Indonesia has the world’s fourth-largest population at almost 260 million, but only 10 percent are registered as taxpayers and only about one million actually submit a tax return. That’s a major reason for the country’s huge and growing deficit, which has stalled the present administration’s ambitious infrastructure plans.

To jump-start the recovery of assets that wealthy Indonesians sequester abroad, the country launched a tax amnesty program in the summer of 2016. It was an experiment that drew criticism from the likes of OECD, the IMF, and domestic labor unions. Still, as it enters the final days of its nine months, the program has exceeded monetary expectations, netting about $330 billion of tax revenue.

The big question, once it wraps up on March 31, is what to do with that money. Finance Minister Sri Mulyani has created a task force to address the repatriated assets, but they can only really start their work after the final numbers are released. The government must also respond to criticism that the amnesty program lets off tax evaders too easily, to the detriment of the working class.

Closing the deficit

“The revenue from this will significantly contribute to reducing the national deficit,” said Asmiati Malik, an economics researcher at the University of Birmingham. “It could do so by as much as 70 percent: from $23 billion to $8.2 billion.”

In recent weeks, regional tax offices have put on daily public campaigns to encourage participation in the amnesty program. Hestu Yoga Saksama of the Taxation Directorate General told the Jakarta Post as many as 4,000 people signed up for it every day in March that as many as 4,000 people signed up for it every day in March, suggesting it arose from a general tendency to procrastinate on personal finances.

“In our culture, people tend to wait until the very last moment,” said Yoga.

Over three million Indonesians have become new tax payers in the last year, according to the Directorate General of Taxation. This includes high profile business people like those of the Indonesian Chambers of Commerce and Industry, a business lobby, who signed up en masse earlier this year.

Since the 1990s, when there were ethnic riots and political unrest before and after the fall of long-time dictator Suharto, rich Indonesians have relocated money to tax havens like Singapore, according to Bloomberg.

“Two huge benefits of the amnesty program for taxpayers now are the low interest rate and the abolition of tax debt,” said Yustinus Prastowo of the Center for Indonesia Taxation Analysis.

If they repatriate assets, individuals will be charged between two and ten percent interest, rather than typical corporate or personal income tax rates, which can reach 30 percent. And they must commit to keeping those assets within Indonesia for at least three years.

Expanding the tax base

Indonesia has already generated more revenue from its tax amnesty experiment than analogous efforts in countries like India and Germany, but according to some experts, there remains room for expansion.

“The major issue is that the number of taxpayers who joined the amnesty program is still low, proportionally,” said Malik. “There are roughly 700,000 people who joined the program out of a total 32 million taxpayers… which is only 2.2 percent of those eligible.”

Malik called for a more progressive tax policy to increase participation in both the amnesty program and taxation in general. “It should be more progressive regarding extensification [widening the tax base], and increase the incentive for tax compliance and avoidance,” she said. “These solutions hinge on using ‘one-gate identification’ that integrates a person’s bank account, national ID, and tax ID, so that no one can avoid declaring their assets.”

That being said, the first round of the amnesty program is well-timed; by September of this year, Indonesia will join the Organization for Economic Cooperation and Development’s Automatic Exchange of Information initiative to share its tax figures internationally. That means it will be able to access the details of Indonesian citizens’ offshore assets in countries like Singapore and the Cayman Islands.

Rising inequality

The OECD, however, was an early critic of Indonesia’s project of tax amnesty. Programs like this are “unlikely to deliver benefits that exceed their true costs, but carry a risk of leading to an erosion of the gross revenue collected and may negatively affect overall tax compliance,” Philip Kerfs, of OECD’s Centre for Tax Policy and Administration, told Bloomberg in August 2016.

Opponents of the program argue that tax evaders are essentially rewarded for flouting the law.

Last fall, there were large worker protests in Jakarta against tax amnesty, and most of the country’s labor unions have vocally opposed the policy.

The International Monetary Fund also expressed doubts about the program. “We were a little skeptical with the implementation of tax amnesty anywhere, but we hope we are wrong in Indonesia,” said IMF’s Luis Bereu.

