The past year 2014 had been a challenging year for the Indonesian economy. Indonesia's economy in 2014 grew at its slowest pace in five years. Since the beginning of 2014, economic growth has been trending down as exports of primary commodities fell, and growth slowed in the international market, especially China. In addition, the high interest rate environment and the weakening of Rupiah had affected the domestic demands as well. The year 2014 also marked with the legislative and presidential elections.
With that backdrop, we asked senior banking executives in December 2014 for their views as to how they see 2015 and challenges ahead. Our survey covers bankers’ prediction, concerns, comments on regulations, responses to new government initiatives and thoughts on consumer banking trends.Read more
Foreign Account Tax Compliance Act (FATCA) is constantly-updated regulation. The United States Internal Revenue Service (IRS) has been continually releasing announcements and update in order to accomodate the needs and concerns of FATCA's global stakeholders. As of January 2015, the IRS has issued new Frequently Asked Questions (FAQs) and guidelines on creating self-certification forms and IDES. Additionally, the IRS has also released the new version of the W-9 form which must soon be adopted by financial institutions globally.
At present, Indonesia is subject to a specific FATCA regime. Indonesia has been granted with "Model 1 IGA in substance" status since May 4th 2014 which was supporsed to expire on December 31st 2014. However, this status has been extended based on IRA Announcement 2014-38 yet there are cautionary clauses that must be noted by relevant Indonesian Financial Institutions (Indonesian FIs). Furthermore, the respectice Indonesian FIs must be concerned with the progressing FATCA timeline. The nearest deadline will be indentification of pre-existing high-value individual accounts, scheduled to be due on June 30th 2015 at the latest.Read more
Over the past five years, PwC Indonesia has asked the views of senior banking executives across Indonesia to gather and sunthesise their diverse opinions for our Indonesian Banking Survey.
The survey endeavours to share bankers' insights on business strategies for growth and challenges; discuss bankers' views on major business areas; and promote mutual understanding across the Indonesian banking industry.Read more
FATCA, the Foreign Account Tax Compliance Act, was enacted by the US Congress ub 2010 in order to prevent and detect offshore tax evasion. The complex FACTA required certain non-U.S. financial institutions to identify, report, and withhold tax of certain account holders for the Internal Revenue Service (IRS). Financial institutions (FIs) that are in scope of FACTA and have to register with the IRS are depository institutions, custodial institutions, insurance companies with annuity contract, investment entities, certain holding and treasury centres. However, FIs such as BPR (Bank Perkreditan Rakyat), financing companies, cooperatives, and other certain FIs do not need to register with the IRS since they are considered complied with FACTA. The cost of non-compliance for financial institutions that are not subject to FACTA exemption is the imposition of 30% withholding tax on their US-sourced income.Read more
Bank Indonesia has issued a new regulation No 16/20/PBI/2014 on the implementation of Prudential Principles in Managing Offshore Borrowings by Non-Bank Corporations which will be effective from 1 January 2015.
The objective of this regulation is to enable Bank Indonesia to manage offshore borrowings to optimise their contribution to national economic and macroeconomic stability. In order to achieve this, Bank Indonesia would also like to emphases the importance of financial risk management, especially in foreign exchange currency, liquidity risk and overleverage financing.
As a result, financial information is required to be reported to Bank Indonesia as evidence of fulfilling this regulation.Read more