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JAKARTA. Ministry of Finance has prepared five fiscal strategies in responding to the sluggish economy, despite the government has relaxed some monetary policies.
The strategies include fostering the utilization of repatriation funds of tax amnesty to have significant impacts for economic activities. “I am conducting analysis on employing repatriation funds as the sources of development funding,” she said.
Another strategy is to monitor the utilization of state capital participation (PMN) in some state ownership enterprises (SOEs). In this case, the employment of PMN funds is supposed to increase the SOEs leverage and bring significant impacts to economic activities.
As part of the strategies, Sri will also review the provision of People’s Business Credit (KUR) for the segment of Small and Medium Enterprises. The Minister will ensure that the provision of KUR has been effective in jacking up national economy.
The fourth strategy is to reduce the inter-regions economic gap. Some regions, which depend on commodity sector experience slow economic growth when the commodities prices dropped.
Aside of the four strategies, the government will maximize the absorption of capital expenditure budgets of ministries and government institutions to stimulate economy. Sri is optimistic that this year the ministries and government institutions may absorb around 95%-100% of the expenditure budgets.
Tax revenues
Indonesia need fiscal breakthroughs to boost the economy. Previously, government predicted that national economy will grow at around 5%-5.1% during this year, or lower than 5.3% target of 2016 State Budget.
Organization for Economic Co-operation and Development (OECD) through its report mentions that an efficient public expenditure is a key to strengthen Indonesia’s economy. OECD estimates that Indonesia has managed well economic development during the last few years.
However, Indonesia’s development still has rooms for improvement. Secretary General of OECD Angel Gurria said that the tax revenue is one of crucial problems in Indonesia’s development. The tax revenues are much lower than the tax potentials. Therefore, the government has to expand the tax basis and improve the tax compliance in order to boost tax revenues.
According to OECD, to date Indonesia only has 27 million taxpayers out of 260 million population. However, out of that number, only 900,000 taxpayers comply with the tax obligations. In order to expand the tax basis and improve the tax compliance, OECD recommends Indonesia to apply digital tax systems, starting from the processes of reporting to auditing processes.
Gurria added that the public confidence to tax authority is essential to improve the tax compliance. Government also needs to convince taxpayers to not avoid their obligations. In this case, the taxpayers can mention their assets based on their own versions, but the government will be able to detect the exact amount the assets, Gurria added.
OECD also recommends the government to increase technical capacities of local governments in improving local’s expenditure and budget administration. In a short time period, OECD recommends to channel the obtained grants to national priority sectors. (Translator: Muhammad Farid)
