Jakarta. James Riady, chief executive of Lippo Group, has become one of the first Indonesian billionaire tycoons to announce his participation in the government-led tax amnesty program. Riady encourages other high-net-worth Indonesians to follow suit to support the government’s development agenda.
With Lippo Group — one of the country's major conglomerates — joining the much-lauded program, other big businesses in the country may now be persuaded to do the same, and help the government boost the so far slow progress of the program.
James, son of Lippo Group founder Mochtar Riady, said he had signed up for the amnesty program to declare his assets and repatriate them, a move that will help bring more dollars into the country and prop up the rupiah.
"This is a good time to invest in Indonesia as reform in infrastructure development has finally started," James, who is also the deputy chairman of the Indonesian Chambers of Commerce and Industry (Kadin) — Indonesia's strongest business lobby, said.
"I have always been transparent with my tax payment. What's uppermost in my mind is work and how to create jobs quickly, especially in remote areas," James told reporters.
Lippo runs a cradle-to-grave business in Indonesia. Its diversified investments range from healthcare and hospitals, real estates, department stores and retails, financial services, telcos, hospitality, news media, IT services to memorial parks and funeral homes.
The group has had its ups and downs, the latter occurring in the aftermath of the 1998 Asian financial crisis, but has managed to emerge as one of the biggest players in Indonesia’s economy.
"We have overcome many crises, especially back in 1998. I’m here today to tidy things up, make everything totally transparent," James said.
Wellian Wiranto, an economist with the Oversea-Chinese Banking Corp. in Singapore applauded James's move.
"If a big fish like James Riady joins the program in a public way, that lessens the restraint on everybody else to follow suit,” Wellian said, as quoted by Bloomberg on its website on Friday.
"The momentum is here now, things will start to look up for tax amnesty soon."
Sofjan Wanandi, another tycoon who recently joined Vice President Jusuf Kalla’s advisory team, handed his tax files to the Directorate General of Taxes on the same day.
The sooner, the better
James did not specify where he would invest his repatriated assets in Indonesia, though he hinted that most likely they will be invested in much-needed infrastructure development in the country.
The nine-month amnesty program, which will last until March 31 next year, is divided into three phases.
A 2 percent special tax rate will be available until the end of September, 3 percent until Dec. 31 and 5 percent until March 31 next year.
Higher rates of 4 percent, 6 percent and 10 percent will be charged to businesses that declare their overseas assets without repatriating them.
The amnesty program is showing slow progress, even as the deadline for the lowest tax rate approaches at the end of this month.
So far only 2 percent of the total Rp 165 trillion ($12.5 billion) additional tax revenue target from the program has been achieved.
James urges other business leaders to follow his lead by joining the program.
"The tax office offers professional, fast and efficient services. There is nothing to be afraid of," he said.
The government intends to pull in Rp 4,000 trillion in declared assets and bring home as much as Rp 1,000 trillion from the program to make up for tax revenue shortfall. Tax revenue remains a key source for the government's development budget.