Can Indonesia succeed in their plan to lure money back from Singapore with tax amnesty? How will it affect the financial industry in Singapore?
First of all, I am happy that by next year (2017) Singapore will exchange assets information with Indonesian tax authority. This is a huge step that needs a round of applause from a full-packed Gelora Bung Karno, if implemented.Second, I am healthily pessimistic that our current government target to cut down tax evasion and at the same time increase tax revenue by 30%. It is a good move and it will move the right direction - but 30%, really?Yet again... coming to the real question. Will this tax amnesty lure money back from Singapore and fill the government treasury for real good?Ha.In some way, yes - but if you thought this would rake humongous amount of money for the Indonesian government, sorry folks, wash that overoptimistic thought off.This thing would affect mostly the OKB (Orang Kaya Baru) / new rich person that came up after Soeharto era - where they already invest in Singapore, park some assets, but not that rich enough to be diversifying their assets somewhere else like Hong Kong or the Middle East.And yes, although there are a lot of OKB rising up through the ranks during these last decade, when you compare their sum of money to the real Taipan / the real real ultrarich of Indonesia that parked their assets not just in Singapore but anywhere else...It amounts to nothing. Seriously. I won't speak about data because the data themselves are probably 80% skewed. Let's just give one example here, a still debated one -The rise of CT/Chairul Tandjung. Yes, he may have made the right moves himself by growing Bank Mega since the 1990s, and eventually overtaking the Trans TV corporation - but his meteoric rise through the ranks of Indonesian ultrarich within the last 5 years, without a background of connection with the usual Taipan names like the Hartono brothers or Sinarmas group does gather some suspicion.......Especially with Indofood advertisements always anywhere in those two TV companies, and Indofood upper-level managers being regularly invited over to TransCorp events....Makes us wonder how much money the Salim group (owners of Indofood) is actually "putting" inside this whole TransCorp thing, all despite Anthony Salim is lower than Chairul Tandjung in Forbes-declared wealthy people list.You see, this (possible) kind of "proxy wealth" is not an uncommon practice for the Taipan ultrarich Indonesians to hide their true wealth (don't even let me start talking about Rusdi Kirana's Lion Air group - one of my friends once worked for a holding that tried to IPOed them, he said the office didn't allow the financial report to be brought back home, that he must read and analyze it there and not take any file/photo back home! Too sketchy isn't it) So for these guys, tax amnesty and finance info exchange between Indonesia and Singapore? Just a child play! And look at who is building Singapore as a whole? These Taipans.John Riady and his Lippo group is a big developer in Singapore. Heck, they even have one of the buildings in NUS named after the older Mochtar Riady! Compare that to in Indonesia, where the only buildings holding their name is in UPH (their own university) and GRII network (the Church they supports). Not to mention Tanoto's Asian Agri and Martua Sitorus' Wilmar, all already headquartered in Singapore. Both also giving "gratitude" back to the Singaporean government for example through NUS.So, at the end, well, Indonesia may raise some money out of this, yet not significant. Singapore may lose some existing/potential investors and property clients, but their trade, port and property investments will go on uninterrupted.But there is one potential that could be exploited positively out of this new tax amnesty and info exchange plans -Some of the OKB/new riches that would be hit by this plan, are former or recent MPs (Member of Parliaments) or some other corrupt government officials, be it regional or national-level. Again, these guys have raked in some "commissions" on the way, and their closest safe parking garage is in Singapore.It would be interesting how much SGDs would be retrieved from this slice alone, and how many of this reputable group of people would fall to the trap....Should it be implemented succesfully.