BCAS Vista 12 Mar-20

MoF is finalizing formulation for temporary tax incentive

Ministry of Finance, Sri Mulyani Indrawati, is one-step closer to finalize income tax stimulus that will temporarily halt income tax collection for six months, consisting PPh 21, PPh 22, and PPh 25. This would be only applicable for the selected sectors with exposure to the potential adverse impact from the virus outbreak. Note that the aim for this policy measures would be to safeguard consumption and to provide additional cash flow for corporate under this volatile times.

Comment: according to the initial calculation by the Directorate General of Taxes, potential loss of revenue from this tax incentive would be up to IDR24tn. This would translate to around 1.2% of government’s 2020 tax revenue target, which might only have marginal impact to the fiscal deficit.

On separate note, the overall impact to shield consumption level would hinge on the monthly salary level of an individual. Note that according to the Ministry of Industry, there are 18.25m workers in the manufacturing sector in 2018. The question would be at what level of salary we would start to see benefits of additional cash from this temporary halt in PPh21 tax collection. Our rough calculation suggest that an individual (No family) with a monthly salary of IDR6m, would receive additional cash of IDR75k per month.

Impact to corporate, however, might be more apparent, as it allows stronger cash flow. Several sectors that might benefit are pharmaceutical, textiles, machinery, and chemical.

Bank of England cut 50bps of its main interest rate

Bank of England announced an emergency cut of its main interest rate by 50bps, form 0.75% to 0.25% in order to limit the economic impact from the coronavirus. (CNBC)

PUPR ministry to offer IDR57tn project

Public Works and Public House (PUPR) Ministry is offering 5 project for Multi Lane Free Flow (MLFF) in several toll roads with a total investment of IDR57tn.  The 5 toll roads includes Bogor – Serpong toll road, Cikunir – Karawaci toll road, East Sumatera toll road and Kamal – Teluk Naga – Rajeg toll road. In separate news, the PUPR minister, Basuki Hadimuljono, stated that government is still delaying tariff adjustment in several toll roads due to the Indonesia economic condition. Currently, PUPR has proposed a tariff adjustment for 3 toll roads, including Palimanan – Kanci, Belawan – Medan – Tanjung Morawa and Surabaya – Gempol. (Investor Daily)

ACES targets to book revenue and net profit of 8% YoY this year

The company opens the 3rd new store this year at Living Plaza Perintis Kemerdekaan – Makassar, South Sulawesi (4,150sqm) with a total capex of IDR40bn. Thus, this will increase ACES stores to 200 stores in total. Note that ACES aims to open 15 new stores this year with an equal standing between Java and Outer Java, while allocating total capex of IDR250bn deriving from their internal cash. (Company, Kontan)

Bumi Serpong Damai (BSDE) targets IDR7.2tn marketing sales

BSDE targets 2020 marketing sales to reach IDR7.2tn, translating to 11% YoY growth. BSDE’s director, Hermawan Wijaya, stated that the target will be supported by the sales of residential products or landed house which is expected to account for 58% to total marketing sales. (Investor Daily)

Kalbe Farma (KLBF) and Merck to secure their inventory this year

KLBF has ensured that the company’s product stock is safe for the next 11 months. The company had to increase their usual stock of 6-7 months to 11 months due to the COVID-19 outbreak. The stock is calculated from the availability of raw materials, semi-finished goods, and finished goods in all outlets. With the additional supply, the production volume is projected to increase about 10-20% this year. The company is constantly looking for alternative sources in raw materials as 20-30% of the raw materials needed are imported from China. In addition, Merck Sharp Dohme Pharma has also ensured that the raw materials for production has also been secured until Jun-20. The COVID-19 outbreak has not impacted the company much just yet, as their raw material are imported from Netherlands, US, etc., not from China. (Bisnis Indonesia)