Indonesia and Singapore have signed an agreement for swap and repo transactions between Bank Indonesia (BI) and the Monetary Authority of Singapore (MAS), amounting to US$ 10 billion. Announced by President Joko Widodo and Prime Minister Lee Hsien Loong, this cooperation aims to address global financial market uncertainties. The agreement includes local currency swaps and US dollar repos to support financial stability in ASEAN and globally.

Indonesia and Singapore have signed an agreement for swap and repo transactions between Bank Indonesia and the Monetary Authority of Singapore, totaling US$ 10 billion. This was announced by Indonesian President Joko Widodo and Singaporean Prime Minister Lee Hsien Loong after signing three MoUs. Amid global financial market uncertainty, both leaders agreed to strengthen regional and bilateral cooperation to enhance monetary and financial stability. Details of the cooperation will be further elaborated by the central banks.

Indonesia and Singapore signed four memorandums of understanding (MoUs) in addition to a bilateral investment treaty (BIT) in Bali. The agreements cover cooperation in Industry 4.0, tourism, fintech, and financial technology education. Key stakeholders include Enterprise Singapore, Kementerian Perindustrian Indonesia, Pelindo III, Star Cruises, Otoritas Jasa Keuangan Indonesia, Otoritas Moneter Singapura, Singapore Ngee Ann Polytechnic, and Direktorat Jenderal Riset, Teknologi, dan Pendidikan Tinggi Republik Indonesia. The signing was witnessed by Prime Minister Lee Hsien Loong and President Joko Widodo.

Bank Indonesia (BI) projects the current account deficit (CAD) for this year to be 2.9% of GDP, which is considered safe as it is below 3%. Governor Perry Warjiyo highlighted measures taken by both BI and the government to manage the CAD, including mandatory B20 to reduce crude oil imports, increasing luxury goods import taxes, and boosting foreign exchange from the tourism sector. BI has also raised the benchmark interest rate by 150 basis points to 5.75% to address global pressures, despite controlled domestic inflation.

The Ministry of Finance will start insuring state assets next year to anticipate natural disasters. Vice President Jusuf Kalla highlighted the current lack of fiscal risk guarantees for state assets, which burdens the state budget when damages occur. The government plans to identify all natural disaster risks and develop the best fiscal mechanisms and financial instruments to support the most effective and rapid rehabilitation.

The Indonesian Ministry of Finance is planning to expand the 0% value-added tax (VAT) policy to nine types of service exports, up from the previous three, aiming for implementation by the end of the year. The policy expansion is being coordinated with the Fiscal Policy Agency (BKF), and addresses technical issues such as double taxation in the service sector. Yustinus Prastowo from the Center for Indonesia Taxation Analysis suggests that the government should apply VAT based on the destination principle, where VAT is charged in the country utilizing the service, to avoid double taxation. The expansion is seen as a potential solution to Indonesia's current account deficit and payment balance issues, with the aim of boosting service exports.

The Directorate General of Taxes (Ditjen Pajak) in Indonesia plans to remove the requirement for export proceeds (DHE) to be placed in the same bank where they were received, as this rule has been burdensome for businesses. The current regulation, outlined in the Minister of Finance Regulation (PMK) 26/2016, mandates that DHE deposits must be placed in the same bank to benefit from reduced tax rates. The proposed change aims to provide more flexibility for exporters, although the government is still reviewing the specifics of the new policy. Business representatives, such as Anne Patricia Sutanto from PT Pan Brothers Tbk, have expressed that the existing rule limits their flexibility and poses challenges for banks in verifying export proceeds.

The Directorate General of Taxes in Indonesia is revising the tax provisions on interest from Export Proceeds Deposits (DHE) due to the lack of popularity of government-offered incentives among exporters. The main issue is the banks' reluctance to ensure that the funds are indeed export proceeds, fearing penalties from the tax authority. Anne Patricia Sutanto of PT Pan Brothers Tbk suggests that the banking issue needs to be addressed first for optimal implementation. Exporters also find the requirement to place DHE in the same bank as where it was received to be inflexible. Industry leaders like Benny Soetrisno and Ade Sudrajat are not well-informed about the incentives, which vary depending on the currency and duration of the deposit, offering significant tax reductions for longer deposits.

The Indonesian government is formulating a new policy for final income tax (PPh) on interest from government and private bonds, aiming for a swift execution. The Directorate General of Taxes, in collaboration with the Ministry of Finance and the Fiscal Policy Agency, is reviewing this policy. The review includes potential incentives for export earnings (DHE) deposited in foreign currency or rupiah. Current regulations set varying tax rates based on the duration and currency of the deposits, with significant reductions for longer-term deposits.

The Indonesian government is considering a new policy to potentially reduce the final income tax on government bond interest to zero percent. This move aims to influence bond yields, which have risen above 8% due to global financial market uncertainties. The Ministry of Finance is revisiting a 2016 proposal to eliminate this tax, which could make government bonds more attractive to investors but reduce direct tax revenue. Discussions are ongoing, comparing tax practices in other countries and considering the impact on different types of bondholders. Experts suggest that lower taxes could incentivize investment in long-term bonds.