Investments and the Indonesian Tax Amnesty 2016

Puspawarna

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Personally, I don't have the money, knowledge, or appetite for risk to invest in Indonesian property. But it is an interesting question. I suspect I would be cautious, in any case - the line that gives me pause, from an anonymous Singaporean private banker, is:

"I have not seen tax amnesties work exceptionally well in other centers so it is unclear how effective this one will be."

Of course, that could be wishful thinking on his part.

BTW, there is another thread on tax amnesty (though not with respect to real estate strategies) here.
 

Bad_azz

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I can say that the value of our house has risen dramatically. Location, location, location.
If I was to give a tip I would advise investing in Bandung- because if that high speed rail link (BDG -JKT) does get finished then a 30 minute rail commute will see people opting to live in the cool climate here & commute to Jakarta.
That has to have an effect on the economy in Bandung & the property prices- the ones near the rail link will price the locals out of the market and they in turn will move a bit further out.
Nothing to do with taxes tho- so sorry if I slid off topic.
But that is my take on it- it just seems logical.
 

Nimbus

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Due to the sharply growing population, property values in Indonesia can only go up, the only question is how fast. Once I have enough saved, I'll definitely invest in property. It's not terribly uncommon for property values to increase 100% in two to three years. The 10% annual return on U.S. stock index funds looks pretty sad in comparison.
 

dafluff

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Note: I moved the thread to the Money Matters and Investment forum, and edited the title to Investments and the Indonesian Tax Amnesty 2016

I think discussion on possible investment ideas to react to the tax amnesty definitely deserves its own thread.
 

Rainman

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I can say that the value of our house has risen dramatically. Location, location, location.
If I was to give a tip I would advise investing in Bandung- because if that high speed rail link (BDG -JKT) does get finished then a 30 minute rail commute will see people opting to live in the cool climate here & commute to Jakarta.
That has to have an effect on the economy in Bandung & the property prices- the ones near the rail link will price the locals out of the market and they in turn will move a bit further out.
Nothing to do with taxes tho- so sorry if I slid off topic.
But that is my take on it- it just seems logical.

My Friend and me both both brought a house in BSD city in 2010. And in 2013, the price of our house triple. Wow. My brought fr 700 Juta and went up to 2.3 M. Thereafter from 2013 until now, the price did not move at all. Still the same.

Bandung. It is as expensive as in Jakarta. For long term investment. U hv to look further. Just went to Sukabumi, the Toll road from Bogor to Sukabumi should be ready in 2 years and prices would shot up to the sky then. Now the price there is about Rp 450,000 to one juta per SQ meter depending on where u look. If u go deeper, then you can get even at Rup 100k per sq meter. So many factories hv already moved to Sukabumi and was surprised to find Japanese and Korean KTV at the main street.

U heard of this Place? - https://www.facebook.com/pages/Ciletuh-Geopark/136787240013696

Land price is about Rp 45k per sq meter. https://www.facebook.com/photo.php?...3677516.106918.100000731505438&type=3&theater

Toaday exchange rates at Bank to Sell dollar - Rup is 12,900 to a dollar. Possibly hit 12,000 to a dollar by Oct and Interest rates is falling.. So??
 

Bad_azz

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There are still pockets around Bandung where the prices are fairly low.
 

HappyMan

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There are still pockets around Bandung where the prices are fairly low.

It's all relative, isn't it?
If I had the money to invest in property, I'd be looking for something outside the city, in hopes of a phenomenal return once development moved out that way. The thing is, some of those places outside the city don't do so well for returns in the short term. The F-i-L has some land on Jalan Chagak (sp?), on the way to Subang. It's near a busy intersection, so he put a mini-market on it with a ruko. The selling of price of the land has gone up quickly, but the rental income from the ruko does not reflect it. If he wanted an income... Then again, I hear similar things about land in the city. There are plenty of properties with an income at less than 5% of the "value", I've been told. All makes me wonder if we are headed towards the popping of a giant bubble, or what.

