This document discusses potential strategies for Indonesia to accelerate economic growth post-pandemic. It suggests focusing on human capital development through improving education, increasing spending on research and development, and supporting small and medium enterprises. Education reform ideas include emulating Finland's approach of fostering creativity over rote learning. R&D spending in Indonesia is currently low at 0.22% of GDP and needs to increase. SMEs employ most workers but were impacted by the pandemic, so policies like the UK's furlough program could help prevent rising unemployment. Developing local consumption of domestic products would also support SME growth and investment. Mergers between major tech startups Gojek and Grab or Tokopedia are mentioned as possibilities to

1. TAX FLASH
There was a breath of relief around the world when China had a 2.2%
economic growth for fiscal year 2020. Despite of its miniscule size, this
news has rejuvenated the world with optimism that the world’s
economy will improve.
At the other hand, EU and United States are struggling to cope with the
second outbreak of the pandemic which has paralyzed their economies,
requiring large fiscal stimulus spending to support their economies.
Meanwhile, Indonesia’s economy is expected to contract 2.2% for fiscal
year 2020 according to a CNBC interview with Sri Mulyani. She also
expects that Indonesian economy will rebound by 5.5% for 2021.
Nevertheless, optimism remains strong in Indonesia with the arrival of
Sinovac vaccine and ongoing negotiations with Pfizer, Mordena and
AstraZeneca for their vaccines.
The question at hand is what can Indonesia do to accelerate its
economic growth and development in a post pandemic world?
“For an economic recovery
program to be effective, it
must not only create a
short-term economic boost
but also generate lasting
value. Home Star would
accomplish that by breaking
down the key barrier
between homeowners and
money-saving retrofits:
upfront costs.”
What can Indonesia do to accelerate its economic
growth and development?
KIB E-newsletter January 2021
In This Issue:
- What can
Indonesia do to
accelerate its
economic growth
and development?
- Merger Talk Gojek
& Grab
- Merger Talk Gojek
& Tokopedia
- Restructuring plan
of PT Asuransi
Jiwasraya
- Does PPE gets VAT
Facilities?

2. Indonesia, being an emerging economy with huge potentials needs to look beyond our border what kind
of future does it yearn to have. A Chinese economic model where Indonesia will rely greatly to use its
large labor army to create a manufacturing powerhouse? Or American economic model where Indonesia
will focus more on digital services and technological goods?
To spur more growth and development, Indonesian lawmakers have legislated the Omnibus law which is
aimed to streamline business applications, labor policies, taxation and harmonize regional governments
with the central government’s policies amidst the pandemic. It was met with fierce response, especially
short social unrests at major cities last October. Regardless of that, it would seem the effect of the
Omnibus law could be seen in medium to long term. But, it might not solve the major concerns in
Indonesia’s economy yet.
One of the major concerns that will impair Indonesia’s future will be the human capital development,
especially in education. The World Bank released a report in 2019 that shows Indonesia’s human capital
development index still lag behind the ASEAN average. Moreover, the report also explicitly indicates that
Indonesians were behind in term of average years of schooling, especially adjusted for quality of learning.
Children in Indonesia on average had 7.93 years of schooling which is way below than the ASEAN average
of 8.57 years and also far behind Vietnam, Thailand and Philippines.
Nadiem Makarim, co-founder and former CEO of GoJek, became Indonesia’s minister of education and
culture after Jokowi got his second presidential term. It seemed that he tends to emulate the world
renowned Finnish education policies to foster innovation and creativity rather than feeding knowledge to
students, which will transform Indonesia’s economy for generations to come. Nevertheless, it is a large
challenge to implement such education standard throughout Indonesia.
Aside from education, what Indonesia is lagging behind would be the Research and Development
spending, a major indicator on an economy’s development and innovation. Indonesia spending on R&D
as a percentage of GDP was 0.22% in 2018 which was below G20 average of 1.94%. For Indonesia to
compete with other G20 and ASEAN peers, it needs to increase its R&D spending, whether in public or
private sector.
Why does it matter?
The pandemic has made relevant examples for Indonesia regarding technology and innovation. The
foremost example would be in the development of COVID 19 vaccines. The world was in a competition to
develop the vaccine in order for its economy to resume normally. The mRNA vaccines developed by
Moderna and Pfizer-BioNtech were designed in days rather than weeks. Moreover, India was able to
develop its own vaccine due to its prowess in pharmaceutical industry. Meanwhile, Indonesia needs
collaborate with China for the vaccine.

