sustainable development" part of their lending requirements, stepping up pressure on companies linked to land-clearing fires in Indonesia.

The 158-member Association of Banks in Singapore (ABS) on Thursday issued guidelines for the inclusion of greenhouse gas emissions, deforestation, forest degradation and biodiversity loss among the criteria for approving commercial loans.

The move came in the wake of fires illegally started to clear land for plantations on Sumatra island and the Indonesian part of Borneo, which have shrouded Singapore and Malaysia in acrid smoke since early September.

"The banking sector in Singapore wants to play a bigger role in driving responsible business and long-term sustainable development," ABS director Ong-Ang Ai Boon said in a statement.

The smoky haze has also reached the popular Thai holiday islands of Phuket and Samui, forcing several planes packed with beach-bound tourists to turn back.

Palm oil and pulp and paper companies are believed to be the main culprits behind the use of burning to clear massive tracts of land for their plantations, but prosecution by Indonesian authorities has been rare, prompting affected countries like Singapore to resort to economic pressure.

Singapore's biggest supermarket chain, NTUC Fairprice, this week withdrew from its shelves all paper products sourced from Indonesian-owned Asia Pulp & Paper (APP), which has corporate offices in the city-state.

The company's suppliers are suspected of starting forest fires in Indonesia.

The Fullerton Hotel is blanketed in thick haze, in Singapore, on September 24,

2015 (AFP Photo/Roslan Rahman)

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Singapore moves against Indonesian firms over haze
Malaysia shuts schools as choking smog worsens

Indonesia Sets Second Tax Amnesty Program for April 29

Jakarta Globe, Margye J. Waisapy, Apr 24, 2015

The directorate general of tax set to launch the second sunset policy tax program
 by the end of this month as a way to help reach 2015’s tax revenue target.
Antara Photo/Zabur Karuru)

Jakarta. Indonesia’s directorate general of tax is set to launch its second tax amnesty program on April 29, as a way to help reach the government’s tax revenue target of Rp 1,249.3 trillion ($92 billion) for 2015.

This policy allows corporate and individual taxpayers to pay and report back taxes without penalty or interest charges for up to one year from the start of the amnesty date.

President Joko Widodo will set the policy on April 29, a day before the deadline for companies to report taxes. The tax office will start taking in back taxes in May.

This is the second so-called sunset policy — for either voluntary or mandatory program — after the first one in 2008 helped increase tax revenue by about a third to a total of Rp 566 trillion ($44 billion).

“I can’t predict this year’s tax revenue, but there was a 30 percent growth in 2008, and I hope that it can grow by over 30 percent this year,” director general of taxation Sigit Priadi Pramudito said on Thursday.

GlobeAsia

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Business Lobby Urges Tax Amnesty for Reinvestment in Indonesia

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Indonesia to Work With Singapore on E-Government Program

Jakarta Globe, Ezra Sihite, Jan 27, 2015

Yuddy Chrisnandi, the minister for administrative and bureaucratic reform, wants
 Indonesia to emulate Singapore's efficient bureaucracy. (Antara Photo/Widodo S. Jusuf)

Jakarta. The Indonesian government plans to enlist the help of Singaporean authorities in implementing its e-government system, having already pledged to get the support of the South Korean and Australian governments.

The three countries rank in the top of the 2014 United Nation e-Government Survey, while Indonesia came in at 105th.

“Other than South Korea, we also want to work with Singapore, whose e-government system is good,” Yuddy Chrisnandi, the minister for administrative and bureaucratic reform, said in Jakarta on Tuesday.

“Singapore has made the best use of the e-government system to disseminate information to the people, businesses and state officials,” he added.

The e-government system, in which administrative affairs will be computerized, is expected to result in a significantly streamlined bureaucracy and shorter waiting times for things like permit approvals and the issuance of ID cards and other government-sanctioned documents.

Singapore has implemented an e-government since the 1980s, to which it attributes hefty savings of time and money for the government.

Business Lobby Urges Tax Amnesty for Reinvestment in Indonesia

Jakarta Globe, Muhamad Al Azhari, Erwida Maulia & Agustiyanti, Dec 22, 2014

By 2016, about $200 billion of assets by high net-worth individuals in Indonesia will
 be held in Singapore in the form of bank deposits, stocks, fixed income and properties,
according to McKinsey & Company. (AFP Photo/Roslan Rahman)

Jakarta. A leading business lobby with strong ties to the administration of President Joko Widodo has called for a tax amnesty, in which the authorities will waive off past taxes and penalties to conglomerates and individuals parking billions of dollars worth of funds overseas, in a bid to reinvest that money in Indonesia.

Hariyadi Sukamdani, the chairman of the Indonesian Employers Association, or Apindo, made the call last week amid recent sharp volatility in the rupiah exchange rate on expectations of a huge outflow of funds from the country once the US Federal Reserve raises its benchmark interest rate.

“It may sound unfair that tax offenders get an amnesty. But the question is, do we want to move forward or keep looking backward?” Hariyadi said.

Among those that would benefit under such an amnesty are conglomerates and banking executives who defaulted on government bailout funds in the wake of the 1998 Asian financial crisis and stashed the money in Singapore.

The government back then spent more than Rp 460 trillion ($37.1 billion) in liquidity to bail out several banks that were devastated by the crisis, which included a sharp fall in the value of the rupiah.

