Indonesia’s tax amnesty brought in revenue. which lowered the fiscal deficit and enhanced the appeal of government bonds. The tax amnesty in Indonesia has been impressive. It yielded a high amount of tax revenues, leading to low fiscal deficit and replenishment of foreign reserves. In that favourable environment, the country’s ongoing reforms are supportive of further investment and infrastructure spending.

Rating agency Standard & Poor’s upgraded Indonesia’s debt to investment grade in May, matching the ratings by Moody’s and Fitch, and ending the long period of rating disparity (Moody’s has rated Indonesia as investment grade since 2012). As an effect of that move, Indonesian bonds will be included in the JPMorgan Government Bond Index-Emerging Markets on 31 July.

Both India and Indonesian government bonds yield between 6.5% and 7%, which is high for investment-grade government debt. Moreover, the Indonesian rupiah has been stable in the last six months, while the Indian rupee has strengthened. With favorable carry and roll-down (when a bond price moves to par as it approaches maturity), as well as stable currencies, both markets are “a good investment for a long term”, said Tan.