3. In addition to the vaccine issue, Indonesia still relies on import for its pharmaceutical industry, which
became vital in this pandemic. Indonesia imported 95% of its active pharmaceutical ingredients (APIs),
which has been the norm for the past decade. This highlights the importance of having strong R&D in
Indonesia especially in important sectors to produce vital goods. The greatest challenges to have a strong
R&D would be persuading transnational firms to open their R&D operations in Indonesia and having larger
pool of talents that could support it especially in STEM.
Our economy still relies on SMEs as they employ more than 90% of Indonesia’s workforce and 60% of its
GDP. They were hampered by the pandemic as Indonesia implemented its large scale social distancing
(PSBB) policies to mitigate the COVID 19 outbreak especially in major cities. Some SMEs shown their
resilience by integrating themselves with the digital economy through e-commerce to withstand the
devastating economic loss from the implementation of PSBB. But some could not survive which led to
unemployment.
To support SMEs that are struggling in this pandemic would be to furlough payments or financial
assistance in the form of credit. These policies have been implemented in the UK by Rishi Sunak, the
Chancellor of the Exchequer, where the government will subsidize employee’s wages for firms at risk.
Moreover, he also created a £500 million fund where the government will extend convertible loans to
startups disrupted heavily by the pandemic.
If Indonesia implements such policies, it would prevent rising unemployment and support SMEs to invest
further. However, there is a possibility that such policies could be hampered by corruption in Indonesia.
Lastly, the government needs to help SMEs promoting the consumption of locally made products.
According to an article published by World Economic Forum, SMEs in Indonesia rarely invest for the
medium to long term due to cheap imports, discouraging local small-scale manufacturers to expand their
productions, which affect the communities through lower household incomes, lesser education spending
for children and low skilled workers.
Source: World Economic Forum
The battle to persuade Indonesians to consume more local products will be a challenge. It is an uphill
battle as consumers prefer cheaper goods despite of its origin to maximize their welfare. The use of tariffs
is least likely as Indonesia has entered RCEP, the largest trading agreement in Asia Pacific where Indonesia
will open up its economy more, leading to cheaper imported goods.

4. Nevertheless, if there is a larger consumption of local products, SMEs would invest more in medium to
long term which will reduce cost and improve the quality of the products further, creating a positive
feedback loop.
Source: World Economic Forum
In conclusion, the development of human capital, R&D and supporting the SMEs would be the key factors
in Indonesia’s economy as it is entering into the age of automation, sustainable, low carbon and big data,
which requires more creativity and innovation. Effective implementation of good policies by a competent
government will be pivotal to maintain Indonesia’s competiveness in the future.
MERGER TALK OF GRAB & GOJEK
In December 2020, there was a major news headline that shook Indonesia. It was a merger talk between
GoJek and Grab, which will create a monopoly in wide ranging services from ride-hailing to food delivery
in Indonesia.
 Entertainment (Goplay)
 Business Partnership (Gobiz)
 Fitness (GoFitness)
 Moka
 Finance Investment (GoInvestasi)
 Buy Now, Pay Later (GoPay
PayLater)
 News (GoNews)
 Bank Artos
 Ride Hailing
 Food Delivery
 Cashless payment
 Groceries
 Logistic
 Insurance
 Pharmacies
 House Services
 Bill Payments
 Movie Ticket
 Advertisement
 Subscription services
 Hotel bookings

