Jayanty Nada Shofa, Jakarta – Purbaya Yudhi Sadewa, the successor to Indonesia's second-longest-serving finance minister, Sri Mulyani, is already facing calls to tax the crazy rich and restructure the country's debt.

President Prabowo Subianto had just replaced Sri Mulyani with Purbaya in a huge cabinet reshuffle on Monday. Bhima Yudhistira, the executive director of the economic think-tank Celios, said that Purbaya already had a pile of "urgent tasks" in front of him if he wished to restore public trust following the recent nationwide unrest sparked by lavish perks for the country's already-wealthy lawmakers.

To this end, Celios is urging Purbaya to slap a 2 percent tax on Indonesia's richest individuals – a move that the research group estimated to generate Rp 81.6 trillion (around $4.9 billion) in additional revenue each year.

"A 2 percent tax on the assets of the superrich is something urgently needed to both lessen the inequality and boost state revenue," Bhima told the Jakarta Globe.

Celios reported that the 50 wealthiest Indonesians possess personal assets starting from a whopping Rp 15 trillion. Their average net worth is around Rp 159 trillion.

Bhima also urged Purbaya to restructure the government's overwhelming debt – in other words, renegotiate the terms to bring the burden to sustainable levels, among others, by lowering the interest rate. Indonesia can also pursue the so-called debt-for-nature swaps. This mechanism can reduce Indonesia's foreign debts in return for environmental pledges. As a case in point, the US last year agreed to forgive Indonesia's debt of $35 million in exchange for coral reef ecosystem conservation.

"We really need to immediately restructure the government's debt and reduce its interest burden. We should also open up opportunities to swap our debt with energy transition programs or forest conservation ... or even pursue debt cancellation," Bhima said.

The government not long ago estimated that Indonesia's debt-to-GDP (gross domestic product) ratio would reach 39.96 percent next year. Indonesia has set aside Rp 552.1 trillion in state budget to pay off interests in 2025, with the numbers set to increase to Rp 599.4 trillion next year.

It is still too early to judge Purbaya's performance, although the freshly appointed minister had told the press that he did not plan on adding new taxes. Sri Mulyani, too, not long ago said that Indonesia had no intention of rolling out new types of taxes next year, but would focus more on making internal reforms.

Purbaya had also said that he would focus on driving national economic growth. Prabowo has set a target to achieve an 8 percent annual GDP growth within his presidential term or at least by 2029, way above the natural expansion rate of 5 percent. Indonesia's economy expanded 5.12 percent year-on-year (yoy) in the second quarter, although these figures sparked doubts over its accuracy among analysts. Indonesia aims to grow by 5.2 percent this year, and eyes 5.4 percent in 2026.

"Mr. President has instructed me on what I can do to speed up economic growth. I will check out what we can do, including what sort of instruments we can take better advantage of," Purbaya told the press.

The 61-year-old economist used to lead Indonesia's Deposit Insurance Agency (LPS). This agency is in charge of guaranteeing the deposits of banking customers in the country.

Indonesia recently faced nationwide protests with economic inequality as its root cause. Sri Mulyani – who had been Indonesia's finance minister for a total of 13 years – had her house looted by mobs.

Source: https://jakartaglobe.id/business/sri-mulyanis-successor-told-to-tax-the-superrich-restructure-deb