On Monday, the Directorate General of Taxation announced it was devoting “special attention” to pursuing several members of a Forbes list of the richest Indonesians who have not yet registered for tax amnesty.

Prastowo suggested another reason why the funds may eventually fall short of their potential — the hardline rallies that gripped Jakarta last November and December, against the city’s Chinese Christian governor. The political disturbance, he said, may have deterred investors from bringing their money back home. It’s a remarkable parallel to the unrest that sent many wealthy Indonesians packing in the first place.
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The stairs are worn down by a millennia of use, but soon the footsteps on some of Myanmar’s most sacred temples may cease amid concerns about the damage done by increasing numbers of tourists.

The sprawling site of Bagan, home to well over 2,000 mostly Buddhist monuments that date back as far as 1057 AD, has become a major lure for travelers as Myanmar becomes an increasingly popular destination.

But as fears grow for the holy sites over the architectural – and cultural – impact of those in search of a good view, so too do calls to ban temple climbing altogether.

In search of something more

At 34-years-old, Charles de Valois quit his job in digital marketing and set off traveling through Southeast Asia in search of something more.

Valois told VOA that Myanmar had been a particularly appealing prospect – somewhere he’d heard good things about from friends.

“It’s a country we talk about because of the politics,” he explained from his hostel, one of many that now line the streets surrounding Bagan. “It changes a lot, and I was curious to see that before it totally changes, before it’s [made] rotten by tourism.”

When it came to the core appeal of this ancient site, Valois is succinct. For him, as for many of the 250,000 tourists who visited in 2015,  it “really is all about the sunrise and sunset.”

WATCH: John’s video report

It is the search for the most stunning view of this panorama that has led tourists to climb up the temples themselves – and led the authorities to the brink of a ban.

Rapid growth

Since political reforms started in 2011 and culminated in the country’s first openly contested election in November 2015, Myanmar’s transition from military dictatorship has meant a country once deemed off limits for many foreigners is now a viable holiday spot.

Figures from the Ministry of Hotels and Tourism show tourist arrivals in 2015 reached 4.68 million, compared to 800,000 in 2010.

A tour guide for nearly three decades, Zaw Win Cho recalls learning his trade as a child showing the smattering of tourists who headed to the site back in the 70s.

“When we were young, we had only three hotels run by government… not many tour guides at the time – not more than 10 in the whole town – and not more than five taxis.

“Nowadays we have about 250 tour guides, about 300 taxis and 100 hotels.”

Not that he is too wistful. Like many others he has earned a living from the tourism industry in a part of Myanmar known as the ‘dry region’, where national poverty levels of around 26 percent are exacerbated by poor agricultural prospects.

But in the case of Bagan, tourism growth comes at a price, and calls for a ban on some activities are coming from two different sources.

Growing concerns

Than Zaw Oo is leading the Ministry of Culture’s ongoing efforts to secure Bagan UNESCO world heritage status.

“Right now, to climb up monasteries [is something] we dislike because of overloading” he said. “We need to be protecting [them] because all these monuments [date back] more than 1000 years and so are very fragile.”

Last February the ministry of culture closed access to the five temples that could be climbed, only to reverse the decision shortly afterwards.

However, concern has been escalated amid ongoing restoration work following the impact of a 6.8 magnitude earthquake last October, which damaged 389 monuments, 89 of which were badly affected.

It is not just archaeologists concerned.

Bagan is a site of profound religious importance in Myanmar, where nearly 90 percent of the population practices Buddhism.  

While in Bagan, VOA spotted at least one temple where ‘do not climb’ signs were being ignored, but it is the breaking of cultural rules that is generating a more immediate response – acts termed “culturally disgraceful” by the authorities during last year’s short-lived ban.

Posters up on the walls of hostels asking guests not to wear shoes, party or drink alcohol on the temples are testimony to the fact that not all are respectful of these rules.

“There are some cases of tourist not knowing or understanding that they aren’t supposed to climb or wear footwear in some restricted places,” explains Nyaung-U district administrator Soe Tint, who is supportive of a ban. “We sometimes, more or less, feel like our beliefs are being imposed upon.”

