The central bank (Bank Indonesia/BI) said it has no plan to impose tax on yields of foreign capital inflows. Recently, there is a report the central bank to regulate the inflow of foreign funds to the country. A number of countries imposed tax on foreign capital inflows in a bid to curb capital outflows when the economic stability was jolted by external pressures.

This kind of foreign exchange management is common in the world, even International Monetary Fund (IMF) has a guideline on this. The financial institution said the foreign exchange management can be done with prudent monetary discipline by the central bank. The IMF also sees that fiscal discipline alone is insufficient to offset the negative impact of foreign capital flows.

In Indonesia, the policy on foreign capital flow management is guided by three principles. First to help mitigate the negative impacts of short term volatility in capital flows on the stability of both the exchange rate and the overall monetary and financial system.

Second, the measures specifically target short-term and speculative capital flows and medium- to longer-term flows are welcomed, as they benefit the economy. And third, the measures are consistent with the broad principle of maintaining the free foreign exchange system.