November [ ], 2000
Jakarta Growth Fund, Inc.
180 Maiden Lane
26th Floor
New York, New York 10038
Re: Merger of The Indonesia Fund, Inc. and
Jakarta Growth Fund, Inc.
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Ladies and Gentlemen:
You have asked us for our opinion concerning certain federal income tax
consequences to (a) The Indonesia Fund, Inc., a Maryland corporation (the
"Acquiring Fund"), (b) Jakarta Growth Fund, Inc., a Maryland corporation (the
"Target Fund"), and (c) holders (the "Target Fund Shareholders") of voting
shares of common stock of the Target Fund (the "Target Fund Shares"), when the
Target Fund merges with and into the Acquiring Fund and the Target Fund Shares
are converted to voting shares of common stock of the Acquiring Fund ("Acquiring
Fund Shares") pursuant to the merger of the Target Fund with and into the
Acquiring Fund under the Maryland General Corporation Law (the "Merger"), all
pursuant to that certain Merger Agreement and Plan of Reorganization, dated as
of October 18, 2000 (the "Merger Agreement"), between the Target Fund and the
Acquiring Fund. All terms used herein which are not specifically defined shall
have the same meanings as when used in the Merger Agreement.
Pursuant to the Merger (a) the Acquiring Fund by operation of law will
acquire all of the assets of the Target Fund and assume all of the Target Fund's
liabilities, (b) each Target Fund Share will convert to an equivalent dollar
amount (to the nearest one ten-thousandth of one cent) of full Acquiring Fund
Shares (based upon the net asset value per share of each Fund), and (c) the
Acquiring Fund will be the surviving entity in the Merger. The Acquiring Fund
will not issue any fractional Acquiring Fund Shares to Target Fund Shareholders
but will instead purchase all fractional Acquiring Fund Shares at their net
asset value and remit the cash proceeds to Target Fund Shareholders.
We have reviewed such documents and materials as we have considered
necessary for the purpose of rendering this opinion. In rendering this opinion,
we have assumed that such documents as yet unexecuted will, when executed,
conform in all material respects to the proposed forms of such documents that we
have examined. In addition, we have assumed the genuineness of all signatures,
the capacity of each party executing a document to so execute that
document, the authenticity of all documents submitted to us as originals and the
conformity to original documents of all documents submitted to us as certified
or photostatic copies.
We have made inquiry as to the underlying facts which we considered to
be relevant to the conclusions set forth in this letter. The opinions expressed
in this letter are based upon certain factual statements relating to the
Acquiring Fund and the Target Fund that are set forth in the Registration
Statement on Form N-14 (the " Registration Statement") filed by the Acquiring
Fund with the Securities and Exchange Commission and representations made in
letters from the Acquiring Fund and the Target Fund addressed to us for our use
in rendering this opinion (the "Tax Representation Letters"). We have no reason
to believe that these representations and facts are not valid, but we have not
attempted to verify independently any of these representations and facts, and
this opinion is based upon the assumption that each of them is accurate.
The conclusions expressed herein are based upon the Internal Revenue
Code of 1986, as amended (the "Code"), Treasury regulations promulgated
thereunder, published rulings and procedures of the Internal Revenue Service and
judicial decisions, all as in effect on the date of this letter.
Based upon the foregoing and subject to the conditions and assumptions
set forth below, we are of the opinion that for federal income tax purposes:
(a) the Merger will constitute a reorganization within the meaning of
Section 368(a)(1)(A) of the Code and the Acquiring Fund and the
Target Fund will each be a "party to a reorganization" within the
meaning of Section 368(b) of the Code;
(b) no gain or loss will be recognized by the Target Fund as a result
of the Merger or upon the conversion of the Target Fund Shares to
Acquiring Fund Shares;
(c) no gain or loss will be recognized by the Acquiring Fund as a
result of the Merger or upon the conversion of the Target Fund
Shares to Acquiring Fund Shares;
(d) the tax basis of the Target Fund assets in the hands of the
Acquiring Fund will be the same as the tax basis of such assets
in the hands of the Target Fund immediately prior to the
consummation of the Merger;
(e) the Acquiring Fund's holding period with respect to the
transferred Target Fund assets will include the period for which
such assets were held by the Target Fund;
(f) no gain or loss will be recognized by a Target Fund Shareholder
upon the conversion of his or her Target Fund Shares to Acquiring
Fund Shares except to the extent that such Target Fund
Shareholder is paid cash in lieu of fractional Acquiring Fund
Shares;
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(g) immediately after the Merger, the tax basis of the Acquiring Fund
Shares received by a Target Fund Shareholder in the Merger
(including any fractional Acquiring Fund Shares deemed to be
received by such Target Fund Shareholder as set forth in (j)
below) will be equal, in the aggregate, to the tax basis of the
Target Fund Shares held by such Target Fund Shareholder and
converted to Acquiring Fund Shares pursuant to the Merger;
(h) immediately after the Merger, the tax basis of the Acquiring Fund
shares actually received by a Target Fund Shareholder in the
Merger will equal, in the aggregate, the tax basis of the Target
Fund Shares held by such Target Fund Shareholder immediately
prior to the Merger and converted to Acquiring Fund Shares
pursuant to the Merger, reduced by the portion of such tax basis
that is allocable to the fractional shares deemed to have been
received by such Target Fund Shareholder and redeemed for cash as
set forth in (j) below;
(i) a Target Fund Shareholder's holding period for his or her
Acquiring Fund Shares (including any fractional Acquiring Fund
Shares deemed to be received by such Target Fund Shareholder as
set forth in (j) below) will be determined by including the
period for which he or she held the Target Fund Shares converted
to Acquiring Fund Shares pursuant to the Merger, provided that
such Target Fund Shares were held as capital assets immediately
prior to the Merger; and
(j) the payment of cash to a Target Fund Shareholder in lieu of
fractional Acquiring Fund Shares will be treated as though such
fractional Acquiring Fund Shares were distributed to the Target
Fund Shareholder as part of the Merger and then redeemed by the
Acquiring Fund with the result that the Target Fund Shareholder
will have capital gain or loss to the extent the cash
distribution differs from such shareholder's basis allocable to
such fractional Acquiring Fund Shares as set forth in (g) above.
The opinion set forth in (j) above assumes that (a) the converted Target Fund
Shares were held by the Target Fund Shareholder as capital assets immediately
prior to the Merger, (b) the percentage of the outstanding Acquiring Fund Shares
owned by the Target Fund Shareholder immediately after the cash distribution
(including any Acquiring Fund Shares which are deemed to be owned at such time
by such Target Fund Shareholder pursuant to Section 302(c)(1) of the Code) is
less than the percentage that would have resulted if fractional Acquiring Fund
Shares had actually been distributed to such Target Fund Shareholder in lieu of
cash, and (c) the distribution of cash in lieu of fractional Acquiring Fund
Shares is not pursuant to a formal or informal plan to proportionately reduce
the holdings of all of the owners of Acquiring Fund Shares.
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Our opinion is based upon the accuracy of the certifications, representations
and warranties and the satisfaction of the covenants and obligations contained
in the Merger Agreement, the Tax Representation Letters and in the various other
documents related thereto. Our opinion may not be relied upon if any such
certifications, representations or warranties are not accurate or if any of such
covenants or obligations are not satisfied in all material respects.
Very truly yours,
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