Economics
Zero Tax on Indonesia’s Bonds Seen Reviving Dying Sukuk Market
- Government proposes lowering levy from as much as 20%
- 2016 issuance is $7.3 million versus Malaysia’s $5.9 billion
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Indonesia’s plan to scrap a tax paid by bondholders on their interest payments looks set to inject new life into the nation’s ailing Islamic finance industry.
“Zero tax will definitely encourage more participation by government funds in the Indonesian sukuk market,” said Abas A. Jalil, chief executive officer of consultancy Amanah Capital Group Ltd. in Kuala Lumpur. “Having reputable government funds as investors in the sukuk market would create ‘ride-along’ interest among foreign investors."