JAKARTA (TheInsiderStories) – Starting today, a zero percent down payment for landed house, flat, shop, and office together with automotive sectors is officially valid after Bank Indonesia (BI) announced the policy since mid-February 2021. The central bank only allows the lenders that have a health non-performing loans of financing (NPL/NPF) not more than 5 percent to run the policies.
According to the governor, Perry Warjiyo, the central bank also removed the rule for the gradual disbursement of indent property to encourage credit growth in the property sector. For banks that have NPL/NPF above 5 percent, the loan or financing to value (LTV/LPF) is only 90 – 95 percent.
To support the policies issued by the Financial Services Authority (FSA) and BI, today The government plans to announces preparing fiscal incentives such as tax breaks for property entrepreneurs. The government will issue tax breaks such as tax relief in the value added tax (VAT) for the buyer and cutting the final income tax for land and building leases, which currently stands at 10 percent of the transfer of land and building rights.
Then, loosening required for foreigners to buy apartments, as long as the immigration requirement are complete. The government also stipulates that foreigners to purchase high-rise buildings, residential property in special economic zones, free trade and port zones, industrial zones, and other economic zones, like tourism areas that support vertical housing development and have an economic impact on the community.
In the virtual conference on Monday, finance minister, Sri Mulyani Indrawati said the government has prepared tax incentives up to Rp5 trillion (US$350.88 million) for the property players, as part of the 2021 national economic recovery program, which pegged at Rp58.46 trillion. She hope that fiscal incentives can boost the economy since the first quarter of 2021.
The tax incentives regulated in the Minister of Finance Regulation Number 21 of 2021 which will take effect from March 1 to August 31, 2021 and clasified in two schemes. First, a 100 percent discount for the selling price of landed houses and flats with a maximum of Rp. 2 billion. Second, a 50 percent VAT discount for the selling price of landed houses and flats of more than Rp2 billion to Rp5 billion.
The government also use tax incentive in the form of income tax for micro, small and medium enterprises and sales tax discounts on luxury goods for cars. In addition, the incentives also implementing in the form imports exemption, VAT refunds, Article 25 discounts, reduction of corporate income tax rates from 25 percent to 22 percent, and free VAT in bonded areas or ease of import for export purposes (KITE).
Earlier, BI and the Financial Service Authority (FSA) has relaxed the down payments for automotive sectors to zero percent for all types segments. The relaxation also will be effective on March 1 to Dec. 31, 2021. According to BI’ calculation with these relaxation he believed that growth in the consumption sector will increase by more than 0.5 percent.
While, senior economic minister, Airlangga Hartarto, has announced, the government set the zero percent of VAT, followed by 50 percent of rate in the second stage, and 25 percent in the third stage. He adds, the amount of this incentives will be evaluated every three months.
The policy, he said, needs to be supported by the regulators policy to encourage motor vehicle loans, through down payment and a reduction in risk weighted assets. Based industry ministry data, its calculated that the auto production will increases to 81,752 units per month. The additional output of the automotive industry are also estimated to be able to contribute to the state revenue around Rp1.62 trillion.
Hartarto noted, the recovery in production and sales of the automotive industry will have a broad impact on other industrial sectors, because these sector is closely related to other supporting industries.
“We hope with the incentives, the consumption of middle-income people will increase and drives the economic growth in the first quarter of this year,” said the minister.
In 2020, Indonesian car sales dropped by 48.35 percent during 2020 depressed by the COVID-19 pandemic. According to the Association of Indonesian Automotive Producers (GAIKINDO), during of last year, the car-maker only sold 532,027 units from 2019 around 1.03 million units.
Based on the organization data, the worst auto sales occurred in April since the crisis in 1998, only sold 7,868 units or subsided by 90.63 percent compared to April 2019, which recorded 84,056 units. While, the highest sales happened in January, when sales touched 80,435 units in a month.
In detailed, passenger car sales such as sedans, two-wheels, four-wheels, still dominate with a percentage of 73.1 percent or 388,886 units. Then, the commercial vehicle sales increased 26.9 percent or 143,141 units. This year, the association hope the automotive market will recover than last year and could sell 750,000 units of car.
To boost the public purchasing power and national economic recovery, President Joko Widodo’ administration has prepared Rp372.3 trillion (US$26.59 billion). Based on BI’ data, as of January 2021, home property credit growth only grown 3.6 percent and automotive sales contracted 26 percent on an annual basis.
-updated on 5.52 p.m.
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