Compliance Report ISSA Recommendations 2000

ISSA - International
Securtities Services Association

Compliance to the ISSA Recommendations 2000

Market: Indonesia

Status: September 25, 2001

Recommendation 1
Recommendation 2
Recommendation 3
Recommendation 4

Recommendation 5
Recommendation 6
Recommendation 7
Recommendation 8

Market selection

Recommendation 7

Investor compliance with the laws and regulations in the home countries of their investments should be part of their regulators' due diligence process. They, in turn, should be treated equitably in the home country of their investments especially in respect to their rights to shareholder benefits and concessionary arrangements under double tax agreements.

1. Do domestic regulators monitor the procedures in place at their locally based cross-border custodians to assure compliance with the laws and regulations of the home countries of their investments?
Commercial banks are required to obtain a custody licence from Bapepam before engaged in the custodial services. Custodians are regulated by Bapepam who may conduct audit on a custodian bank if it sees fit. KSEI is regulated as a Self Regulatory Organisation and supervised by BAPEPAM. KSEI provides the central custodian services to the securities companies and custodian banks and are bound by contracts and service level agreement.

2. What are the areas (e.g. benefits, investor compensation) where foreign investors are not treated in the same way as local investors?
In term of ownership there is no difference. In term of taxes on dividends, foreign investors in personal capacity and who has the permit card and stay in Indonesia for more than 183 days will be subjected to the same tax rate as the local investor. Foreign institutional investors is subject to a standard tax rate of 20% unless documentation could be provided to support preferential tax rate.

3. Can sales proceeds and income be repatriated without any restrictions?
Repatriation of Rupiah (IDR) to accounts outside Indonesia is not allowed. Sales proceeds and income could be repatriated subject to availability of proper documentation.

4. Are double tax agreements simple to apply, and do foreign investors receive promptly their full entitlement to dividends and interest payments?
Yes, double tax agreements are simple to apply.

1.	Do domestic regulators monitor the procedures in place at their locally based cross-border custodians to assure compliance with the laws and regulations of the home countries of their investments?	Commercial banks are required to obtain a custody licence from Bapepam before engaged in the custodial services. Custodians are regulated by Bapepam who may conduct audit on a custodian bank if it sees fit. KSEI is regulated as a Self Regulatory Organisation and supervised by BAPEPAM. KSEI provides the central custodian services to the securities companies and custodian banks and are bound by contracts and service level agreement.
2.	What are the areas (e.g. benefits, investor compensation) where foreign investors are not treated in the same way as local investors?	In term of ownership there is no difference. In term of taxes on dividends, foreign investors in personal capacity and who has the permit card and stay in Indonesia for more than 183 days will be subjected to the same tax rate as the local investor. Foreign institutional investors is subject to a standard tax rate of 20% unless documentation could be provided to support preferential tax rate.
3.	Can sales proceeds and income be repatriated without any restrictions?	Repatriation of Rupiah (IDR) to accounts outside Indonesia is not allowed. Sales proceeds and income could be repatriated subject to availability of proper documentation.
4.	Are double tax agreements simple to apply, and do foreign investors receive promptly their full entitlement to dividends and interest payments?	Yes, double tax agreements are simple to apply.