The government still maintains a list of the companies and individuals that fled with the money, and has prosecuted only a handful.

Since the crisis many Indonesian conglomerates continue to park their money in Singapore in a bid to keep it beyond the reach of the Indonesian authorities and to take advantage of the city-state’s position as a global financial services hub.

“Why am I raising this issue?” Hariyadi went on.

“We all know billions of dollars of money parked in Singapore is the money of Indonesian tycoons. This money has been used by financial corporations there to speculate and even buy assets in our country. Isn’t that silly?

“Just look at Italy; it is a country of mafia [sic], yet they managed to bring back more than $100 billion to their country from a tax amnesty program.”

Italy’s tax amnesty program was introduced in 2001, and by 2009 had yielded some 80 billion euros ($97.8 billion) of the 500 billion euros that the country’s central bank estimated was held by its citizens in undeclared funds overseas.

So-called high-net-worth individuals in Indonesia, with assets of at least $1 million, will hold a projected $250 billion overseas by 2016, according to management consulting firm McKinsey & Company.

Four-fifths of that amount, or approximately $200 billion, will be held in Singapore in the form of bank deposits, stocks, fixed income and properties.

The figures, released last week, come from McKinsey’s survey of 60 high-net-worth individuals, 83 percent of whom said they had foreign bank accounts and kept 40 percent to 50 percent of their financial assets overseas.

McKinsey partner Guillame de Gantes said the funds could benefit Indonesia’s financial markets if kept inside the country.

Citing the findings from the survey, de Gantes named business considerations as the main factor for keeping money overseas, followed by the availability of banking products, tax advantages, immigration issues, risks avoidance and, lastly, security and privacy.

Finance Minister Bambang Brodjonegoro said his ministry was considering some tax incentives, including a tax amnesty and the omission of double taxation, to lure wealthy Indonesians to withdraw their assets from abroad and deposit them at home.

“If we want the money to quickly come in, tax amnesty is the choice. We’re considering [the option], but will need legislation for that. The tax law must be amended,” Bambang said.

A lighter version of a tax amnesty was implemented by the administration of the former president, Susilo Bambang Yudhoyono, in 2008, through the so-called sunset policy.

This policy allows taxpayers to pay unreported or back taxes without the penalty of interest charges. The purpose of the program is to boost the number of registered taxpayers.

Bambang said that eliminating double taxation may also have instant results in terms of repatriating money to Indonesia. “We must implement those policies slowly, though, because we have to examine each option,” he said.

Earlier, a deputy commissioner for banking supervision at Indonesia’s Financial Service Authority (OJK), Mulya Siregar, said as many as 40,450 Indonesians were currently classified as high-net-worth individuals with a combined wealth inside the country totaling $143 billion. The number of these individuals grows by around 7.5 percent annually.

“That exceeds the growth rate in Singapore, at 4.5 percent, and India, which is 2 percent,” Mulya said.

Ragimun, a researcher with the Finance Ministry’s fiscal policy office, said that although a tax amnesty was an option worthy of consideration, it should not be implemented in the near future.

“One of the flaws of a tax amnesty, if implemented in Indonesia, is that it may lead to a range of violations and moral hazards, because access to information here and other facilities needed as prerequisites for a tax amnesty are not yet adequate,” he said in an analysis published on the Finance Ministry’s website.

“A tax amnesty [plan] must be delayed pending [...] legal tools to support implementation of the policy.”

Ragimun added that public resistance to a tax amnesty remained high, suggesting that alternatives like the sunset policy and tax holidays would make taxpayers more compliant with the law and subsequently boost Indonesia’s tax revenue.

Revrisond Baswir, a political economist at Yogyakarta’s Gadjah Mada University, was quick to slam Apindo’s suggestion.

“Apindo was among those that pushed strongly for the [subsidized] fuel price hike, which is certainly burdening the people, from the higher price of fuel to other things,” he said.

“Now they’re asking for a tax amnesty. So there’s an impression here that while people at large are made to bear a greater burdens, the rich will enjoy a lighter burden.”

Revrisond added there was no guarantee that a tax amnesty would lure wealthy Indonesians to keep most of their funds inside the country, saying concerns over domestic political stability were the main factor driving them to look overseas.

“Even Indonesia’s high interest rate is proven to have no effect [to lure them to keep their money here]. There are many other factors to consider, the most important being political stability,” he said.

Revrisond added that with most of Indonesian high-net-worth individuals being of ethnic Chinese descent, the issue of social and income gaps between them and “native” Indonesians might also become an issue once again, citing the May 1998 riots that targeted Chinese-Indonesians and their businesses.

The rioting, reportedly instigated by elements in the military, also included the rape of hundreds of Chinese-Indonesian women, and resulted in countless Chinese-Indonesians fleeing the country and not returning.

“The problem is, we’ve never been open about this wide income and social gap in our society, which has caused the feeling of insecurity to linger [among ‘native’ Indonesians] and the wealthy Chinese-Indonesians to remain on guard,” Revrisond said.

This is what has kept wealthy Chinese-Indonesians putting a considerable amount of their money abroad rather than leaving it in the country, he added.

Further Coverage

Editorial: Tax Amnesty Without Trust Is Not Enough

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Indonesia, Singapore Agree to Step Up Sharing of Tax Information