Tax amnesty less significant for credit growth

JAKARTA. The first phase of tax amnesty might raise Rp 93.8 trillion of redemption fees and Rp 137 trillion of repatriation funds. However, several bankers said that the tax amnesty revenues are insufficient to boost liquidity.

President Director of Bank Central Asia (BCA) Jahja Setiaatmadja queries that the tax amnesty revenues may drive banking liquidity and credit. Jahja added that the tax amnesty revenues will become idle funds if the tax amnesty participants prefer to invest their funds by purchasing stocks.

According to Jahja, some repatriation funds flow to banking sector under the scheme of debts settlement. During the first period of tax amnesty, an Rp 37.1 trillion of redemption fews flew to BCA. However, the funds will reduce the interest rate income, since the debtors tend to settle the credit before the maturity period.

Meanwhile, President Director of Maybank Indonesia Taswin Zakaria admitted that the amount of tax amnesty revenues, which flew to the bank, is lower than the tax amnesty socialization cost spent by Maybank Indonesia. He is pessimistic that the bank will raise more tax amnesty revenues during the second phase of the program.

The bankers assume that most of tax amnesty participants allocate their repatriation funds to stock exchange products, such as multi fund.
In the periode of June to the middle of August 2016, Financial Service Authority (FSA) recorded additional 35 multi fund products, while investment units increase from Rp 207.74 billion to Rp 214.42 billion.

Vice President Head of Investment Division at BNI Asset Management Hanif Mantiq said that tax amnsty participants have allocated hundreds billion of funds to the product of BNI-AM Dana Likuid (liquid funds) and dozens billion of funds to the product of BNI-AM Dana Berbunga Tiga (open-end fund). However, Hanif refused to specify the details of the amount of funds.

Director of PT Panin Asset Management (PAM) Rudiyanto said that some tax amnesty participants have opened accounts in the financial institution to allocate their repatriation funds.

(Muhammad Farid/Translator)