A balancing act

Like many others mulling a ban, Soe Tint is all too aware of the dangers of scaring off tourists.

“We are trying to balance things out and trying to make this accessible for everyone,” he said, adding the hope is to move people to alternative spots, including existing and newly built viewing hillocks.

Though Soe Tint claimed the idea had strong local and national support, views are far from unanimous on the matter. Tour guide Zaw Win Cho, for example, thinks allowing tourists to climb up more temples will help spread the load.

Reaching the end of his time in Bagan, de Valois is conflicted about climbing temples. Taken aback by the beauty of the sights he has seen atop them, he nonetheless had to suppress a guilty feeling.

“I think it’s important when you travel to respect the country you’re in, and I have the feeling when climbing on the temple that perhaps it’s a bit wrong,” he said.

“Selfishly,” he added, “I’m happy it’s still authorized.”

 
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Amazon purchased the Middle East’s biggest online retailer Souq.com on Tuesday for an undisclosed amount, a day after a state-backed firm disclosed an $800 million counteroffer.

A joint statement described the purchase as expanding Amazon’s influence into the Mideast as the state-supported firm Emaar prepares to launch its own retail website in a country known more for its luxury malls than online shopping.

That could put Seattle-based Amazon in a head-to-head competition with a firm helmed by one of the sheikhdom’s favored business magnates.

“This is a milestone for the online shopping space in the region,” Souq.com co-founder and CEO Ronaldo Mouchawar said in a statement.

The announcement said the two companies expect the sale to close this year.

“Together, we’ll work hard to provide the best possible service for millions of customers in the Middle East,” Russ Grandinetti, a senior vice president at Amazon, said in a statement.

On Monday, Emaar Malls PJSC made public its bid for Souq.com in a filing on the Dubai Financial Market. The short filing, signed by Emaar Malls vice chairman Ahmad Thani al-Matrooshi, said the bid was made “in line with the strategy to align e-commerce with physical shopping.”

Rumors about Amazon’s interest in Souq.com have circulated for months. In November, Emaar chairman Mohamed Alabbar reportedly met Amazon CEO Jeff Bezos at the state-backed firm’s cavernous Dubai Mall, home to a massive aquarium and in the shadow of the Burj Khalifa, the world’s tallest building it built.

Dubai, the commercial capital of the United Arab Emirates, home to the long-haul carrier Emirates and the world’s busiest international airport, also has luxury malls that even include an indoor ski slope. Its summer heat of over 50 degrees Celsius (122 degrees Fahrenheit) makes malls a major attraction for both shopping and leisure time in the city.

While Uber and other online services firms work in Dubai, online retail shopping has yet to truly take off like it has in Western countries.

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       Follow Jon Gambrell on Twitter at www.twitter.com/jongambrellap . His work can be found at http://apne.ws/2galNpz .

       AP-WF-03-28-17 0927GMT

 
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As Myanmar opens up and tourist numbers increase, more visitors flock to the country’s renowned ancient holy temples of Bagan. But there is growing concern that those on the hunt for the site’s famed views may have gone a step too far.
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A report from a U.S. think tank says China has nearly completed construction work on three man-made islands in the South China Sea, giving it the ability to deploy combat aircraft and other military assets to the disputed region.

The Washington-based Center for Strategic and International Studies analyzed recent satellite photos and concluded that runways, aircraft hangers, radar sites and hardened surface-to-air missile shelters have either been finished or are nearing completion.

The report, released Monday, appears to be the most conclusive indication yet that China is using its island-building project to give teeth to its claim over almost the entire South China Sea and its islands and reefs.

The islands in the study — Subi, Mischief and Fiery Cross reefs — are part of the Spratly chain, which is claimed in whole or in part by China, the Philippines, Vietnam, Malaysia, Taiwan and Brunei.

On each of the islands, China has constructed enough concrete hangers for 24 fighter jets and four or five larger planes such as bombers or early warning aircraft, CSIS reported.

