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Fifth policy package sees Lippo shift REITs to Indonesia
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(lippokarawaci.co.id) (lippokarawaci.co.id)
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Real estate development company Lippo Group is planning to shift its two real estate investment trusts (REITs), together worth Rp 35 trillion (US$2.57 billion), from Singapore to Indonesia.
Lippo Group CEO James Riady said the group was taking this step in order to benefit from tax incentives, specifically the recent removal of a double taxation that would previously have applied to such REITs.
"Currently, Lippo has two REITs in Singapore with Rp 35 trillion in asset value and we will move those to Indonesia," said James in Jakarta on Wednesday.
The Singapore-listed REITs are Lippo Malls Indonesia Retail Trust and First Real Estate Investment Trust.
Last week, the government announced its fifth economic policy package, which mainly aims to boost property and infrastructure investment by cutting a multiple tax previously imposed on a financial instrument known as a collective investment contract of REITs.
James acknowledged the government had made a breakthrough, after 10 years of discussion, by cutting the double tax to encourage the development of REITs. This development, he said, was very important.
"If we do not develop REITs, property project funding will be difficult. "These developments are very important decisions," he said.
The company, James said, would shift its REITs from Singapore next year. "We are expecting that Lippo can manage the REITs, which could be worth over Rp 100 trillion within 3 to 4 years," he said.
Last week, Economic Coordinating Minister Darmin Nasution said that property companies used to create a subsidiary to turn their real assets into underlying assets, for REIT securities. They raised funds by selling and listing the REITs on capital markets abroad, such as in Singapore. Previously, the government imposed a tax on the property companies and also on the subsidiaries.
Finance Minister Bambang Brodjonegoro added that the government would publish the necessary finance minister's regulation this week, to officially scrap the double taxation practice. (ebf)(+)
