JAKARTA (Yosefardi) – Composite index of the Indonesia Stock Exchange (IDX) closed flat, only down 0.01%, at 5418 at morning close today.
Yesterday, the index ended lower 0.09% to 5419 with the selling, dominated by domestic investors, taking place in afternoon trade.
Foreign investors only booked net buy of Rp61.2 billion, bringing year to date net buy to Rp36.84 trillion. While the rupiah strengthened to Rp13,113 against the US dollar.
Foreign investors might take a stop short for making a massive trading or buying in local stocks as they did in earlier days while awaiting new development on tax amnesty progress.
The global economic slowdown is also another factor weighed on market sentiment. Singapore has Thursdaycut its economic growth target to 1-2% from previous target of 1-3%.
In domestic front, investors concern on the government’s intension to cut the budget and tax tariff. Finance Minister Sri Mulyani proposes a budget cut for Rp68.8 trillion (for budget transfered to regions) and to cut budget amounting Rp65 trillion for Ministries and Financial Institutions (K/L). The combined proposed budget cut totals Rp133.8 trillion.
The economy remains showing a slow growth, at 5.18% in the second quarter of 2016, lower than the government’s projection of 5.3% growth. This might be the main reason for Finance Minister to propose the cut on budget. Sri Mulyani revealed that the proposed cut on budget aimed to keep the momentum of economic growth.
President Joko Widodo said the Government is drafting Law for Income Tax (PPh), Value-added Tax (PPN), and General Provision of Taxation, aiming to support the country’s competitiveness of economy, to have better competition power among other countries in southeast Asia region (Asean). Jokowi said the Government mulls to lower PPh for corporates/institutions to 17% from current 25%, as incentive to attract the capital inflow. Singapore now sets 17% tax for corporates/institutions.