26 June 2019

Kadin and Apindo Worries about the Future of the Tax Amnesty


JAKARTA The two leaders of the parent organization of Indonesian employers appealed to the government, for the sake of legal certainty, to show a clear and firm attitude in respecting the binding treaty agreements and legal guarantees that they have given.

Chairperson of the Indonesian Chamber of Commerce (Kadin) Rosan P. Roeslani and Chairperson of the Indonesian Employers' Association (Apindo) Hariyadi Sukamdani stressed that this was not only a legal obligation, but also a moral obligation for the government to uphold agreements and guarantees.
Regardless of whether it was made and given by the current or previous government, because this is very important for the development and future of Indonesia.

Their statement was conveyed in reference to the problem of the settlement of Bank Indonesia Liquidity Assistance (BLBI) which, although it was completed 20 years ago, was recently ignored by the Corruption Eradication Commission (KPK).
"The KPK ignores agreements, promises, government guarantees, and the Presidential Instruction which ratified the BLBI settlement," Hariyadi Sukamdani said. "If this injustice can happen to a citizen, the same thing can happen to us all," he said again.

Investor Trust

Meanwhile, Rosan Roeslani reminded that investor confidence in Indonesia will worsen if the government keeps silent and does not take any action.
"The government's inaction or omission of the problem will only worsen confidence in other government pledges and guarantees, such as the Tax Amnesty Program. If the KPK's actions continue to be ignored and not corrected, then there is no guarantee of legal certainty that the Tax Amnesty or similar policies will be respected by the Government in the future."

As is known, BLBI was given by the government to national banks in order to maintain monetary stability following the 1997-1998 crisis where the value of the rupiah plummeted drastically and interest rates surged very high. The community lost confidence in the government, until there was a rush of withdrawals from banks.

Then, to assist the economic recovery, the government requested the cooperation of BLBI recipient bank shareholders to take over the bank's obligations, by signing the Shareholder Settlement Agreement including the Master Settlement and Acquisition Agreement (MSAA) scheme. After the agreement was fulfilled, the government provides Release and Discharge for any actions and lawsuits in connection with the BLBI settlement.

Hariyadi Sukamdani pointed to the acceptance and recognition of the government towards Sjamsul Nursalim (SN) the shareholder of BDNI (Indonesian National Trade Bank), one of the BLBI obligors who fully completed his obligations under the MSAA Agreement.

In May 1999, the government fulfilled its promise by providing a full and unconditional release and discharge, which clearly stated that the government would not initiate, prosecute or take any legal action against SN in connection with the BLBI settlement. The Release and Discharge policy was later strengthened by a Presidential Instruction.

Rosan Roeslani revealed, in the "Ease of Doing Business" report issued by the World Bank, Indonesia scored very low in the criteria for "Contract Compliance" (Contract Enforcement). Therefore, the actions of institutions that do not fulfill and adhere to government promises and guarantees will only worsen the situation and cause investors to tend to decide to invest in other places / countries.