5. GoJek and Grab operations in Indonesia
The merger seems logical as there are a lot of synergies to be created, especially in the cost synergies from
the integration of wide ranging services shown above into one app. These involves cost cuts in marketing,
expenditures related to digital infrastructure, system and personnel. Revenue synergy rarely occurs in a
merger, but in this case it is likely to occur due to the integration of their services where they can raise
the price of such services without giving any alternatives for consumers.
Furthermore, the merger will create tax and financial synergies due to the low corporate tax rate and
presence of global financial institutions in Singapore. The merger will save millions of dollars in tax
expenses for the merged firm in the future, similar to Burger King’s acquisition of Tim Hortons.
For the time being, both firms are still making losses, which is common for startups before they matured.
Nevertheless, this will be a predicament for the Indonesian government as this merger implies loss of
billions of Rupiah in future tax revenue once the newly merged firm make profit.
The financial synergy from this merger would enable the newly merged firm to raise more capital at lower
cost from greater access to global capital market. This is necessary despite the merged firm will be a
monopoly in Indonesia, it needs to expand further domestically and overseas to capture the larger market
share in ASEAN, which requires large capital expenditures to compete with other rivals.
All of these mentioned synergies would allow the merged firm to use these savings to hire more talents
and invest in bigger and profitable projects to grow faster and improve its profitability. These will increase
its value tremendously in the future and create a technology firm that rivals with global peers such as
Alibaba, Tencent, Google and Facebook.
Nevertheless, the monopoly resulting from this merger
might not be received well in Indonesia as riders who used
GoJek and Grab for their livelihood might receive lower
fares from the merger due to the combined bargaining
power. Such fear has manifested last month, where driver
unions for GoJek and Grab threatened protests across the
country if the merger talks between them proceed without
their consultation as they fear that their incomes will get
smaller and possible reduction in the number of riders
needed.
Lastly, the notion of a tech monopoly in Indonesia will attract criticisms not only from the consumers, but
regulation and politics too. The merger could be scrutinized heavily by the regulators, especially Komisi
Pengawas Persaingan Usaha (KPPU). In addition to that, politically motivated antitrust investigations have
occurred in China where the regulators are investigating monopoly practices by its revered tech
champions which consist of Alibaba, Tencent and AntPay. This could happen even if the merger is
approved.

6. Regardless of such drawbacks, the merger of both Go-Pay and GrabPay will be tremendous as it will enable
the creation of a Fintech giant in Indonesia, which allows the possibility of a digital bank that serves
Indonesians without any access to financial services in the upcoming future. This could propel Indonesia’s
economy further as there are 180 million peoples unbanked in Indonesia according to a Think with
Google’s 2018 article. That implies thousands of SMEs that can invest in their operations which will
increase the number of employment and alleviate people out of poverty.
MERGER TALK GOJEK & TOKOPEDIA
In early January, there was another major headlines that took Indonesia by surprise. It was a merger talk
between GoJek and Tokopedia.
This merger enables a cost synergy in marketing, personnel and expenditures related to maintaining their
digital infrastructure. Nevertheless, this synergy will be less compared to Grab-Gojek merger mentioned
previously due to lesser similarity of operations between Gojek and Tokopedia.
Nevertheless, we believe that there are some synergies that will make this merger viable too. One of them
is the possible integration of GoPlay, GoPay and GoJek’s logistic services to Tokopedia’s e-commerce
environment which will be a game changer in Indonesia.
Firstly, the addition of GoPlay to Tokopedia will be similar to Amazon’s strategy using entertainment to
entice consumers to subscribe to its Amazon Prime. This implies possible increase in number of active
users in Tokopedia, leading to higher gross merchandise value and revenue. Moreover, in an age where
we stream entertainment, this will be a great boon to boost Tokopedia’s brand awareness as Amazon has
used its original TV series and movie to increase its brand awareness.
In Tokopedia website, it stated that it relies on GrabExpress for its one-day delivery service. That could
change by completely integrating GoJek’s logistic services to its delivery system. Such integration can
reduce its reliance on other delivery services such as J&T, JNE, Tiki and POS Indonesia, leading to lower
delivery cost for Tokopedia and its thousands of merchants. This will make Tokopedia a step closer to
Amazon which has one of the most efficient logistic capabilities in the world where it can deliver one-day
delivery service worldwide. A greater control of the delivery service allows for larger delivery capacity too,
which improves Tokopedia’s reputation among its merchants and consumers.
In the future, Tokopedia could replicate Amazon’s Prime subscription model for its one-day delivery and
media entertainment, which will generate sustainable cash flow and improving its profitability. GoPay
integration in Tokopedia will be a great boon for its operational efficiency as it could reduce its reliance
on other payment methods, especially OVO. This will lead to lower operational costs and also promote
GoPay usage in our daily life further which will improve its revenue.

