Stock down for seven trading days
Stock down for seven trading days
Rendi A. Witular, Jakarta
The Jakarta stock market ended lower on Friday for seven
consecutive trading days on negative regional issues and jitters
over security ahead of the presidential election.
Amid the negative sentiment, the Directorate General of
Taxation plans to issue an unfavorable policy of raising income
tax for stock transactions, a move considered by brokers as a
shortsighted decision that could damage the market.
The Jakarta Composite Index dropped by 2.480 points or 0.33
percent at 743.637 on a volume of 1.84 billion shares worth Rp
915 billion (US$105 million).
Stock analyst David Ferdinandus of CIMB Securities said the
decline was driven by a combination of security problems ahead of
the presidential election.
Indonesia will hold its first-ever direct presidential
election on July 5, with a possible runoff on Sept. 20.
Among security problems are the recent bomb blast in
Pekanbaru, Riau, which claimed two lives, and the sectarian clash
in Ambon, Maluku, which left more than 35 people dead.
"The decline is still driven mostly by security concerns. But,
unlike previous days, the decline is not that sharp because
investors have difficulties in selling their stocks due to
limited buyers," said David.
David said that aside from domestic issues, the plan by China
to slow down its growth, and the growing belief that U.S.
interest rates would rise soon, had also fueled negative market
sentiment.
"Investors fear that the policies could severely hit the
country's exports," he said.
The issues have apparently ravaged regional benchmark stock
markets, bringing them to multi-week lows.
In Japan, the Nikkei average ended a six-week low to 11,438.82
after slipping 1.2 percent.
Meanwhile, Syarifuddin Alsyah, a member of the tax reform team
for the Directorate-General of Taxation, said the directorate was
now in the process of evaluating the current tax rate for stock
transactions, and was likely to revise it upward.
"The result of the evaluation will be announced at the end of
this year ... Currently, we are not in the position to disclose
the new rate," said Syarifuddin, on Friday.
Income tax for share transactions is currently set at 0.1
percent.
According to sources at the tax directorate and in the capital
market industry, the directorate was likely to raise the tax to
0.3 percent.
Syarifuddin declined to comment on the figure.
He only said that the rate would be stipulated by a government
regulation.
Several brokers, who refused to be named, said that the plan
was "foolish", because it was not in line with developments in
other countries, which had decided to cut all costs, including
taxes, for stock transactions.
"Other countries have decided to eliminate such costs to
nurture the development of their stock market, but here the
government will decide the contrary ... It seems that we are
heading back to the stone age," said a broker from a foreign-
based securities house.