Triyan Pangastuti, Jakarta – Repatriated funds from the government's tax amnesty program have yet to leave Indonesia even though the holding period for some of the funds had ended, assuaging fears of a massive capital flight that may exacerbate the country's economic problems ahead of a possible global recession.
Indonesia rolled out its tax amnesty program from July 2016 to March 2017, repatriating Rp 146 trillion ($10.3 billion) of assets previously stashed overseas.
Tax amnesty participants are required to keep their repatriated funds inside the country for at least three years since they brought them back.
"Data from the reporting gateway showed there hasn't been any movement of repatriated funds until August," Robert Pakpahan, the tax director general at the Finance Ministry, said on Monday.
"We are confident the end of the holding period will not trigger an outflow of the funds," Robert said.
Nevertheless, Robert said the government will remain vigilant as the bulk of the repatriated funds could still leave the country over the next six months.
"The funds whose holding period ended in September make up only Rp 12.6 trillion of the total Rp 146 trillion," Robert said.
The World Bank warned in a report last month that a global recession will throw Indonesia's external account off-balance as demand for its exports would drop.
This would spell trouble for a country that has been financing two-thirds of its current account deficit – which averages $33 billion annually – using volatile portfolio investments.
"[Indonesia needs] at least $16 billion per year in external financing inflows to close the gap under normal circumstances... much more if there are capital outflows," the World Bank said in the report.
Hadiyanto, the Finance Ministry secretary general, said earlier that the government had hoped for the repatriated funds to find their way into direct investment in projects across Indonesia, instead of just lingering around in financial instruments.
"The government is continuing to improve the investment climate," Hadiyanto said.