7. The financial synergy that arises from this merger would be lower cost of capital due to higher creditability
of the newly merged firm due to having diversified business fields. Regarding tax synergy, since both
startups are domiciled in Indonesia, the merger will not create tax saving as much as the Grab-GoJek
merger. Instead, the merger will combine both tax credits derived from years of losses that can be used
for foreseeable future.
Aside from these mentioned synergies, there are several factors that fully increases the likelihood of
GoJek-Tokopedia merger. Both startups are Indonesians, thus implying stronger support by the public and
government to have an Indonesian tech champion, creating confidence in Indonesia’s growing digital
economy. This implies that the regulator might not scrutinize this merger compared to GoJek-Grab
merger.
Furthermore, both GoJek and Tokopedia founders are known to be good friends, which translates to a
smooth negotiation between the managements. This is contrast to the negotiation between Grab ad
GoJek which has been reported by the news to be complicated by the Anthony Tan, founder of Grab, as
he laid out a condition that he should be the head of the merged firm based in Singapore.
Nevertheless, the Tokopedia-GoJek merger might not be what both sides were looking for either.
Tokopedia plans to consolidate its position in Indonesia’s e-commerce, which is filled with competitive
rivals such as BukaLapak, Lazada and Shopee. Thus Tokopedia’s merger with GoJek will not alleviate this
problem at all. Instead it should merge with its rival. This is the same with GoJek too.
In conclusion, GoJek-Grab mergers have more synergies compared to Tokopedia-GoJek mergers, but it
does not mean that the former will proceed smoothly due to the possibility of monopoly investigation by
the regulator and complicated negotiation.
What is going on?
These mergers have one common theme which is Masayoshi Son, CEO of Softbank, who is managing his
$100 billion Vision Fund. We believed that his pursuit of these merger is related to the performance of his
Vision Fund.
In the past years, the Vision Fund was expecting great hope on its notable investment in WeWork and
other startups. Nevertheless, it did not happen especially how WeWork’s scandal botched its highly
anticipated IPOs, that would generate a hefty return for Vision Fund. Techcrunch reported that Softbank
was expected to lose $24 billion from Vision Fund, WeWork and Oneweb investments in 2020. It is without
any doubt that Masayoshi Son felt that he needs to do something to turn this around. He is known to be
a risk taker as he was known to be the richest person in the world during the dot com bubble where he
invested greatly in the emerging technology firms that made him almost bankrupt after the bubble burst.
Not only that, it was discovered that he was responsible for the surging tech rally last year as Softbank
bought billions of dollars’ worth of US equity derivatives on US tech stocks.
As we can see, he really needs to score a few victories for the Vision fund, which has invested on Grab and
Tokopedia respectively. Thus, his pursuit of mergers is a mean to support his Vision fund as both firms are