Guess I'm lucky not to have the money to try my hand in the game...:playball:
 

Missnaughty

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Lombok now have few developments of high end villa. Marketed to investors and high end market. Seems the market is getting better. Yes, price is increasing.. but not sure good well the market really is. Have few mixed marriage couple friends bought properties there recently. To me, Lombok is still a wild market/unstabil ... you never know where their development is heading on to.
 

jstar

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About the valuation of the houses, land and appartments in RI: Sorry to say, but many people pull numbers out of their @ss. It is not based on an objective price for sqm and facilities but purely on; "the lady two doors further is asking xxx billion for her house so ours should be at least the same!". And when someone can't sell his house, he increases the asking price! So unless you see a sales contract or have the money in your hand, takes those 'my house is worth 3x more than when I bought it' stories with a grain of salt. And don't calculate yourself rich.

About the DKI and surroundings: A place like South Tangerang (BSD & Serpong) has still such an amazing amount of free space for the developers to use, they can keep on going for 10 years (in my conversations with Paramount marketing) it is not very wise to invest there for a short term gain. Especially since many people want a new built, not a 3 year old house. If (big if) the Pluit island developments and the Big Garuda get materialized, it would not be a bad place for investment. But Agung Sedayu and Agung Podomoro have quite some issues there. Luckily I pulled out of the Branz and Holland Village projects.
 

waarmstrong

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I can say that the value of our house has risen dramatically. Location, location, location.
If I was to give a tip I would advise investing in Bandung- because if that high speed rail link (BDG -JKT) does get finished then a 30 minute rail commute will see people opting to live in the cool climate here & commute to Jakarta.
That has to have an effect on the economy in Bandung & the property prices- the ones near the rail link will price the locals out of the market and they in turn will move a bit further out.
Nothing to do with taxes tho- so sorry if I slid off topic.
But that is my take on it- it just seems logical.

Bandung as a Jakarta suburb -- could happen.
 

dafluff

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Bloomberg reports that since the announcement of the tax amnesty, the Indonesian stock markets, particularly the property and infrastructure stocks have raised rapidly (14% and 10% respectively between end of June and 1st of August. However, as the reality in the shortfall of the amnesty has set in, many people are dumping Indonesian stock and they have declined since.

http://www.bloomberg.com/news/artic...lted-by-reality-as-tax-amnesty-optimism-fades

The biggest shortfall is in the estimated repatriation of foreign assets. It was expected that Indonesian's stashing their cash overseas would bring it back. People that thought this obviously did not read the text of the law of the tax amnesty law. The difference in penalty between only declaring your overseas assets vs declaring your overseas assets and repatriating it is a meager 2% for the first 3 month period. The assets repatriated have to also be invested in approved Indonesian vehicles for a period of 3 years.

It is incredibly unattractive to move assets already safely in hard currency abroad back to Indonesia then locked in Indonesian paper for 3 years. To make matters worse, many Singaporean banks have offered to "take care" of the 2% penalty by increasing the interest earned on assets in that country, and further Singaporean banks are now reporting any customers that even mention the word "amnesty" to the police under the pretext that those assets are now suspicious.

We shall see what the government will do when the shortfall becomes more and more critical.
 

jstar

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Indeed, and if you see what a SGD is doing vs the IDR...

image.png
 

scouser59

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Im not to much aware of the jakarta and surrounds market , but for sure in bali the bubble has burst , property remains unsold even after substantial reductions , personally I would not buy anything here unless it was dirt cheap because for sure you will need to do a big spend on major renovations in a few years because of build quality , in south bali there is also a looming water supply problem , when that rears its ugly head it will be like a "ghost town".

no water = no people !
 

CjoNot

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Investments and the Indonesian Tax Amnesty

Was anyone else sold investment in LM investments in Australia? I'm still reeling from the shock of losing most of my retirement funds and really don't know where to go for advice or help. The IFA who sold it to me seems to have disappeared and because I invested in the MPF it now seems that this was not regulated in Australia and so there will be no help there. What can I do?
 

2knowmore

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I tend to agree that property prices in Jakarta have been in stagnation for at least 2 yers. I noticed some used homes in good locations have gone down which makes them a real bargain. It's really a good buy for someone with some cash to spare. What I don't expect despite the amount of penalties being paid from tax amnesty, the IDR is still weak. I would've thought IDR would be stronger.
 

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