The Law No. 11 Year 2016 on Tax Amnesty which was issued in June 29 is effective in July 2016 rights after Eid al-Fitr until March 2017. The law aims to increase tax revenue as well as to promote tax reform by giving delinquent tax payers opportunity to redeem their assets. It is expected as the assets are freed, there are inflows of repatriated funds inundating Indonesia’s economy in near future. The Indonesia Stock Exchange (IDX) has prepared and market has expectation that there are sectors which benefit from this scheme. Who are they?
While some people deem the government is too optimistic by setting tax revenue target of Rp 165 trillion from this law alone, (Read more: Government Is Too Optimistic About Tax Amnesty) but IDX still sees this opportunity.
IDX has prepared private equity fund (RDPT), IPO stocks and equities amid secondary market as containers. (Read moreIs IDX Ready to Manage Repatriation Funds from Tax Amnesty?) Moreover IDX has given incentives in terms of discounted stock crossing transaction fee and simplification of tender offer requirement with regards to repatriated funds (Read more Speeding up Repatriation, IDX Gives Crossing and Tender Offer Incentives).
Banking sector is the most profitable. Firstly, it is because liquidity will increase hence reducing cost of fund. Secondly, it is because 7 banks have been designated to collect repatriated fund from tax amnesty policy. Those banks will have additional fee-based income and liquidity which can be distributed as credit hence becoming positive catalyst for their stock price movement. Read more Collect Shares of Banks Eligible to Receive Repatriation Fund.
Non-banking financial sector will also benefit with appointment of 19 Securities and 18 Investment Managers to Manage Repatriated Funds. These companies will boost their transaction liquidity and revenues.
In addition, property and infrastructure sectors are sectors which are worth looking. Read more Investors Wait for Good Performance in the Second Quarter. Specifically, PT Bumi Serpong Damai Tbk (BSDE), PT Ciputra Surya Tbk (CTRS), PT Ciputra Properti Tbk (CTRP) and property contractors, namely, PT Total Bangun Persada Tbk (TOTL) will become investors’ choices. Read Tax Amnesty Law Completion, a Catalyst for JCI?
Four stocks from SOE which will hold rights issue are also predicted to absorb funding from repatriation. This was said by SOE Ministry which said that remaining Rp 5.3 trillion fund will be absorbed by public by using some funds resulted from tax amnesty which are projected to achieve Rp 165 trillion. Read more Saham Baru Publik Empat BUMN Serap Dana Tax Amnesty
The last sector gaining benefit is consumer. It is because repatriated fund inflow will lift consumer’s purchasing power. Read more Tax Amnesty Benefits Consumer and Banking Sector.
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