8. poised to have their IPOs this year. If either of the merger with GoJek occurred, it will increase IPO
valuation of the merged firm, delivering greater return for Vision Fund.
Our opinion on these mergers?
From an Indonesian perspective, these mergers will serve a confidence signal to the world and at home
that Indonesia’s startups can develop into major players in the foreseeable future. This would pave the
path for more investment to our growing tech environment in Indonesia, spurring more growth and
possibly improves Indonesian’s livelihood. Indonesia can create its tech champion, but what it lacks are
the capitals to do so. Most of the startups in the world are heavily invested by Private Equity firms based
in United States, especially the well-known venture capital firms such as Sequioa Capital and Silverlake or
buyout firms such as KKR and Blackstone.
When two firms merged, there will be some tax implications. For the acquired firm, there will 2 taxes to
be considered, Income tax (PPh Final) and VAT (PPN). If there is an asset transfer, it is taxed as much as
5% due to income tax under Article 10 Section 3 Bill number 36 legislated in the year of 2008 regarding
income tax. Furthermore, if one of the merging firms is not a tax-paying firm, VAT will be imposed on the
merger deal. In addition to that, under Article 9 Section 14 Bill number 42 legislated in 2009, tax credit
can be used by the acquiring firm as long as the capital expenditures of the acquired firm has not been
expensed or capitalized. Moreover, there is also land and building tax (BPHTB) as much as 5% for the
acquiring firm.
Hopefully, the upcoming IPOs of Tokopedia and Gojek will mint new billionaires and millionaires that will
create well-funded venture capital firms to support more innovative and disruptive Indonesian
entrepreneurs.
Restructuring Plan of PT Asuransi Jiwasraya
In connection with the current financial condition of PT Asuransi
Jiwasraya (Persero) and based on the provisions in the Law of the
Republic of Indonesia Number 40 of 2014 concerning Insurance and
Regulation of the Financial Services Authority (POJK) Number 71 of
2016 concerning the Financial Health of Insurance Companies and
Reinsurance Companies, the Government The Republic of
Indonesia as a shareholder has approved the Financial
Restructuring Plan of PT Asuransi Jiwasraya (Persero).
The preparation of the Policy Restructuring Program will be carried
out in three stages. The first stage will be the registration of all
Policy Holders to choose the communication channel used during
the Policy Restructuring Program. The second stage will be carried
out socialization regarding the details of the Policy Restructuring
Program to all Policy Holders. The third stage will be the closing of
the new policy based on the decision of the Policy Holder to address
the Policy Restructuring Program.

9. Restructuring Program from Jiwasraya:
15 years with no interest
Jiwasraya claims to be able to return 100% of policy holders fund within 15 years. However, if we look at
the illustration below, policy holders have lost at least 45% (IDR 900,000,000 / IDR 1,900,000,000 x 100%
= 47.3%); because the interest which should be our right is "taken" by Jiwasraya / government.
5 years (5/6 time installments)
Jiwasraya offers another restructuring plan with the options of 5x installments (only 71% of capital) or
with an option of 6 x installments (only 69% of capital)
For simplicity, let's calculate with a 70% of capital will be return with scheme for 5 years.
Taking this option means that you have agreed "in advance" (contract written in advance) that your funds
will only be returned at 70% of the capital.
So the loss borne by customers in this scheme is: {(1,240,230,745 - 700,000,000) / 1,240,230,745} x 100%
= 43.6%
Bank Deposit
5.5% Interest
20% Admin
Return = 90%
Rp. 1.907.688.580,-
JS
Restructuring
Plan
Return = 0%
Rp. 1.000.000.000,-
15 Years
Capital: Rp. 1.000.000.000,-
Bank Deposit
5.5% Interest
20% Admin
Ending Balance
Rp. 1.240.230.745,-
5 Years
JS
Restructuring
Plan
Ending Balance%
Rp. 700.000.000,-
Capital: Rp. 1.000.000.000,-

