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Indonesian Tax Amnesty Makes Final Push for Overseas Assets

Indonesia has the world’s fourth-largest population at almost 260 million, but only 10 percent are registered as taxpayers and only about one million actually submit a tax return. That’s a major reason for the country’s huge and growing deficit, which has stalled the present administration’s ambitious infrastructure plans.

To jump-start the recovery of assets that wealthy Indonesians sequester abroad, the country launched a tax amnesty program in the summer of 2016. It was an experiment that drew criticism from the likes of OECD, the IMF, and domestic labor unions. Still, as it enters the final days of its nine months, the program has exceeded monetary expectations, netting about $330 billion of tax revenue.

The big question, once it wraps up on March 31, is what to do with that money. Finance Minister Sri Mulyani has created a task force to address the repatriated assets, but they can only really start their work after the final numbers are released. The government must also respond to criticism that the amnesty program lets off tax evaders too easily, to the detriment of the working class.

Closing the deficit

“The revenue from this will significantly contribute to reducing the national deficit,” said Asmiati Malik, an economics researcher at the University of Birmingham. “It could do so by as much as 70 percent: from $23 billion to $8.2 billion.”

In recent weeks, regional tax offices have put on daily public campaigns to encourage participation in the amnesty program. Hestu Yoga Saksama of the Taxation Directorate General told the Jakarta Post as many as 4,000 people signed up for it every day in March that as many as 4,000 people signed up for it every day in March, suggesting it arose from a general tendency to procrastinate on personal finances.

“In our culture, people tend to wait until the very last moment,” said Yoga.

Over three million Indonesians have become new tax payers in the last year, according to the Directorate General of Taxation. This includes high profile business people like those of the Indonesian Chambers of Commerce and Industry, a business lobby, who signed up en masse earlier this year.

Since the 1990s, when there were ethnic riots and political unrest before and after the fall of long-time dictator Suharto, rich Indonesians have relocated money to tax havens like Singapore, according to Bloomberg.

“Two huge benefits of the amnesty program for taxpayers now are the low interest rate and the abolition of tax debt,” said Yustinus Prastowo of the Center for Indonesia Taxation Analysis.

If they repatriate assets, individuals will be charged between two and ten percent interest, rather than typical corporate or personal income tax rates, which can reach 30 percent. And they must commit to keeping those assets within Indonesia for at least three years.

Expanding the tax base

Indonesia has already generated more revenue from its tax amnesty experiment than analogous efforts in countries like India and Germany, but according to some experts, there remains room for expansion.

“The major issue is that the number of taxpayers who joined the amnesty program is still low, proportionally,” said Malik. “There are roughly 700,000 people who joined the program out of a total 32 million taxpayers… which is only 2.2 percent of those eligible.”

Malik called for a more progressive tax policy to increase participation in both the amnesty program and taxation in general. “It should be more progressive regarding extensification [widening the tax base], and increase the incentive for tax compliance and avoidance,” she said. “These solutions hinge on using ‘one-gate identification’ that integrates a person’s bank account, national ID, and tax ID, so that no one can avoid declaring their assets.”

That being said, the first round of the amnesty program is well-timed; by September of this year, Indonesia will join the Organization for Economic Cooperation and Development’s Automatic Exchange of Information initiative to share its tax figures internationally. That means it will be able to access the details of Indonesian citizens’ offshore assets in countries like Singapore and the Cayman Islands.

Rising inequality

The OECD, however, was an early critic of Indonesia’s project of tax amnesty. Programs like this are “unlikely to deliver benefits that exceed their true costs, but carry a risk of leading to an erosion of the gross revenue collected and may negatively affect overall tax compliance,” Philip Kerfs, of OECD’s Centre for Tax Policy and Administration, told Bloomberg in August 2016.

Opponents of the program argue that tax evaders are essentially rewarded for flouting the law.

Last fall, there were large worker protests in Jakarta against tax amnesty, and most of the country’s labor unions have vocally opposed the policy.

The International Monetary Fund also expressed doubts about the program. “We were a little skeptical with the implementation of tax amnesty anywhere, but we hope we are wrong in Indonesia,” said IMF’s Luis Bereu.

On Monday, the Directorate General of Taxation announced it was devoting “special attention” to pursuing several members of a Forbes list of the richest Indonesians who have not yet registered for tax amnesty.

 

 

Prastowo suggested another reason why the funds may eventually fall short of their potential — the hardline rallies that gripped Jakarta last November and December, against the city’s Chinese Christian governor. The political disturbance, he said, may have deterred investors from bringing their money back home. It’s a remarkable parallel to the unrest that sent many wealthy Indonesians packing in the first place.

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Science & Health
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‘Electric Sands’ Cover Titan

To build a sandcastle here on Earth, the sand needs to be wet so it can stick together. Not so on Saturn’s strange and largest moon Titan, according to a new study.

Researchers from the Georgia Institute of Technology say the moon’s non-silicate sand is “electrically charged” and “resistant to motion.” Researchers liken the charge to the static electricity generated when you rub a balloon on your hair.

