Tuesday, December 7, 2010

Foreign funds are taxed Difficult???

JAKARTA - Plan for the taxation of any flow of foreign funds that entered the Indonesian capital market assessed will be difficult to be realized.

In addition to its domestic market system of open markets, foreign investors have not recorded in the list of taxpayers in Indonesia.

"Given the fact that two, would be very difficult to realize that diembuskan discourse by the government," said Lily Widjaja, Chairman of the Association of Indonesian Securities Companies (APEI), in Jakarta, Friday (3 / 12).
Because, even if it is realized, the government has no concrete data that can be used as a reference to verifi cation of their presence one at a time. "Because there are huge numbers and spread.

Plus they do not enter directly, but through representatives such as the Fund Manager or securities firms (broker), "said Lily. Therefore, capital market authorities set a transaction tax of 0.1 percent.

"That's sometimes still difficult to be maximized," said Lily. However, it does not mean the capital market authorities could be lulled by the swift flow of foreign capital (capital infl ow) that enter the domestic stock market.

As stakeholders, the Capital Market Supervisory Agency and Financial Institution Supervisory Agency (Bapepam-LK) and the Self Regulatory Organizations (SRO) charged with creating a climate attractive capital markets and transparent.

"Instead of restricting capital inflow or make them uncomfortable to be in Indonesia," said Gema Merdeka Goeryadi, an analyst at UOB Kay Hian Securities in Jakarta, yesterday.

As is known, later, Bank Indonesia (BI) berwacana regulate the flow of foreign funds into Indonesia.

It was considered important in order to maintain the national economy remains stable and is not filled by short-term capital flows. One of the proposed discourse, and may be taken, is to limit the flow of foreign capital into capital market instruments, by imposing progressive taxes.

"Hot Money" In response, the stock exchange authorities were agreed. The government felt no need to limit the flow of funds that go to the Indonesian capital market. In addition to the Act (Act) that has not been possible, it would make Indonesia the world's capital markets fail to thrive.

"Because the Central Bank Act we still embrace capital free flow system, which means that foreign funds flow freely in and out anytime.

So even if we limit, it means we are against the law. Moreover, foreign contributions are still quite large in the Indonesian capital market "said Ito Warsito, President Director of Indonesia Stock Exchange (BEI).

In addition, his side looked at the swift flow of foreign funds have become a threat. "Because, in the capital markets that investment over the medium and long term, and investment patterns of foreign investors was the main like that," said Ito.

Concerns about compliance with the local stock market by hot money (short-term capital flows) is likely small.

"If they want to invest for the short term, it is likely he would park it in the certification kat Bank Indonesia (SBI). So maybe the Bank Indonesia (BI) feel the need to manage, "Ito said. The trend was reinforced by the fact that happened during the crisis of 2008.

The portion of foreign ownership of shares in the domestic market was not too much changed. The decrease ranged from only 1 percent - 1.5 percent.

Even to this day no matter its value is still about 66 percent to 67 percent. That number has not changed much compared to the position of the last three years, "said Ito.

Thus, the withdrawal of foreign funds from domestic stock markets lately can not be used as a benchmark if they are short term oriented.

The proof, until September 2010, foreign transactions are still recorded a net foreign purchases amounted to 20.57 trillion rupiah. That's a sign that foreign investors still believe in the domestic capital market and yet there is a tendency to withdraw their funds in the near future

Source : Jakarta Newspapers, December 6, 2010

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