Sri Mulyani Indrawati, center, is mobbed by media after the cabinet announcement. (Antara Photo/Widodo S Jusuf)

Govt, Business Pins Tax Amnesty Hopes to Sri Mulyani


JULY 28, 2016

Jakarta. The appointment of Sri Mulyani Indrawati as the country's new finance minister is hoped to lend much needed credibility to the government's stalling tax amnesty program.

The amnesty — aiming at repatriating Rp 1,000 trillion ($76.2 billion) in funds, adding Rp 165 trillion in tax revenue to government coffers — is off to a slow start, with potential users looking for assurance the economy will be stable, fearing the risk of losing money would be greater in Indonesia than elsewhere.

"As we are currently implementing the tax amnesty, we need somebody with credibility and confidence to run this program. She is the right person for it," said David Sumual, chief economist at Bank Central Asia, one of 20 banks managing the repatriated funds.

Sri Mulyani was a pivotal force in reforming the tax office during her first five-year stint in the position before leaving to become chief managing officer at the World Bank in 2010.

Sri Mulyani has been out of favor with some politicians in the current ruling coalition due to her role in the Rp 6.7 trillion bail out for Bank Mutiara at the heigh of the global financial crisis in 2008. The bank was later sold for far below the cost of the bail out.

But, for business leaders on whom the success of the tax amnesty depends the bail out reflected her resolve in taking action when needed — even if controversial or difficult — to maintain economic stability.

As some observers have pointed out, President Joko "Jokowi" Widodo's infrastructure ambition risks the country's budget by exceeding the deficit limit and dragging growth. Sri Mulyani is expected to return discipline to fiscal management.

"Sri Mulyani joining the cabinet has been expected since the start of the Jokowi-JK [Vice President Jusuf Kalla] administration," Hariyadi Sukamdani, chairman of the Indonesian Employers Association (Apindo), told the Jakarta Globe.

"Apindo is among those who [suggested her for Finance Minister] at the time. Unfortunately, she refused at the time."

She stills commands respect among ministry officials, who received a significant salary boost following her bureaucratic reform during her first tenure.

It's likely she'll be welcomed back to the ministry to get started on establishing services across its offices to facilitate tax amnesty program.

"There are still complains about tax offices services regarding tax amnesty," Jokowi said on Wednesday.

Jokowi noted some people come to tax office only to find officers unavailable or cannot explain tax amnesty program in detail.

"So now I warn the tax chief and the minister: tax amnesty must success," Jokowi said.