Once the market value increases, demand for construction materials, such as steel, concrete and other building materials.
Arief Kamaludin|KATADATA

Construction businesses say the Tax Amnesty law will multiply the value of the construction market next year because it will provide some construction sectors, such as infrastructure and property, with liquidity.

Secretary General of the National Indonesian Association of Construction Companies (Gapensi) Andi Rukman Garumpa said direct repatriation of funds will stimulate the real sector. “The market value is now IDR 1,000 trillion. If the tax amnesty policy is successful, it could reach up to IDR 2,000 trillion next year,” he said Rukman in an official statement on Wednesday (20/7).

Rukman predicted that once the market value increases, demand for construction materials, such as steel, concrete and other building materials, will also rise. Data from Gapensi says Indonesia's construction sector is the largest in Southeast Asia, accounting for some 60 percent to 70 percent of the Southeast Asian construction sector. Indonesia's construction sector is ranked fourth in Asia after China, Japan and India. (Read: Repatriation to Open Industrial Opportunities to Unemployed).

Gapensi also estimated this sector's contribution to GDP could be some 15 to 16 percent “Provided that government spending goes to plan and private investment increases”. (Read: The Regulations for Tax Amnesty Program).

From the fiscal aspect, the tax amnesty will boost the state budget, which will increase the budget for infrastructure in the State Budget. At the same time, the government will be able to cover its fiscal deficit, which is 2.4 percent of GDP.

Meanwhile, Chair of the Association of Indonesian Employers (Apindo) advisory board Sofyan Wanandi said that plans to challenge the tax amnesty program by filing for a judicial review are natural. Almost all laws have been challenged by filing for a judicial review with the Constitutional Court.

However, Sofyan is certain that the Constitutional Court's judges will realise how important this regulation is for driving economic growth. “The leaders of the government and the Constitutional Court must realise that this serves everyone's interests. So they must see the pros and cons it has for the economy,” said Sofyan.

He also claimed that entrepreneurs are ready to sign up for the government's tax amnesty program. “We are ready because it’s only going to be for nine months. Most entrepreneurs want to repatriate (their assets),” said Sofyan. (Read: BI Urges Banks to Increase Foreign Currency Loans to Absorb Influx of Repatriated Funds).

Meanwhile, Apindo Chair Haryadi Sukamdani added there is a possibility that most entrepreneurs will take advantage of the tax amnesty in the first three months of the program, from July to September. He has also convinced his colleagues that the proposed judicial review of tax amnesty law at the Constitutional Court will not disrupt the program.