Francis Chan Indonesia's much touted tax amnesty scheme has not generated anything close to the quadrillion rupiah cash injection Jakarta had hoped for from the repatriation of offshore assets.
Of the 937 trillion rupiah (S$102 billion) worth of offshore assets declared by Indonesians, only 14 per cent has been sent home since the scheme's launch. Sceptics will undoubtedly use this fact to argue that the amnesty will not be a success.
An insider in the Joko Widodo administration, however, has told The Straits Times that seeking repatriated funds was never the only objective of the amnesty. What it was also going after was a more valuable commodity - information. This includes assets owned by Indonesians at home and abroad, as well as other income data, which can be used as a foundation for Indonesia to rebuild its notoriously loose tax regime.
Only 27 million of Indonesia's 250 million population have registered as taxpayers. Of these, less than a million actually file tax returns and experts say this has been the case for as long as they can recall.
But director-general of taxes Ken Dwijugiasteadi told The Straits Times yesterday that of the 341,110 tax- payers who have filed their returns under the amnesty, 15,000 were new taxpayers.
Indeed, Finance Minister Sri Mulyani Indrawati earlier this week said the scheme was more about reforming Indonesia's tax policy and administration.
"What is more important is that Indonesian taxpayers realise that in order for us to build the country we really have to mobilise tax in a much more professional and good governance fashion," she said.
As of yesterday, Indonesians declared 3,516 trillion rupiah worth in assets, achieving almost 90 per cent of its four quadrillion rupiah target in the first three months of the nine-month-long scheme, which officially kicked off only in mid-July. The taxman also collected 97 trillion rupiah, or 59 per cent of the 165 trillion rupiah in tax revenue Jakarta had hoped to raise.
These figures mean Indonesia has managed to outperform - in just the first phase of the scheme - other jurisdictions around the world such as Australia, Chile, Ireland, Italy, South Africa and Spain, which had introduced tax amnesties between 1993 and last year.
It has also raised the highest in tax revenue among countries that have done so over the same period.
Therefore, the repatriation shortfall, the only blemish in the scheme thus far, may well be a short-term issue, said experts such as RHTLaw Taylor Wessing deputy head of banking and finance Ow Kim Kit. "Some of the customers' funds may be locked up in illiquid property or investments that may require more time and resources to find a buyer at an appropriate price. No one's interest will be served by any large-scale divestment of any asset class that disrupts the market."
OCBC Bank economist Wellian Wiranto agrees the real game-changing element of the tax amnesty is over the longer term and how it would be a boon to Indonesia's narrow tax base and less than developed financial sector. "What is worth thinking about too, and much less discussed thus far, is the notion that the tax amnesty would shift how the average Indonesian views the government-to-citizenry relationship."
Correction note: An earlier version of this analysis stated that sceptics will undoubtedly refer to the low repatriation rate of funds under the tax amnesty to argue that the scheme will not succeed in helping Indonesia raise the capital it needs to balance its state budget for the coming year. That is incorrect. Funds repatriated by taxpayers under the amnesty do not enter into Indonesia's state Budget but are instead channelled into state-approved investments.