The Director General of Indonesia's Tax Office, Sigit Priadi Pramudito, unexpectedly resigned from his post on Tuesday (01/12) as it became increasingly clear that there will be a big shortfall, perhaps up to IDR 250 trillion (approx. USD $18 billion), in the country's tax collection this year. In the Revised 2015 State Budget the Indonesian government targets to collect IDR 1,294.3 trillion (approx. USD $94 billion). Pramudito is the first tax chief to resign from his post in the modern history of Indonesia.

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The House of Representatives of Indonesia (DPR) is scheduled to meet on Thursday (22/10) to discuss the government's revised 2016 macroeconomic assumptions. In August 2015, Indonesian President Joko Widodo had unveiled the government's draft 2016 State Budget. However, due to overly optimistic assumptions, there has been the need for several revisions.

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Indonesia berencana untuk memotong pajak yang dikenakan pada para eksportir lokal dalam rangka mendongkrak jumlah cadangan devisa, sambil mendukung rupiah, sebagai bagian dari paket kebijakan yang kedua. Rupiah Indonesia telah melemah 18,1% sejak awal 2015 karena ancaman kenaikan suku bunga AS, rendahnya harga-harga komoditi, dan devaluasi yuan Republik Rakyat Tiongkok (RRT). Pemerintah kini berencana untuk memotong pajak penghasilan atas bunga yang didapat para eksportir karena menabung pendapatan usaha ekspor mereka di bank-bank lokal. Saat ini, pajak penghasilan terhadap bunga bank (dari rekening-rekening tabungan) mencapai 20%.

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Starting per 1 January 2016, Indonesian companies’ interest payments to lenders are no longer considered tax deductible in case the company’s debt amounts to over four times its equity. Indonesian Finance Minister Bambang Brodjonegoro said such a tighter regulation regarding corporate debt financing will make it less attractive for local companies to accumulate debt, while strengthening the company's equity structure.

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Sejalan dengan paket kebijakan ekonomi yang baru-baru ini diumumkan, Menteri Keuangan Bambang Brodjonegoro mengatakan bahwa Pemerintah berencana untuk merevisi kebijakan pajak barang mewah untuk rumah. Saat ini, rumah-rumah bernilai lebih Rp 2 miliar dikenai pajak barang mewah 20%. Pemerintah kini berencana untuk menaikkan batasannya menjadi Rp 10 miliar. Pajak barang mewah Indonesia diperkenalkan oleh rejim Orde Baru Suharto dalam rangka membatasi kesenjangan sosial dalam masyarakat Indonesia.

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Darmin Nasution, Indonesian Coordinating Minister for Economics, told reporters on Thursday (27/08) that the government is set to announce a policy package aimed at supporting the rupiah. The package, set to become effective next week, involves deregulation and tax holidays. Further information is expected to be presented by Indonesian Finance Minister Bambang Brodjonegoro later today.

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On Friday (14/08) the Indonesian government unveiled its 2016 State Budget draft at a session in the House of Representatives (DPR). The draft is important as it shows government targets regarding the macroeconomy of Indonesia and it shows on what fields the government will focus in terms of public spending. The government - led by Indonesian President Joko Widodo - is optimistic that economic growth will finally rebound after four years of slowing economic growth as its 2016 GDP growth target was set at 5.5 percent (y/y).

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The Indonesian government targets to narrow the budget deficit to between 1.9 and 2 percent of gross domestic product (GDP) in 2016 from a projected budget deficit of 2.2 percent of GDP in 2015. Indonesian Finance Minister Bambang Brodjonegoro said on Monday (06/07) that in 2016 the government will continue to prioritize spending on infrastructure development as well as energy and food. President Joko Widodo is scheduled to officially announce the 2016 State Budget in a speech in front of parliament on 16 August 2015.

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Several days ago Indonesian Finance Minister Bambang Brodjonegoro announced that the government may soon allow foreigners to own luxurious apartments in the bigger cities of Indonesia. His ministry is currently focused on revising Government Regulation No. 41/1996 on Housing for Foreigners Residing in Indonesia which still forbids foreigners (expats) owning any type of property in Indonesia. Indonesian property developers have warmly welcomed the new plan of the government as it brings more opportunities to the property sector.

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Menteri Keuangan Indonesia Bambang Brodjonegoro sedang menyelesaikan sebuah studi berkaitan dengan kemungkinan mengizinkan kepemilikan asing atas properti di Indonesia. Dalam upaya untuk menghasilkan lebih banyak pendapatan negara melalui pajak, Pemerintah Indonesia mungkin akan mengizinkan warganegara asing (ekspatriat) untuk memiliki apartemen yang mewah di kota-kota besar di Indonesia. Apartemen ini harus bernilai minimal Rp 5 miliar menurut proposal saat ini. Brodjonegoro menekankan bahwa ekspatriat tidak akan diizinkan memiliki rumah di darat.

