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Indonesia Tax Amnesty Nets $330 Billion-Now for Reform

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by Reuters
Sumber : www.nytimes.com
MARCH 21, 2017, 12:06 A.M. E.D.T. Continue reading

Indonesia Tax Amnesty Nets $330 Billion-Now for Reform

JAKARTA — Southeast Asia's biggest economy this month is winding up one of world's most successful tax amnesties, with at least 745,000 taxpayers declaring more than $330 billion of assets so far. President Joko Widodo has cited higher tax revenue as the key to boosting infrastructure spending and growth. But if the amnesty is to avoid being just a one-off windfall, Indonesia needs to improve a tax collection ratio well below many of its peers, international agencies and local officials have said.

To that end, Indonesia's finance minister Sri Mulyani Indrawati has set up a special tax reform team to boost collection. It faces an immense task in a country where tens of millions of people - both the wealthy and the poor - remain outside the tax system.

Parliament is considering draft legislation that would overhaul an institution the public views as one of Indonesia's most corrupt, according to global corruption watchdog Transparency International.

"People don't pay taxes because they believe they won't get caught," said Darussalam (like many Indonesians, he goes by one name), a partner at consultancy Danny Darussalam Tax Centre.

The amnesty has provided the government with more revenue than similar plans in countries such as India, Chile, Italy or South Africa, Indrawati said.

The amnesty has been criticised for benefiting mostly the rich. The World Bank blames poor tax compliance amongst high income earners in Indonesia for hampering poverty reduction and maintaining inequality. The richest one percent of Indonesia's 250 million people control nearly half the wealth, charity organisation Oxfam said.

TAX REFORM TEAM

The tax bureau as of 2016 employed about 38,000 people to collect taxes from a workforce of 118.41 million. Less than a third of the workforce is registered at the tax office and even fewer file annual tax reports.

A visit to the tax office in Jakarta provides a window into the challenges the government faces.

Tax inspector Jeffry Martino sometimes works a 12-hour day just to keep tabs on a small portion of the hundreds of companies under his watch.

He has 661 taxpayers under his watch, but focuses on the biggest 100 companies that contribute the most to his target of collecting 495 billion rupiah ($37.02 million) this year.

"We are the spearhead of state revenue collection," said Martino, at his temporary office with a misfiring air conditioner.

His job would be easier if tax auditors had far fewer clients and more access to third-party data, such as banking information, he said.

He might get that wish under proposed legislation to reform the tax system.

The draft in Indonesia's parliament calls for giving tax collectors wider access to bank data in line with Indonesia's pledge to join a global effort to share tax-related financial data.

"HUNTING IN THE ZOO"

Andreas Eddy Susetyo, a member of the commission overseeing the bill, said it may take up to a year to finish discussions and even then progress may be interrupted because politicians would be distracted by campaigning ahead of 2019 elections.

Widodo has vowed to bypass parliament if necessary by issuing an emergency regulation before mid-year giving the tax office access to bank data.

In the meantime, Finance Minister Indrawati's tax reform team aims to increase the tax ratio to 15 percent of GDP in 2020 from about 11 percent now. That compares with a global average of 14.8 percent in 2014, according to the World Bank.

The team, consisting of finance ministry officials and advisers from the World Bank and other agencies, intends to act as a brainstorming think-tank to push through reforms of everything from the tax office's business model to tariffs.

Hestu Yoga Saksama, a tax office spokesman, said the team would redeploy thousands of tax officers to auditing once the amnesty period ends this month.

"We are preparing to take legal action against people we found non-compliant but have not taken part in the amnesty," said Saksama, describing it as a potential quick win.

But the World Bank still estimates Indonesia will miss its 2017 total revenue target by 70 trillion rupiah ($5.23 billion), while the tax ratio will likely stay below 11 percent of GDP.

Rosan Roslani, chairman of Indonesia's chamber of commerce and industry, said that the tax office should not just monitor those already in the system, but go after tax evaders.

