[JAKARTA] For Indonesians seeking to bring back billions of dollars stashed overseas, the government just opened up more avenues to park their funds under a tax amnesty plan.
Individuals who sign up to the amnesty will be allowed to invest in assets such as gold, property and infrastructure projects, according to the Finance Ministry. Participants can also move funds between approved assets before a three-year holding period ends, the ministry said in rules notified on its website Wednesday.
The amnesty program may bring back about 560 trillion rupiah (S$57.3 billion) in assets stashed offshore, according to Bank Indonesia. President Joko Widodo, also known as Jokowi, aims to use the taxes from the plan to pay for an ambitious infrastructure agenda and boost economic growth.
More avenues to park the repatriated funds may encourage greater participation and help Mr Jokowi partly plug a shortfall in tax revenue as the nation grapples with a slowdown in China and low commodity prices.
"I see it as a positive development that will create a more conducive environment by allowing people to switch between asset classes, switch between things they can hold even though they still have to keep it in Indonesia for three years," said Wellian Wiranto, an economist at Oversea-Chinese Banking Corp in Singapore.
While Mr Jokowi estimates the government will levy 165 trillion rupiah in taxes from the plan this year, Bank Indonesia says the program will generate a more modest 53 trillion rupiah.
Inflows, however, have been slower than expected with 761 billion rupiah being repatriated so far, according to the nation's tax office. The amnesty came into effect last month and runs until March 2017.
OCBC's Mr Wiranto said some details were missing when the amnesty program was first rolled out, and that Indonesians would be more likely to participate now that they are able to invest in assets such as as gold and property, and will be able to withdraw returns on those investments.
"I think they didn't quite prepare the ground so much before this. They were probably focusing too much on getting the whole thing through the parliament which is a big deal on its own."
Participants may also withdraw returns from investments made using repatriated funds before the holding period ends, as long as the original amount is kept with gateway lenders, according to the Finance Ministry.
Mr Jokowi appointed Sri Mulyani Indrawati as finance minister last month, returning the former World Bank managing director to a role that she held from 2005 to 2010.
Ms Indrawati, who successfully steered Indonesia through the global crisis and spurred investment and restructured the tax office during her previous stint, will bolster the implementation of the amnesty plan, Mr Wiranto said last month.
While the amount of flows from the amnesty is still uncertain, anticipation of extra inflows appears to be putting upward pressure on the rupiah, domestic asset prices and demand, Edward Teather, a Singapore-based senior economist at UBS Group AG, said in a note e-mailed before the rules were announced.
The rupiah is up 5.1 per cent this year after finishing as the second-worst performer in Asia last year.