JAKARTA: A leading business community of Indonesia has requested its government to initiate a Tax Amnesty Scheme for the better development of the country and omit all the pervious taxes and penalties so that the overseas money of Indonesia would come in the country for positive development.
Hariyadi Sukamdani, the chairman of the Indonesian Employers Association, or Apindo, made the call last week amid recent sharp volatility in the rupiah exchange rate on expectations of a huge outflow of funds from the country once the US Federal Reserve raises its benchmark interest rate.
“It may sound unfair that tax offenders get an amnesty. But the question is, do we want to move forward or keep looking backward?” Hariyadi said.
Among those that would benefit under such an amnesty are conglomerates and banking executives who defaulted on government bailout funds in the wake of the 1998 Asian financial crisis and stashed the money in Singapore.
The government back then spent more than Rp 460 trillion ($37.1 billion) in liquidity to bail out several banks that were devastated by the crisis, which included a sharp fall in the value of the rupiah.
The government still maintains a list of the companies and individuals that fled with the money, and has prosecuted only a handful.
So-called high-net-worth individuals in Indonesia, with assets of at least $1 million, will hold a projected $250 billion overseas by 2016, according to management consulting firm McKinsey & Company.
Four-fifths of that amount, or approximately $200 billion, will be held in Singapore in the form of bank deposits, stocks, fixed income and properties.
The figures, released last week, come from McKinsey’s survey of 60 high-net-worth individuals, 83 percent of whom said they had foreign bank accounts and kept 40 percent to 50 percent of their financial assets overseas.