China already uses an existing airfield on Woody Island in the similarly disputed Paracel chain, located to the north, where it has maintained mobile HQ-9 surface-to-air missiles for more than a year and deployed anti-ship cruise missiles on at least one occasion, CSIS said.

The airfields and advanced surveillance and early warning radars will allow China’s military to operate over virtually the entire South China Sea.

“Beijing can now deploy military assets, including combat aircraft and mobile missile launchers, to the Spratly Islands at any time,” the report said.

China’s creation of seven man-made islands in the South China Sea has drawn strong criticism from the U.S. and others, who accuse Beijing of further militarizing the region and altering geography to bolster its claims.

China says its island construction is mainly for civilian purposes, particularly to increase safety for ships that carry an estimated $5 trillion worth of goods through the waterway each year. It has also provided reassurances that it will not interfere with freedom of navigation or overflight, although questions remain as to whether that includes military ships and aircraft.

Commenting on the report, a senior Philippine defense official said the construction China has carried out on the islands “belies a clearly military purpose contrary to Chinese public pronouncements that it is civilian in nature.”

That raises the likelihood of further militarization and restrictions on air and sea traffic, posing a “clear and present danger to the present regional security balance,” said the official, who requested anonymity because he was not authorized to speak to reporters on the matter.

China has refused to confirm speculation over whether it plans to declare an air defense identification zone over the South China Sea as it has done already over international airspace in the East China Sea. The U.S. has refused to recognize the East China Sea zone, which requires aircraft to declare their flight plans, identify themselves to Chinese traffic monitors and follow their instructions.

 
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The body of the half-brother of North Korean leader Kim Jong Un is still in Malaysia, the country’s health minister said Tuesday, dismissing reports that his remains were about to be flown out of the country as part of diplomatic negotiations.

Malaysian authorities say Kim Jong Nam was killed Feb. 13 after two women smeared his face with the banned VX nerve agent at Kuala Lumpur’s airport. North Korea — widely suspected of being behind the attack — rejects the findings.

Conflicting reports in the local media on Monday said either that Kim’s body was to be cremated and flown to Pyongyang, or that the body was about to be sent to Macau where his family is believed to be.

But Health Minister Subramaniam Sathasivam said Kim’s body was still in a morgue, pending negotiations with North Korea.

“I need to check with my forensic department whether there is any requirement for them to take the body out. But as far as we are concerned, there has been no change,” he said.

Kim’s death has sparked a diplomatic dispute, with the countries imposing an exit ban on each other’s citizens. Malaysian officials have pledged to secure the release of nine Malaysians — three embassy staff and six family members — stranded in Pyongyang but have been tight lipped on the negotiations.

About 315 North Koreans are in Malaysia but the focus is on three of the seven North Korean suspects wanted by police in connection to Kim’s death. Police have said the three men, including the embassy’s second official and a worker with North Korean carrier Air Koryo, are believed to be hiding in the embassy. Four others left the country on the day of the killing.

Confusion set in after local media reported that Kim’s body was taken out of the morgue late Sunday. Later reports then said it had been returned to the hospital due to technical problems with airline cargo.

Subramaniam said the government will keep the body until a solution is found “to this problem.”

“Once they finish the discussion and come to a definite decision, we will make an announcement,” he said, in reference to the negotiations.

The countries have each expelled the other’s ambassador. North Korea then blocked all Malaysians from leaving until a “fair settlement” of the case was reached. Malaysia followed suit, by barring North Koreans from exiting its soil. Both countries also scrapped visa-free travel for each other’s citizens.

Although Malaysia has never directly accused North Korea of being behind the attack, many speculate that Pyongyang must have orchestrated it. Experts say the VX nerve agent used to kill Kim was almost certainly produced in a sophisticated state weapons laboratory, and North Korea is widely believed to possess large quantities of chemical weapon.

The attack was caught on surveillance video that shows two women going up to Kim and apparently smearing something on his face. He was dead within 20 minutes, authorities say. The women — one Indonesian, one Vietnamese — have been charged with murder but say they were duped into thinking they were playing a harmless prank.
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