Indonesia's tax amnesty doesn't tackle the problem at its source

WHILE Indonesia basks in the afterglow of a successful first phase of a nine-month tax amnesty, the largest economy in South-east Asia must take stock of the reality beyond the rosy headlines.

By most measure, the amnesty policy, dubbed a signature move by Indonesian President Joko Widodo and led by his able Finance Minister Sri Mulyani Indrawati and which has thus far drawn over US$7 billion in revenue windfall to fund development and spur growth, is a triumph. The scheme was rolled out in July and picked up pace, albeit disappointing, in August and by mid-September was ready to be written off as somewhat of a letdown as the numbers fell far short of official targets.

But it was saved by taxpayers' last minute dash to the tax offices across Indonesia to declare their previously unreported assets and cough up the penalty to capitalise on paying the lowest rates which click higher after September.