Economy Dini Agmivia Anggraeni

Transcription

1 September 30, 2015 Economy Dini Agmivia Anggraeni September Economy package Part II : More about tax talk More about tax talk The finance minister, Mr. Bambang Brodjonegoro, announced the Economy Package Part II yesterday. Four points been mentioned including: 1) Regulation for tax allowance & tax holiday; 2) Tax removal for shipyard business, railway, and airplane sparepart; 3) Integrated logistic zone; and 4) Tax incentive for exporters which deposit their proceeds in local bank. Actually, the first three points weren t a new issue. The ministry just announced that regulation for the respective policy been ready and official. Yet, the most anticipated issue regarding lower corporate tax rate (from 25% to 18%), tax amnesty, and foreign ownership in property haven t released. MACRO ECONOMY DATA GDP 2Q % Bank Indonesia rate 7.50% Inflation Aug 15 (YoY) 7.18% Inflation Aug 15 (MoM) 0.39% Trade balance Aug 15 USD 434mn Current account 2Q % of GDP USD/IDR* 14,690 10Y Government Bonds* 9.85% FX Reserves Aug 15 USD bn * As of Sept 29, 2015 Tax incentive for export proceeds deposit Exporters who deposit their export proceeds (DHE : Dana Hasil Export) in local banks will get lower deposit tax rate which normally at 20%. Tax rate for 1-mo USD deposit is 10%, 7.5% for 3-mo USD deposit, 2.5% for 6-mo USD deposit, and 0% for > 6-mo USD deposit. And if the exporters deposit in Rupiah currency, the tax rate were even lower, i.e 7.5% for 1-mo deposit, 2.5% for 3-mo deposit, and 0% for 6-mo deposit. With the new policy, local banks could offer 1-2% higher net rate (interest minus tax rate) compare to Singapore banks where most of Indonesia export proceeds now been placed. PP on tax holiday is already released In order to attract investment, government offer longer tax holiday facility from 10 years to 20 years along with wider industry coverage. This new regulation will replace the previous PMK No 130/PMK.011/2011 and PMK No 192/PMK.011/2014 which only allow 10 years tax holiday. Investor in steel industry, oil & gas, chemical, machinery, agriculture, telco, marine (new), and KEK (new) could get these facility. Under the package, new tax payer get a maximum 100% income tax free through 20 years (max limit). It only take 45 days to get the approval after all requirements are met. We think this is a positive noting that the former tax holiday release in 2011 could increase FDI by 28% in the next two years. also for tax allowance Meanwhile to retain foreign investment, government released PP No 18/2015 regarding tax allowance. The facility including (1) tax reduction up to 30% for 6 years, (2) depreciation & amortization acceleration, (3) compensation for loss position until 10 years, (4) reduction in dividend payment tax from 20% to 10%. Thus, the one who repatriate their income to offshore will be losing from getting tax allowance and have to pay dividen tax. It only take 25 days to get tax allowance approval after all requirements are met. PT Trimegah Securities Tbk - ECONOMIC FOCUS 1

2 Freeing shipyard tax, PP (Peraturan Pemerintah) No. 65/2015 Logistics and transportations sector also get benefit from tax removal and integrated logistic zone facility. Please note that Indonesia s logistic cost was relatively high at 24% of GDP. Government freeing Value Added Tax (VAT) for shipyard business, railway, and airplane sparepart (the airplane import tax itself is already free). Airplane association revealed that tax removal for sparepart import could minimize 5% of operational cost. For shipyard business, the tax free could increase competitiveness between non-batam producer Vs Batam producer (which already tax free). Furthermore, integrated logistic zone will be launch soon in Tanjun Batu (North Kalimantan) and Merak. PT Trimegah Securities Tbk - COMPANY FOCUS 2

3 September Economy Package-Part 1 No. Topic Date Issue Sector / stocks impacted 1 Gas Industry Pricing September 2015 Lower gas price for several industry to increase local competitiveness Gas, power plant, chemical, ceramic, food, and fabricated metal 2 Visa simplification September 2015 Government plan to freeing visa for several countries to increase tourist visit Tourism, hotel, restaurant 3 Inflation control September 2015 Government state their commitment to control inflation, especially food prices Consumers 4 Rural empowerment September 2015 Strengthen the role of cooperatives, convertion program from fuel to gas Fishery 5 Low income protection September 2015 Giving rice more often (two months additional) Source: Various Source, TRIM Research The Previous March Economy Package No. Topic Date Issue Sector / stocks impacted 1 Tax Allowance for retain dividen March 2015 To retain dividend from foreign companies who are doing business in Indone- Maritime, Oil and Gas, Heavy Equipments, Transportatiosia, the government plan to give tax allowance. 2 Export Tax Allowance March 2015 Tax allowance for export oriented company with minimum 30% of total production is for export purposes Oil and Gas, Plantation, Mining, Textile, Machinery, and Electronic Equipments 3 Logistic Tax Elimination March 2015 Govt will eliminate VAT to reduce logistics cost and Transportation (Shipyard Railway) 4 Anti-Dumping Practices March 2015 Govt will apply anti-dumping import duty of import product to keep price of domestic product attractive Agriculture, Consumer, Flour and Sugar Products 5 Visa Relaxation March 2015 Govt plan to stimulate the tourism segment by freeing visa for 30 countries Hotel, and Transportation, Restaurant, Tourism 6 Biodiesel Product March 2015 Increase production of Fatty Acid Methyl Esters (FAME) component in biodiesel from 10% to 15%, this will reduce dependency on oil import Agriculture, Chemical, Plantation 7 L/C - for commodity transactions March 2015 Encourage applying of Letter of Credit (L/C) for transactions to minimizing risk on price and currency exposure. Coal. Mineral Products, Oil and Gas. Plantation Source: Various Source, TRIM Research PT Trimegah Securities Tbk - COMPANY FOCUS 3

