TEMPO.CO, Jakarta-Finance Minister Bambang Brodjonegoro said that if the repatriation goes well, the private sector's foreign debt will decline. The status of funds will be switch from foreign debts into capitals or equity. He also said that foreign ownership in state bonds will decline as many will switch statuses into domestic ownership.
"It is still their money—Indonesian citizens who are using the special purpose vehicle (SPV) in Singapore to invest," he said at the State Palace, Jakarta, last week.
According to Bambang, some capital owners are committed to changing the status of their investments from foreign direct investment (FDI) into domestic investments (DCI). "As an impact, foreign investments will decline."
He said that in addition to increasing state revenues, the tax amnesty program will strengthen the rupiah. But, Bambang said that the rupiah must be kept from appreciating too high, as a drastic gain would disrupt export performance.
"Domestic products will become less competitive. Right now, some countries are even purposely devaluating their currencies [to prevent that from happening]."
The inflow of fresh funds is also expected to boost foreign exchange reserves. According to Bank Indonesia (BI), as of June 16, 2016, Indonesia's forex reserves amounted to US$109.79 billion.
Bambang added that bank liquidity will increase. "This must be distributed, otherwise it could cause problems. There are a variety of investment instruments to be offered," he said.
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