JAKARTA (TheInsiderStories) – Good morning. Indonesian government and lawmakers from the budget committee had agreed to raise the outlook on tax revenue in the 2019 State Budget to Rp1,784 trillion from earlier estimates of Rp1,781 trillion on expectations of higher income from the oil and gas sector.
The government, represented by the finance ministry, and the budget committee had also agreed to raise the budget’s macro-assumption on Rupiah exchange rate to 14,500 per US$1 from previously 14,400 per US$1. The oil output goal was also raised to 775,000 barrels per day from 750,000 barrels per day.
Higher assumption on dollar exchange rate and oil output stipulated in the 2019 state budget is equal to an additional state income of more than Rp1 trillion (US$68.96 million). That means the government would still have to generate more tax revenue from other sectors.
The original tax revenue assumption in the 2019 budget is already high, aiming for 15 percent increase from this year’s outlook of Rp1,548 trillion. The government had been struggling to meet tax revenue aim, though this year is expected to record a slight improvement as economic activities are gaining traction.
The government had collected Rp907.5 trillion in tax and excise revenue until August, a 16.5 percent rise from a year earlier.
To achieve the higher objective in 2019 tax revenue, the government has to increase Indonesia’s tax ratio to 12.1 percent in 2019 from 10.7 per cent in 2017. The government expected the tax ratio to reach 11.6 per cent by the end of 2018.
The financial market ended in the green on Wednesday (19/09) on the tariff rate imposed by the United States and China in the escalating tit-for-tat trade war between the pair was lower than initially expected.
The Rupiah strengthened to 14,896 per US$1 from 14,908 per US$1. The Jakarta Composite Index ended up 1.1 percent at 5,874 as foreign investors net bought stocks worth Rp258 billion.
The index’s gain was mainly supported by shares of heavyweight PT Astra International Tbk (IDX:ASII) which surged 4.9 percent after data was released that shows the automotive conglomerate managed to increase its share in Indonesia’s car market.
Market’s movement today may be affected by crude oil price which rose after a report showing that US crude oil inventories fell to the lowest level since February 2015. Market may also respond to the meeting between UK Prime Minister Theresa May and EU leaders in negotiating the stalemate over the the British’s exit from the eurozone.
From the politic side, the ruling coalition secured another coup after 10 local government heads in West Sumatra declared their support for the incumbent candidate, President Joko Widodo, in 2019. Though not exactly a size-able province, West Sumatra is one of the provinces where Widodo failed to win a majority in the last presidential election, securing only 23.1 percent of vote shares in 2014.
May you have a profitable day.
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