Investors Observe BI’s Independence. Pressure is still on bond prices in all tenors. The government’s plan to revise the Bank Indonesia Law will affect the independence of BI. This was amid the news on the formation of the Monetary Board which would oversee BI in the draft bill. In addition, investors are also watching that the supply of SBN will increase due to the possibility that the government and BI will continue to carry out a burden sharing scheme. This scheme will continue until 2022, if economic growth is below the target. The government is targeting the economy in 2021 to be in the range of 4.5% -5.5%. Market players are concerned that this policy will trigger an increase in inflation in Indonesia, which will erode the real return of Indonesia’s domestic bonds.
Soho Global to Convert Bonds. Quadria Capital Investment Management Pte Ltd through a private fund, namely Medisia Investment Holdings Pte Ltd, will exchange compulsory convertible notes for new shares of PT Soho Global Health. This action will be carried out in conjunction with the listing of the producers of Imboost and the multivitamin Curcuma Plus. Based on Soho Global’s prospectus, the company will issue 533.29 million new shares from the company’s portfolio for the purposes of four corporate actions at once. First, the company released 114.38 million shares or 13.78% of the issued and paid-up capital for the public in the context of an initial public offering (IPO) of shares. Furthermore, the company is ready to issue 233.52 million new shares or the equivalent of 18.4% of the issued and paid-up capital in the context of implementing the bond conversion. It is known, this Medisia convertible note is the result of an agreement (master agreement) made between Soho Global with Medisia and Eng Liang Tan as the main shareholder on December 19, 2014, then amended on June 21, 2020. Based on the agreement, the company agreed to issue debt securities which can be converted into new shares at the exercise price equal to the IPO offering price. For information, Soho Global’s IPO offering price is IDR 1,820 per share. The total aggregate nomimal for Medisia convertible notes reached IDR 522.74 billion. The proceeds from the bond issuance have been used by the company in accordance with its annual business and operation plans. (Investor Daily)
Next year the employee tax incentive will be revoked. Minister of Finance Sri Mulyani Indrawati announced that the income tax incentive (PPh) article 21 which is the basis for employee tax will no longer be given next year. “We will continue to do tax incentives, but PPh article 21, PPh article 25, PPh 22 imports will not be done again for next year,” said Minister of Finance Sri Mulyani. Sri Mulyani ensured that the tax incentives in the 2021 National Economic Recovery (PEN) program only accelerated the return or refund of value added tax (VAT). In addition, there is a government-borne tax incentive (DTP). However, the Minister of Finance has yet to say what type of tax will use the DTP mechanism. What is clear is that the total tax incentive budget for the business world in the 2020 PEN program has a ceiling of IDR 20.4 trillion. This ceiling is lower than the location for this year’s incentive budget, which is IDR 120.61 trillion. Or only about 16.9% of the total ceiling this year. For the record, this year tax incentives are provided in the form of accelerated VAT refunds, reduced installments of PPh article 25, PPh 22 on DTP imports, PPh article 21 DPT, and decreased corporate income tax rates from 25% to 22%. (Kontan)
Investors Pay Attention to SUN Auction. Investors are starting to pay close attention to bids for FR0086 and FR0087 amidst the trend of low interest rates. The short tenor liquidity factor is important, amidst the current volatility of the bond market. On the other hand, investors can also look at the long tenors FR0083 and FR0076, which are currently in demand by foreign investors. A number of market players are interested in long tenors because they offer high yields amid the current trend of low interest rates. Yesterday, the rupiah exchange rate weakened 0.22% to IDR 14,778 / USD on the spot market. Meanwhile, BI’s middle rate edged down 0.09% to IDR 14,818 / USD.