“If you grabbed piles of grains and built a sand castle on Titan, it would perhaps stay together for weeks due to their electrostatic properties,” said Josef Dufek, the Georgia Tech professor who co-led the study. “Any spacecraft that lands in regions of granular material on Titan is going to have a tough time staying clean. Think of putting a cat in a box of packing peanuts.”

The electrical charge, according to researchers, can last for days or months.

The charge is likely generated by the winds on Titan, which blow at around 30 kilometers per hour. As the sand moves, it begins to hop and collide, becoming charged.

Researchers say the electrification of Titan’s sands could explain why dunes on the moon, some of which are more than 90 meters tall, form in the opposite direction of the prevailing winds.

“These electrostatic forces increase frictional thresholds,” said Josh Mendez Harper, a Georgia Tech geophysics and electrical engineering doctoral student who is the paper’s lead author. “This makes the grains so sticky and cohesive that only heavy winds can move them. The prevailing winds aren’t strong enough to shape the dunes.”

To reach their conclusions, researchers built a model to replicate conditions on Titan. For the model, they put grains of “naphthalene and biphenyl — two toxic, carbon and hydrogen bearing compounds believed to exist on Titan’s surface — into a small cylinder.”

The cylinder was then rotated in a nitrogen environment similar to Titan. Then, they measured the electric characteristics of the grains.

“All of the particles charged well, and about two to five percent didn’t come out of the tumbler,” said Mendez Harper. “They clung to the inside and stuck together. When we did the same experiment with sand and volcanic ash using Earth-like conditions, all of it came out. Nothing stuck.”

Sand on Earth also can pick up an electric charge, but the grains are much smaller and dissipate rapidly.

“These non-silicate, granular materials can hold their electrostatic charges for days, weeks or months at a time under low-gravity conditions,” said George McDonald, a graduate student in the School of Earth and Atmospheric Sciences who also co-authored the paper.

The study was published in the journal Nature Geoscience.

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Arts & Entertainment
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Twitter to Let Advertisers Buy Video Ads on Periscope

Twitter Inc, trying to boost its sagging advertising revenue, will allow brands to buy commercials on its video streams for Periscope, signaling a major push to make money off the live-streaming platform, the company announced on Tuesday morning.

With sponsors growing more wary of exactly what kind of online videos their ads are being placed against, Twitter is allowing a select group of advertisers to purchase pre-roll videos, meaning those that run prior to the publishers’ content, on Periscope streams.

Twitter acquired Periscope in 2015.

Google’s YouTube, long the dominant force for online video ad dollars, has seen an exodus from brands upset to find their ads running alongside anti-Semitic and other videos that shocked customers. Companies that left included Verizon Communications Inc, AT&T Inc and Johnson & Johnson.

YouTube’s selling process automatically places ads next to videos that meet the criteria for the audience advertisers want to reach, but the Alphabet unit has had difficulty policing the vast array of videos that are uploaded.

Twitter is only offering up a select group of publishers for brands to buy ads against, which will let advertisers know exactly where their ads are showing up. “This is the solution to that problem,” Matthew Derella, Twitter’s vice president of global revenue and operations, told Reuters. “We believe the advertiser should have control.”

The video ads will only be seen when viewed within Twitter’s platform. Twitter allowed for Periscope streams to be integrated within Twitter last year. The advertisers will be able to purchase ads on Periscope videos through Twitter’s Amplify program.

Until now, Twitter has monetized Periscope by relying on brands to purchase Promoted Tweets, which are placed in user feeds, even for those who do not follow the company on Twitter. The goal is to draw more attention whenever the company is live-streaming something on Periscope.

Twitter is looking to turn around its sagging fortunes. Its stock has slumped 8 percent so far this year as investors have worried about slowed user and advertising revenue growth, along with mounting competition from Facebook Inc’s Instagram, and Snap Inc’s Snapchat.

In the fourth quarter of 2016, Twitter posted the slowest revenue growth since it went public four years earlier, and revenue from advertising fell from a year earlier. The company warned that advertising revenue growth would continue to lag user growth during 2017. The company is also considering a paid subscription offering.

 

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Arts & Entertainment
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Leonardo Masterpiece Unveiled After Facelift

Leonardo da Vinci is, simply put, one of the greatest artists of all time. The world still marvels at his genius and some of his most famous works, such as the Mona Lisa. One of his uncompleted works, Adoration of the Magi, had fallen on hard times, but thanks to more than five years of restoration, the painting is back on display. VOA’S Kevin Enochs reports.

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Silicon Valley & Technology
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Samsung Plans to Sell Refurbished Galaxy Note 7s

Tech giant Samsung Electronics plans to sell refurbished versions of the Galaxy Note 7 smartphones, the company said late on Monday, signaling the return of the model pulled from markets last year because of fire-prone batteries.

Samsung’s Note 7s were permanently scrapped in October after some phones self-combusted, prompting a global recall roughly two months after the launch of the near-$900 devices.

A subsequent investigation found manufacturing problems in batteries supplied by two companies — Samsung SDI Co and Amperex Technology.

Analysis from Samsung and independent researchers found no other problems in the Note 7 devices except the batteries, raising speculation that Samsung will recoup some of its losses by selling refurbished Note 7s.