4 Government Intervention & Tax Issues 1H 2015 No. Topic Date Issue 1 Govt intervention - lowering cement price 16-Jan-15 Govt forced SMGR to lower cement price by Rp3,000 per bag or approximately 5% Sector / stocks Comment impacted Cement (SMGR, INTP, SMCB, SMBR) 2 Property Tax 26-Jan-15 3 Property Tax 9-Mar-15 To lower the 5% super luxury tax threshold from Rp10bn to Rp5bn Govt plans to introduce price threshold for 20% luxury tax on new properties (previously only size threshold). medium to highend property companies: BSDE, SMRA, medium to highend property companies: BSDE, SMRA, Already applied After going back and forth, govt seems settling down on Rp5bn threshold for luxury tax, same as super luxury tax 4 Cigarette excise Tax 28-Jan-15 5 Shipping Tax 2-Feb-15 6 Toll Road Tax 5-Mar-15 Govt plans to increase excise tax. Govt budgets imply 13% higher excise tax. Cigarette (GGRM) WINS, LEAD, Increase shipping tax from 1.2% of SOCI, TMAS, revenue to 4-7% of revenue MBSS 10% value added tax to be applied for toll road user. Implementation JSMR, CMNP, is delayed (initially plan to be effective by Apr WSKT 2015) No update until now Upon discussion with shipping industry, govt seems to have shelved this idea. Instead, it plans tax stimulus for shipbuilding industry Govt continues to go back and forth. Last proposal is implementation in 4Q15 7 Stock Transaction Tax 10-Mar-15 Govt will tax some percentage from total transactions; supposed to be executed this year 8 Beverage Tax 17-Mar-15 Excise tax in the beverage industry (esp. carbonate) -- under review Soda products 9 Tax punishing companies with high 15-May-15 leverage 10 E-commerce Tax 20-May-15 Government will put cap on leverage starting in 2016 (to be tax deductible criteria for interest). Banks and mining companies are exempted. Roadmap to be issued by Aug 2015, incl. tax regulation All sectors except banks and mining e-commerce industry No further update but low probability No details yet 11 Tax deductible restrictions on loan write-offs 1-Jun-15 Tax department is actively implementing existing rule requiring tax IDs for loans, affecting loans between Rp5-50mn Banks If applied retroactively, banks may have to post a significant charge to their earnings 12 Tax - Forced revaluation of SOE assets 1-Jun-15 If SOEs have to revised up the value of its land assets, tax payment can be significant for the SOEs. SOE banks, SOE pharmaceuticals Very low probability 13 Govt intervention - KUR to fall 11-Jun-15 Govt requested banks to reduce govt-sponsored micro loan (KUR) to fall from 22-24% to 12%. BBRI Govt will subsidize the difference in loan yield to KUR but unclear how much subsidy 14 Govt intervention - toll road tariff 13-Jun-15 Govt requested toll road operators to reduce tariff by 25-35% for 15 days around Eid moslem festive season JSMR, CMNP, WSKT Impact is 1.4% lower revenue and 5% lower earnings for JSMR Source: Various Source, TRIM Research PT Trimegah Securities Tbk - COMPANY FOCUS 4

5 Rupiah has depreciated by 18.6% YTD Source: Bloomberg, TRIM Research Net FDI flow is near zero Source: BI, TRIM Research PT Trimegah Securities Tbk - COMPANY FOCUS 5

6 Economy in a brief Month Actual Previous CPI Inflation (% MoM) Aug CPI Inflation (% YoY) Aug Core Inflation (% YoY) Aug Trade Balance (USD mn) Jul BI Rate (%) Sept GDP (% YoY) 2Q Source: Bloomberg, TRIM Research Macroeconomy Forecast E GDP growth (%) Headline Inflation (%) Rupiah/US$ (Rp/US$) - avg 11,800 13,660 Rupiah/US$ (Rp/US$) - eop 12,388 15,191 BI Rate (%) eop YR Bond Yield (%) eop Source: PGN, TRIM Research Source: CEIC, TRIM Research PT Trimegah Securities Tbk - COMPANY FOCUS 6

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