"When our tax base is low, there will be some 'hunting in the zoo' because you only have so many people in the system," said Roeslani, who is also advising the reform team. He advocates creating an Indonesian social security number system, similar to that of the United States, to help boost the number of taxpayers.

(Editing by Ed Davies and Bill Tarrant)

Indonesia holds investment week in Singapore

President Joko Widodo

News Desk The Jakarta Post
Tue, March 14, 2017 | 05:33 pm

Indonesia holds investment week in Singapore

The government is holding an event to attract foreign investors called “Indonesia Investment Week Singapore Chapter 2017,” which started on Monday and will end on Wednesday.

It is the first Indonesian Investment Week organized outside Indonesia.

The event at Marina Bay Sands will feature various activities, including an exhibition, a business forum and one-on-one meetings with businesspeople, said Zaidin A. Zaiti, the president director of PT Eksibit Internasional, which organized the event, as reported by tempo.co.

“The event is expected to welcome more than 5,000 international business people in Singapore,” Zaidin said on Tuesday, adding that it was expected to speed up infrastructure development in Indonesia.

Indonesian Ambassador to Singapore Ngurah Swajaya said the two countries would soon commemorate their 50th year of diplomatic relations and the Indonesian Embassy would organize various events to mark the occasion.

“The Indonesian Embassy in Singapore welcomes Indonesia Investment Week with the hope that it will be integrated into events to commemorate the 50th anniversary,” Ngurah said.

Ngurah said the event was supported by a number of institutions including the National Economy and Industrial Commission, the Trade Ministry’s Export Development Directorate General, the Cooperatives and Small and Medium Enterprises Ministry, the Investment Coordinating Board, Agriculture Ministry and Industry Ministry. (bbn)

Alibaba’s UCWeb to invest in content development in Indonesia

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Dylan Amirio
Mon, March 20, 2017 | 03:07 pm

Alibaba’s UCWeb to invest in content development in Indonesia

Chinese e-commerce giant Alibaba group’s UCWeb Inc will invest up to Rp 400 billion into content development and distribution in Indonesia and India for the next two years, after seeing the rising usage of the UCWeb browser in the market.

The main focus for the investment will be for the We-Media program, which encourages unique content creation for the UCNews platform and builds a local content ecosystem for the platform as well.

“The Rp 400 billion investment affirms our commitment to the development of the We-Media content industry in Indonesia, seeing as there’s considerable scope for the surge in content that is differentiated by contributors’ different styles,” UCWeb Indonesia’s general manager, Donald Ru, explained on Monday.

To drive the community, UCWeb announced the We-Media Reward Plan 2.0 on Monday, which aims to recruit up to 1,000 media writers in Indonesia and India to write for the UCNews platform under a minimum income of Rp 10 million per month for their work.

Ru said to achieve greater digital consumption, the browser would continue to explore partnerships with local and international content creators.

We-Media is an effort by UCWeb for UCNews to drive the personalized and unique content by independent contributors such as bloggers, and its appearance in Indonesia, as they claim, will open the door to more opportunities for Indonesia’s writers. (ags)

Industry Ministry allocates Rp 650b for vocational training in 2017

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Stefani Ribka
Mon, March 20, 2017 | 01:35 pm

Industry Ministry allocates Rp 650b for vocational training in 2017

The Industry Ministry has earmarked Rp 650 billion (US$48.6 million) for various vocational training programs as part of its efforts to address a shortage of skilled labor in the manufacturing sector.

The programs funded include two new polytechnics and free trainings to enhance the skills of school graduates, according to the ministry’s head of training and education, Mujiyono.

The new polytechnics to open in Semarang, Central Java, and Bantaeng, South Sulawesi, will enable students to gain skills in furniture making and metal processing, respectively. They will add to just 10 existing polytechnics nationwide.

“We are also cooperating with the technical directorate general to provide extra funding to the limited budget,” Mujiyono recently said.