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Pemerintah Indonesia mengumumkan paket kebijakan ekonomi September yang kedua pada hari Selasa (29/09). Paket ini diperkenalkan dalam rangka mendongkrak pertumbuhan ekonomi Indonesia dan mendukung rupiah yang lemah. Pertumbuhan Produk Domestik Bruto (PDB) Indonesia telah melambat menjadi level terendah dalam enam tahun terakhir pada 4,67% pada basis year-on-year (y/y) di kuartal 2 tahun 2015, sementara rupiah telah melemah ke level terendah dalam 17 tahun terakhir terhadap dollar Amerika Serikat (AS). Capital outflows dari Indonesia adalah akibat dari pengetatan moneter di Amerika Serikat (AS), rendahnya harga-harga komoditi dan lambatnya pertumbuhan ekonomi global (terutama karena penurunan pertumbuhan ekonomi Republik Rakyat Tiongkok).

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Indonesia adalah pemegang saham terbesar ke-8 di Asian Infrastructure Investment Bank (AIIB) yang baru saja didirikan. Kementerian Keuangan Indonesia mengumumkan di awal minggu ini bahwa Indonesia akan menginvestasikan 672,1 juta dollar AS di AIIB selama lima tahun ke depan. AIIB adalah sebuah lembaga keuangan multilateral yang baru (dipelopori oleh Republik Rakyat Tiongkok) yang menyediakan dana untuk proyek pembangunan infrastruktur di wilayah Asia Pasifik.

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In an attempt to boost the sluggish domestic economy by persuading Indonesian consumers to spend more, the central government of Indonesia will exempt several products from the luxury goods sales tax. By law, Indonesia has a tax (ranging between 10 and 50 percent) on goods that are categorized as luxury goods. These products include household items such as televisions, electronics, furniture, refrigerators, washing machines, water heaters as well as cars, motorcycles and property.

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Contrary to the previous trading day, most emerging Asian currencies strengthened against the US dollar on Tuesday (09/12) supported by the yen’s advance as falling oil prices dented risk appetite. Based on the Bloomberg Dollar Index, Indonesia’s rupiah appreciated 0.47 percent to IDR 12,331 per US dollar today. Despite local firms’ increased US dollar demand to settle debt before the year-end, market participants were happy to learn that Indonesia’s central bank is active in the foreign exchange market to guard the currency.

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The Governor of Indonesia’s central bank, Agus Martowardojo, said that he expects inflation to accelerate to 6.1 percent year-on-year (y/y) in November 2014, significantly up from 4.83 percent y/y in the previous month. Accelerated inflation is caused by the multiplier effect triggered by the recent subsidized fuel price hike in Southeast Asia’s largest economy. On 18 November 2014, the government introduced higher prices for subsidized fuels in a bid to reallocate public spending from fuel consumption to structural development.

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Last week, Indonesian President Joko Widodo introduced higher subsidized fuel prices in Southeast Asia’s largest economy in a bid to shift generous public spending from fuel consumption to productive and structural economic and social development. Prices of subsidized low-octane gasoline (premium) and diesel (solar) were raised by over 30 percent, or IDR 2,000 (USD $0.17) per liter, starting from 00:00 on Tuesday (18/11). Widodo aims to reallocate these funds to infrastructure, social welfare and the maritime sector.

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One strategy of Indonesian President Joko Widodo to generate more state revenues in order to enhance investments in social and economic development of Indonesia is by improving the country’s tax collection system. As the middle class as well as number of companies that are active in Indonesia has risen rapidly in recent years, it is disappointing that tax collection targets are rarely met in Southeast Asia’s largest economy: tax compliance is low, while corruption among civil servants (tax collectors) remains a structural problem.

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Pemerintah mengakui sulit mengejar target pertumbuhan yang ditetapkan dalam APBN-P 2014 yakni sebesar 5.5 persen. Wakil Menteri Keuangan Bambang Brodjonegoro bahkan memperkirakan Indonesia harus bekerja keras mengejar pertumbuhan di level 5.3 persen. “Kita mencoba realistis. Mudah-mudahan di semester II bisa memperbaiki jadi sedikit bisa ke 5.3 persen. Outlook range kami di 5.2-5.3 persen,” tutur Bambang, pekan ini.

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The current account deficit of Indonesia is expected to ease further in the first quarter of 2014 due to a possible slowdown of imports according to Deputy Finance Minister Bambang Brodjonegoro. This slowdown is estimated to be caused by the implementation of Indonesia's higher income tax on the import of durable consumer goods, effective from January 2014. However, the deficit will not ease markedly from the USD $4 billion deficit (equivalent to 1.98 percent of the country's gross domestic product) recorded in the fourth quarter of 2013.

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The government of Indonesia will release two additional fiscal policy packages at the end of November or start of December that both aim to heal Indonesia's current account deficit. The two packages constitute follow ups of the policy package that was released in August 2013. Previously, deputy minister of Finance, Bambang Brodjonegoro, announced that an additional package would be released in October. However, it turned out that the government needed some more time to prepare the two additional packages.

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