Hong Kong is still shaken by large-scale demonstrations. Community demonstrations that have taken place since early June have led to violence and left the local situation chaotic. Millions of people have reportedly taken to the streets in the past two months to voice opinions.
As the world knows, this massive demonstration was triggered when the Hong government discussed the Draft Law (RUU) on Extradition. The bill allows Hong Kong prisoners, including foreign nationals, to be extradited to China. The regulation is considered to threaten Hong Kong’s position as one of the world’s economic hubs.
Potential investors and fund owners increasingly fear overshadowed by excessive suspicion of the Chinese government, and finally they are preparing to run away. And if it gets blurred, doesn’t that mean doomsday for the regional economy that is actually supported by the service and trade sector?
If Hong Kong’s economy collapses, Indonesia must also be prepared to get the sap. It is a fact that 90% of coal demand in Hong Kong is supplied from Indonesia. The contribution of coal-fired power plants (PLTU) made from coal in Hong Kong amounted to 40% of the total needs. If the economy collapses, this means that electricity demand will also fall. Certainly will reduce the need for coal from Indonesia.
One of Indonesia’s coal companies that has the potential to be affected by political turmoil in Hong Kong is PT Adaro Energy Tbk. Each year, the company’s coal export, led by Garibaldi Thohir, reaches 3.5 million tons and determines the reliability of electricity supply in the city.
“Of the total coal supplied from Indonesia, Adaro’s contribution reached 35%,” Boy, Garibaldi Thohir’s nickname, told the chief editors of the Indonesian mass media when reviewing Castle Peak Power Station, a 4,108 MW power plant in Tuen Mun, Kowloon, Hong Kong, Monday (07/08/2019).
The coal power plant is managed by China Light and Power (CLP Power) and is now 37 years old. Every year, CLP Power requires 6.5 million tons of coal and have that total 2.5 million tons is supplied by Adaro. “CLP Power is our main partner. Our relationship with this company has been well established for 20 years,” said the President Director of Adaro.
Having three power plants, CLP Power not only produces electricity, but also manages transmission and distribution networks to serve Hong Kong consumers. Two other power plants owned by CLP Power are the Black Point Power Station, a gas power plant (PLTG) with natural gas raw materials supplied by China. The plant, which is also located in Tuen Mun, has a capacity of 2,500 MW.
The third power plant managed by CLP Power is Penny’s Bay Power Station, which is located on Lantau Island with a capacity of 300 MW. Although small, this solar power plant is designed to fill the surge in demand at peak loads.
Looking at the Hong Kong electricity source portfolio, it can be concluded that the lives of Hong Kong residents, who almost all live in apartments, are very dependent on electricity. Just a minute of power outages, various activities disrupted.
Besides coal exports, is there anything else that will affect Indonesia from the increasingly heated conditions in Hong Kong? Interesting information came from the tax amnesty program a few years ago. The program, which was attended by 727,363 taxpayers, managed to collect assets worth IDR 4,491 trillion. Hong Kong is one of the largest sources of repatriation, which is around IDR 15.65 trillion and IDR 12.43 trillion was taken home as of September 25, 2016.
Although it has been recorded in the tax amnesty data, the Director of Counselling, Services, and Public Relations of the Directorate General of Tax (DG Tax), Hestu Yoga Saksama, said that there is still potential for Indonesian citizens to receive tax in Hong Kong.
The amount? Rumours are circulating, no less than IDR 50 trillion of Indonesian citizens’ funds (WNI) are still stored in this administrative country’s financial system.
To pursue the remaining funds that have not been tracked, the Indonesian Tax Directorate General did not play games. They, among others, began to carry out routine socialization to cooperate with Hong Kong through the Bilateral Competent Authority Agreement (BCAA) in the context of Automatic Exchange of Information (AEOI).
No wonder when the Director General of Taxes succeeded in reaching an AEOI agreement with Hong Kong, the Minister of Finance, Sri Mulyani Indrawati, confidently said that the Ministry of Finance would be able to pursue the assets of Indonesian citizens even if hidden in an ant pit. This statement is possible because according to the general provisions of taxation in Indonesia, taxpayers who are Indonesian people must report assets that are abroad, must also report income that comes from abroad and pay their taxes according to the Indonesian Income Tax Act or existing tax treaty.
With the data obtained from this AEoI, the Indonesian tax authorities will be able to better detect tax avoidance and avoidance practices carried out by utilizing transfer pricing, treaty abuse, treaty shopping, thin capitalization, CFC and others. So, imagine if the political turmoil in Hong Kong continues to spread and cause greater chaos.
On the other hand, the signs of demonstrations in Hong Kong have not yet seen abating. Having previously only been followed by the community, NGOs, and students, on August 2 thousands of civil servants began to protest with demands for the repeal of the Bill on Extradition and urged the government not to call the protests during the past two months riots.
The civil servants also asked Hong Kong leader Carrie Lam to free all arrested demonstrators and set up an independent commission to investigate alleged police violence during the demonstration. On August 5, 2019, the situation became more chaotic. Demonstrators returned to the demonstration and were determined to cripple Hong Kong. Public transportation services are suspended in a number of areas. As many as 105 flights to and from Hong Kong were cancelled.
As of August 6, 2019, instead of releasing protesters, the Hong Kong Police instead arrested 148 demonstrators.