Honda: Tax Amnesty Could Hike Car Sales 20% in Indonesia

Indonesia’s amnesty plan to return undeclared assets held overseas could generate a 20% jump in new-car sales in the country, a Honda Motor Co. sales chief tells Bloomberg News.

Honda, which controls 22% of the Indonesian car market, saw its sales there surge 35% in the first half of 2016. The overall market expanded only 1%. A 20% annual growth rate for Honda next year would be the company’s biggest gain since 2012.

Gaikindo, the country’s auto trade group, predicts Indonesia’s overall car market will expand 4% to 1.05 million units this year.

Indonesia’s tax reprieve began in July and will end next March. Those who elect to repatriate funds they stashed overseas to evade the country’s taxes must pay a relatively low tax of 2%-5% on the returned money.

Indonesia’s population of 240 million has only about 28 million registered taxpayers. The government hopes the amnesty scheme will stimulate economic growth and help fund its huge infrastructure expansion.

Skeptics predict most offshore funds will remain there in spite of the tax offer. Indonesia’s central bank forecasts the program will lure as much as 560 trillion rupiahs ($43 billion) back into the economy. That compares with an estimated $200 billion in undeclared Indonesian money parked in Singapore alone.