Thursday, December 28, 2017

US Economic Reforms Will Benefit Indonesia

US President Donald Trump is currently heavily restoring the United States (US) economy in various ways. One of the latest related tax reforms that will be made this superpower. This tax reform will improve the US economy itself.

Executive Director of Economic Action Indonesia Ronny P Sasmita analyzed the issue of US tax reform. Although these provisions apply to US taxpayers, taxation reform has significant consequences for global companies, markets and economies, especially emerging market countries.
The most important change is that there is a US corporation tax whose portion is no less than the individual tax.


He said the US congress legislated the tax provision of US-funded US companies funded by US $ 2 trillion, which is not yet subject to US taxes.
Although the details of the provisions have not been set, the basic idea is to be taxed at 10 percent for US corporate profits that have been settled abroad, and can be paid in a few years.
As compensation for such provisions, US corporations may repay these funds at any time without any additional tax burden.

"In short, with these factors, the US economy will grow at a faster pace, both because of structural factors and by stimulus, while on the one hand, Indonesia will be more profitable by increasing non-oil exports to the country," Ronny told Liputan6.com , Tuesday (26/12/2017).
According to him, through the mechanism of trade transmission with the US, Indonesia's economic growth will also be accelerated. Keep in mind, the share of Indonesia's exports to the US in 2015 alone reached 11.6 percent, in which the US was ranked first destination of non-oil exports of Indonesia.

"Therefore, the US position in the Indonesian economic constellation is still very large, even though this country is often asked to contradict it," he added.
The strengthening of this economy will also be supported from the Fed's policy under the new leadership of Jerome Powell.

Powell's five-year experience at the Fed is already certain to be approved by the Republican-dominated US Senate.
In addition, according to Ronny, Powell represents an ideal compromise for the US today. He is also a backer of Yellen's strategy with a dovish interest rate policy for US monetary normalization.
On the one hand, Powell is a Republican with a background of international finance experts, though not a PhD in economics.

"In his hands it is certain that the US will not raise significant interest rates, so its policy will encourage US demand that is increasingly spurring US economic growth in accordance with the president's target," he asserted.



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