Indonesia's Policy Activism – Matthews Asia

Indonesia's Policy Activism by Sriyan Pietersz, Matthews Asia

Recently, I met with a broad mix of corporations, bureaucrats and private sector commentators in Indonesia's bustling capital city of Jakarta. The clear common thread to emerge was the increased policy activism by the Indonesian government, including one to increase tax collection—primarily by implementing a tax amnesty on undeclared/offshore assets held by Indonesians—and another to reduce commercial bank lending rates to single digits by the end of the year.

Tax Amnesty on Undeclared Assets

The Indonesian government’s pursuit of increased taxes to fund its deficit, which is constitutionally capped at 3% of GDP, has caused disruptions in consumer and business activity. Spending on expensive durable items and residential property has fallen significantly,...