With the budget at hand, the ministry aims to train at least 220,000 people to become skilled workers. Of that figure, 190,000 will join a “link and match” program, which aims to synergize vocational school training with demand from manufacturing companies. The rest will take part in a free education and training program, a one-year diploma program and free certification of competence for industrial labor.  

Businesspeople have long complained about the difficulty to obtain manpower with proper skills despite an abundant workforce of 100 million in the country, according to data from the Central Statistics Agency (BPS).

The manufacturing sector needs 589,447 additional workers this year, and the number is set to increase to 619,732 workers by 2019, Industry Ministry data show. (lnd)

Kadin secures US$875 million from German firms

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Ayomi Amindoni
Mon, April 18, 2016 | 09:49 pm

Kadin secures US$875 million from German firms

The Chamber of Commerce and Industry (Kadin) Indonesia has inked a total investment commitment worth US$875 million between Indonesian and German firms, in conjunction with President Joko “Jokowi” Widodo’s visit to Europe on April 17 to 22.

Comprised of a cooperation between German miner Ferrostahl Cronimet and state-owned miner Antam worth US$800 million, an agreement between state-owned ship operator Pelni and the major German shipyard operator Myer Werft worth $40 million, and an agreement between Indonesia’s  leading manufacturer in the paper and pulp industry April and Inova Semiconductors GmbH, a fabless semiconductor manufacturer headquartered in Munich, Germany worth US$35 million, according to Kadin chairman Rosan Perkasa Roeslani, the commitments were confirmed with a series of Memorandum of Understanding (MoU) signings.

“The MoU signing is a real contribution to the development of the national economy," said Rosan in a press statement on Monday, the first day of a visit to Berlin, Germany.

Kadin Indonesia deputy chairman of International relations Shinta Widjaja Kamdani said Kadin had invited several business delegates from various sectors such as energy, industry, maritime, agribusiness, and telecommunications to join the President’s European delegation.

“This is a very important event aimed opening Indonesia up to new investment, as well as to accelerate the finalization of trade cooperation under the framework of CEPA [Comprehensive Economic Partnership Agreement] with the European Union, which is due to be completed within the next two years," she said.

During the six day visit, the President is scheduled to visit Germany, the UK, Belgium and the Netherlands accompanied by a group of Kadin members, led by Rosan.

In Brussels, the President plans to talk with European Council President Donald Tusk and European Commission President Jean Claude Juncker regarding CEPA progress. IE-CEPA was initiated in 2010.

Previously, discussion of the scoping paper had been postponed due to Indonesia’s change in government. An intensive discussion in Brussels on April 4-5, 2016, allowed both sides to bridge many of the issues that could have hindered the completion of the scoping paper. (ags)

Two German firms keen to invest in nickel processing, gas sectors: BKPM

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Stefani Ribka
Mon, March 20, 2017 | 03:14 pm

Two German firms keen to invest in nickel processing, gas sectors: BKPM

Buoyed by Indonesia’s economic growth despite the global crisis, two German firms have expressed interest in investing in the country’s lucrative nickel processing and gas sectors, Investment Coordinating Board (BKPM) chief Thomas Lembong says.

One firm is eyeing a project to build a US$800 million nickel smelter with an Indonesian state-owned firm, while another is keen to enter the gas sector with an unspecified amount of investment, Lembong said Monday.

Lembong is leading the board’s delegation on a March 15 to 22 visit to Europe, which also covers France, Sweden, the United Kingdom and Denmark.

“We used this working visit as a chance to meet German firms that are keen on investing in Indonesia,” he said in statement.

Lembong emphasized that Indonesia’s continued growth of about 5 percent against the backdrop of a global economic slowdown remained a pull factor in attracting investors to do business in the country.    

Realized foreign direct investment in Southeast Asia’s largest economy annually rose by 8.4 percent to $28.9 billion last year, with Germany contributing 4.6 percent of the figure.

In the past five years, Europe’s largest economy spent $13.3 billion in Indonesia, according to BKPM data. (lnd)

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