A person familiar with the matter told Reuters in January that it was considering the possibility of selling refurbished versions of the device or reusing some parts.

Samsung’s announcement that revamped Note 7s will go back on sale, however, surprised some with the timing – only days before it launches its new S8 smartphone on Wednesday in the United States, its first new premium phone since the debacle last year.

Under pressure to turn its image around after the burning battery scandal, Samsung had previously not commented on its plans for recovered phones.

“Regarding the Galaxy Note 7 devices as refurbished phones or rental phones, applicability is dependent upon consultations with regulatory authorities and carriers as well as due consideration of local demand,” Samsung said in a statement.

South Korea’s Electronic Times newspaper, citing unnamed sources, said on Tuesday that Samsung will start selling refurbished Note 7s in its home country in July or August and will aim to sell between 400,000 and 500,000 of the Note 7s using safe batteries.

Samsung said in a statement to Reuters that the company has not set specifics on refurbished Note 7 sales plans, including what markets and when they would go on sale, though it also said it does not plan to sell refurbished Note 7s in India or the United States.

The company said refurbished Note 7s will be equipped with new batteries that have gone through Samsung’s new battery safety measures.

“The objective of introducing refurbished devices is solely to reduce and minimize any environmental impact,” it said.

The company estimated that it took a profit hit of $5.5 billion over three quarters because of the Note 7’s troubles. It had sold more than 3 million of the phones before taking the model off the market.

Samsung also plans to recover and use or sell reusable components such as chips and camera modules, as well as rare metals such as copper, gold, nickel and silver from Note 7 devices it opts not to sell as refurbished products.

Environment rights group Greenpeace and others had urged Samsung to come up with environmentally friendly ways to deal with the recovered Note 7s. Greenpeace said in a separate statement on Monday that it welcomed Samsung’s decision and that the company should carry out its plans in a verifiable manner.

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Arts & Entertainment
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From Syria to Detroit, We Are All Migrants, Sings Bluesman Bibb

“Migration Blues”, a new album from veteran bluesman Eric Bibb, uses the sounds of the American South to tell the tale of everyone from 1920s farmers fleeing the Dust Bowl for California to refugees crossing the Mediterranean to Europe in the 2010s.

Along the way are Mexicans seeking a future in the United States, families moving from land the government has just seized for corporate expansion, and a Cajun jig reminding listeners of the expulsion of French Canadians south down the Mississippi.

“We are all linked by one migration or another. We are all connected to migrants,” Bibb told Reuters ahead of the album’s release on March 31.

“The hysterical reaction against migrants is really hard to understand. Have we really forgotten our history?”

The album’s most contemporary subject is to be found in “Prayin’ For Shore”, a blues about the plight of millions of Syrians and others who have fled civil wars in the Middle East on sometimes fatal journeys to Europe across the Mediterranean.

“In an old leaky boat, somewhere on the sea/trying to get away from the war/Welcome or not, got to land soon/Oh lord, prayin’ for shore,” run the lyrics.

The song, Bibb writes in an accompanying booklet, is about remembering the drowned.

But the fleeing migrants of today are nothing new.

For Bibb, an African American, another key moment in history was “The Great Migration” of millions of southern blacks away from America’s segregated South.

By some estimates, more than 6 million left the rural areas for industrial places like Detroit, New York and Chicago between 1910 and 1970.

“(They were) not just looking for jobs but fleeing racial terror,” Bibb said.

Such a point is made in his mellifluous rendition of “Delta Getaway” about a man fleeing a lynch mob to Chicago.

“Saw a man hanging from a cypress tree/I seen the ones who done it/now they coming after me”.

The album is being released as anti-immigrant politics is on the rise across much of the world, including the United States where U.S. President Donald Trump wants to build a wall on the Mexican border to keep out immigrants.

Bibb said it was all laid down and finished before Trump’s election, but that he was nonetheless “astounded by the synchronicity of it”.

Most of the songs on the album are Bibb’s, although he offers covers of Woody Guthrie’s “This Land Is Your Land”, originally an angry riposte from the dispossessed, and Bob Dylan’s “Masters of War”, about the merchants of destruction.

Bibb said that apart from “Prayin’ For Shore”, his favorite composition on “Migration Blues” is “Brotherly Love”.

He said it reflected his personal belief.

It offers more hope for the future, one in which people can live in peace.

 

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Arts & Entertainment
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Political Atmosphere Gives Cartoonist Plenty of Material

Political satire dates back to the ancient Greeks, 2,400 years ago when Aristophanes made fun of the Peloponnesian War. It’s a staple of late night American television talk shows and the editorial pages of most newspapers. Successful political cartoonists are able to draw biting commentary with the stroke of a crayon. VOA’s Anush Avetisyan profiles an award-winning cartoonist.

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Science & Health
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Exoskeleton Makes Lifting Easier

Lifting boxes by hand, day after day, in places like warehouses can cause muscle strain and other injuries. But now a new exoskeleton — a rigid external body frame that assists with limb movement can help prevent problems associated with repetitive tasks like handling boxes or materials at construction sites. VOA’s Deborah Block tells us more about it.

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