The enthusiastic response of businesspeople, including powerful magnates, to President Joko “Jokowi” Widodo’s tax amnesty program is strong evidence the government has gained the trust of the private sector.

The influential Indonesian Employers Association (Apindo) pointed out that the tax program, the first phase of which ended on Friday, would bring a new dawn in relations between the government and business players.

Apindo claimed that nearly 95 percent of business players in the group had participated in the first phase of the tax amnesty. Such high confidence from the private sector is likely to be very valuable in boosting its coordination with the government in the future.

“What happened in the last three months will be an impetus for business players to become more involved in the government’s efforts to restructure the country’s weak economy,” Apindo advisory board chairman Sofjan Wanandi told a press conference on Friday.

Other Apindo executives, such as chairman Hariyadi Sukamdani and vice chairwoman Shinta Kamdani, were also present at the briefing.

The first phase of the amnesty offered the lowest penalty rates — 2 percent and 4 percent — compared to 3 percent and 6 percent in the second phase and 5 percent and 10 percent in the final phase.

As of Friday evening, the redemption payments stood at Rp 88.5 trillion (US$6.81 billion), more than half of the target of Rp 165 trillion.

Sofjan, founder of Santini Group, is one of many of the country’s tycoons who joined the first phase of the amnesty. Other names include Tommy Soeharto, the son of former president Soeharto; Lippo Group boss James Riady; and Central Cipta Murdaya founder Murdaya Poo.

Sofjan, who is Vice President Jusuf Kalla’s chief economic advisor, said the government had to prepare the projects to invest using money generated from the amnesty, so that business players would also reap profits from their participation.

“This does not mean that the various instruments of investment already offered are not enough, but the higher the chance an investment generates profits, the more business players will be enthusiastic to spend their money,” said Sofjan, who has strongly campaigned for the tax amnesty program from the very beginning.

Apindo chairman Hariyadi said the organization would assist the government in disseminating information about the amnesty to the country’s small and medium enterprises (SMEs), claiming that their participation was still lacking in the first phase of the program.

SMEs in Indonesia contribute around 57.8 percent of the country’s gross domestic product (GDP). That stands in contrast to 42 percent from large companies, which make up only 0.1 percent of total businesses registered in the country.

Citibank Indonesia head economist Helmi Arman said penalty payments generated from the tax amnesty could prevent the state budget deficit from touching the legal limit of 3 percent of GDP.

Citibank predicts that the deficit will be between 2.3 and 2.5 percent by year-end, lower than the government’s estimate of 2.5-2.7 percent.

He added that the repatriated funds would also act as buffer against the seasonal outflows in November, which occurs as a result of annual dividend payments by multinational companies. “We will still have enough dollar supplies until year-end.”

Popular

To my horror, it’s just a movie!

RI, Australia strengthen partnership on taxing crypto assets

Pentagon chief congratulates Prabowo on being elected President