The Indonesian tax amnesty program has reportedly unhinged a whopping USD7.4 billon in previously undeclared wealth. While the program remains in place until March of next year, a sliding scale has moved up making penalties progressively higher.

From a real estate perspective the reality is that the majority of funds while declared will remain offshore in havens such as Singapore, Hong Kong, and Australia. This bodes well for those stabilized yet high-priced real estate sectors.

To date, the mounting list of business people who have availed of the amnesty include familiar family names such as Bakrie, Riady, Salim and Widjaja. Even a family member of the deposed Indonesian political dynasty Soeharto has come forward.

Despite the apparent success of the program, there have been protests within the country over allegations that the initiative will legitimize ill-gotten wealth. Banks in Singapore are being asked to report on Indonesian’s who have made declarations and continue to hold funds in the city-state.

In Bali the lack of clarity over the situation of property nominees has reminded clouded in confusion for the most part. Though some have come forward, there remains a large-scale lack of understanding at the grass roots level. Hence overseas owners are being somewhat left in the lurch.

There is a question now if properties that are owned in a nominee set-up and that no declaration has been made, whether valuations will be effected and if this will create a two-tier real estate segment?

The amnesty is general has been a domestic affair, but is garnering widespread international interest. It’s possible that other Southeast Asian countries will look at similar programs to aid their economies which is many cases have been receding due to the crash of global energy prices.

It will be interesting to view the continued take-up for the next five months and see what positive stimulus Indonesia takes to put the tax revenue to work.