The Indonesian government is encouraging SMEs to offer their shares to the public through the Indonesia Stock Exchange (IDX).
The Financial Services Authority (OJK) executive head of stock exchange supervision, Hoesen, said that 11 SMEs were now in the pipeline for initial public offerings (IPOs) to raise about Rp 631 billion (US$45 million) in fresh capital.
“Besides the SMEs, IDX is processing IPO [applications] of 29 other companies,” he said on 17 December 2019. As of 20 December 2019, the IDX has recorded 664 companies listing this year, including 17 SMEs.
Vice President Ma’ruf Amin said at the Indonesian Publicly Listed Companies Association’s (AEI)31st anniversary event that he encouraged more SMEs to go public through IDX, as the majority of them were not listed.
In an effort to encourage SMEs to go public, the government, according to Coordinating Economic Minister Airlangga Hartarto, plans to gradually lower the tax rate for IDX-listed SMEs from the current 25 percent to 17 percent during the first five years after their IPOs. For larger companies, their tax rate will be lowered to 20 percent by 2023 under the planned omnibus law on taxation.
Airlangga stated that his office was now in talks with the Finance Ministry to finalise the technical guidelines on the tax incentives.
Under the planned omnibus law, the government is also planning to offer tax holidays for investment in industries to create more jobs and support businesses that add value to products in key industries. This is in addition to the lowering of corporate taxes. These measures are all part of the government’s plan to improve the investment climate and accelerate growth.
Indonesia’s economic growth has stagnated at around 5 percent per annum since 2013. The World Bank slashed the nation’s annual projection this year to 5 percent from 5.2 percent just recently.
Under OJK Regulation No. 37/2018, SMEs can raise funds from retail investors through equity crowdfunding on online platforms.