Long-term deposits

In order to strengthen the economy and control inflation, I suggest long-term savings schemes should be launched. Any increase in the interest rate will have a detrimental effect on banks, the corporate sector and the stock market. Therefore we must launch innovative schemes to lure depositors without placing an additional burden on the system.

Such a scheme could offer tax relief on interest earnings to encourage depositors to commit their money for a longer period of time. All interest earnings are currently taxed at 15 percent.

Incentives could vary according to the length of time deposits are locked away. For example, investments of 12 to 23 months, 23 to 35 months and 36 to 60 months, could be entitled to tax rebates of 5, 10 and 15 percent respectively.

This scheme has the potential to promote savings and boost bank deposits. Funds generated will assist in strengthening the financial sector. Furthermore, the funds can be utilized for development purposes.

We need to devise and launch innovative schemes like this, because ultimately, they will have a positive effect on the economy.

R.K. CHOPRA

Jakarta