Indonesia tax amnesty likely to benefit state-owned construction companies, banks: UOBKH

INDONESIA'S tax amnesty in 2022 will likely boost state budget and spending on infrastructure projects, healthcare and education, UOB Kay Hian said.

In a research note on Tuesday (Jan 11), analyst Stevanus Juanda expects this will benefit state-owned construction companies, as more money will be spent on infrastructure projects, which results in more contracts.

He also expects state-owned banks will indirectly gain from higher loan growth from financing these projects.

Meanwhile, healthcare spending could remain high in 2022 with the higher revenue, with more budget for areas including healthcare treatments and prescription drugs.

Juanda noted that this round of tax amnesty - which began on Jan 1 - will unlikely be as successful as the first round held in 2016, since its minimum rate is 6 per cent, compared with the 2 per cent in the first round.

However, he noted that the Indonesian government should still be able to collect an additional 130 trillion rupiah (S$12.3 billion) in taxes at a tax rate of 9.22 per cent, with the tax amnesty programme.

Juanda's stock picks among the construction companies are Wijaya Karya and Pembangunan Perumahan. For banks, he recommends Bank Mandiri and Bank Negara Indonesia. As for the healthcare sector, his picks are Mitra Keluarga Karyasehat and Kalbe Farma.

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