10. The policy holders will 30% (deducted in advance) + 15% (from the loss on retained funds that are not
given interest) = a total loss of 45% of the funds policy holders should be able to get.
Both calculations use the "Value of Money" principle as taught in Managerial finance.
To conclude, the long term (15 years) option and short term (5 years) option on a pro rata basis will make
the customer lose 45%. The restructuring option offered is not a win-win solution. Therefore, on January
19th
, 2021, the policy holders has decided to refuse the restructuring plan offered by PT Asuransi Jiwasraya
(Persero).
Our opinion
Paying the insurance policy is a commitment that should be held by PT Asuransi Jiwasraya as a state-
owned enterprise. As this restructuring plan does not generate benefits for policy holders, PT Asuransi
Jiwasraya needs to find other alternatives to solve this problem. This case can also have a bad impact on
the insurance industry as people will lose their trust in this industry or even to the state-owned enterprise.
Does PPE (personal protective equipment) gets VAT facilities?
The VAT Facilities on PPE is regulated on PMK 239/2020 Article 2, 3, 4, and 7
VAT facilities can be given to “Certain Parties on the import or acquisition of
Taxable Goods, the acquisition of Taxable Services, and / or the use of
Taxable Services from outside the Customs Area within the Customs Area are
required in the context of handling the Covid-19 pandemic".
This certain parties include: government agencies / agencies, hospitals, or
other parties.
Furthermore, the taxable items needed in the context of handling the Covid-19 pandemic include:
a. drugs;
b. vaccines and vaccination support equipment;
This includes at least a syringe, alcohol cotton, personal protective equipment (face shield,
hazmat, gloves and surgical masks, and cold chain), power supply (genset), hazardous and toxic
waste bins (safety box), and alcohol-based antiseptic fluids.
c. laboratory equipment;
d. detection equipment;
e. personal protective equipment;
f. equipment for patient care; and / or
g. other supporting equipment declared by Certain Parties for the purposes of handling the Covid-
19 pandemic.
The VAT payable on the delivery of taxable goods as intended by taxable entrepreneurs to certain parties
is borne by the government. This provision is valid until 31 December 2021.

11. OUR INVOLVEMENT

12. Business Consulting
Business Matching
Investigation
Merger & Acquisition
Financial Valuation
Due diligence:
Operational & Legal
Accounting & Tax
Outstanding debt collection
Business & Asset Appraisal
Transfer Pricing Documentation
(TP-Doc)
Company Setup & Liquidation
Copyrights & Patent Dispute
Copyrights & Patent Registration
Tax and Custom Consulting
Diagnostic Review
Planning
Compliance
Dispute
Audit
Objection
Appeal
Tax ruling
Tax Conciliation
PT. Konsultan Indonesia Bersama is a boutique company serving Finance,
Business, Accounting and Tax Advisory since 2008. KIB has been immensely
successful in creating a local business network of small-medium-and-big
businesses. We highly adept intelligent workforce that can help a company
achieve their mission-critical projects and goals. Keeping pace with projects
and being on the look-out for every opportunity to grow with our clients has
become our mission statement. KIB commits to bring the best suited services
for our clients and stakeholders.
All of our resources are multifaceted and come with years of commended
performance. Project completion rate of our consultants is 97%, 3% is
attributed to unforeseen situations like changes of clients’ decision issues,
natural disaster, etc. We appreciate the experience that our team bring and
together we thrive to grow and prosper together.
Accounting and Assurance
Independent Audit
Actuarial report (PSAK 24)
Accounting SaaS Migration
with Jurnal.id (Mekari)
About Us
Contact Us
Phone:
(62-21) 2929 5870-73
Bambang B. Suwarso
bambang.suwarso@kib-
consulting.com
Rachmat Kurniawan
rachmat@kib-
consulting.com
Yosefine Amelia
yosefine@kib-
consulting.com
Raden Roro Ratna
Indah Wulandari
wulan@kib-
consulting.com
Addresses:
North Jakarta -14450
The Koppel
Building Suite IB.
Jalan Pluit Selatan Raya no. 10
Gold Coast Tower
Eiffel Unit N
Pantai Indah Kapuk
www.kib-consulting.com
Disclaimer:
The facts and opinions stated or expressed in this publication
are for information purposes only, and are not necessary
and/or must not be relied upon as being to those of the
publisher or of the Institutions for which the contributing
authors work.
Although every part of content has been taken to ensure the
accuracy of the information contained within this publication, it
should not be by any person relied upon as the basis for taking
any action or making any decision.
KIB Consulting and its representative, cannot be held liable or
otherwise be responsible in any way for any advice, action
taken or decision made on the basis of the facts, surveys, and
opinions stated or expressed within this publication.