Breaking News: Indonesia Gives New Stimulus US$10B

Indonesian government prepares second stimulus Rp147.90 trillion (US$10.20 billion) for the industry to help the domestic economy from COVID-19 effect, said senior minister today - Photo by TheInsiderStories

(JAKARTA (TheInsiderStories) – Indonesian government prepares second stimulus Rp147.90 trillion (US$10.20 billion) for the industry to help the domestic economy from COVID-19 effect, said senior minister today. In detail, the nation prepared fiscal incentives Rp22.9 trillion and widening 2020 State Budget deficit Rp125 trillion.  

“In total, we spent around Rp158.1 trillion from the relaxation Rp22.9 trillion, widening deficit of Rp125 trillion and first package Rp10.2 trillion,” said the coordinating minister for economic affairs, Airlangga Hartarto today (03/13). 

The government also prepared non-fiscal stimulus is related to the simplification of the ban on export certificates, legal fees and procedural for exporters and importers.

Finance minister, Sri Mulyani Indrawati stated, in response to the development of COVID-19 on Indonesia’ economy will continue to responds to the effects. She stated, “We cannot eliminate the impact but can minimize it. The second focus is on the production sector affected by the pandemic, especially manufacturing which is prevented from getting capital goods and exporters.”

The big picture, from the state budget side, the deficit will increase 2.5 percent of gross domestic products (GDP) or provide a stimulus of 0.8 percent of GDP or worth of Rp120 trillion in values. He adds, “If yesterday it increased purchasing power this time to support the industry’ cash flow.”

In details, she elaborated the fiscal stimulus

1. Income Tax (PPh 21): we will provide relaxation that is usually paid by companies or the community borne by 100 percent by the government which has an income of Rp200 million per year in all manufacturing industries according to the recommendations of KADIN and APINDO. Relaxation starts from April to September salary. The relaxation value of Rp8.6 trillion is based on the company’s performance in 2019. We hope to increase the purchasing power of employees or companies.

2. PPh 22: We will provide a relaxation of import taxes on raw materials and capital goods for 19 affected manufacturing industry sectors. Exemption from income tax will be given for 6 months starting from April to September. The relaxation that we provide is IDR 8.15 trillion. It is hoped that this can provide cashflow space to monitor production.

3. PPh 25: corporate income tax is given 30 percent to 19 processing sectors. This also applies from April to September. This will reduce the burden of cash flow of Rp4.2 trillion.

4. Value-added tax refunds without audits and without ceilings in 19 sectors for the next 6 months from April. For non-exporters we give a limit of Rp5 billion. Total estimated relaxation of Rp1.97 trillion.

5. Non-fiscal stimulus: we will reduce the limited export ban to 749 Hs Code or 55.19 percent of total exports. Products that receive stimulus are the fishing and forestry sectors (legal fees).

6. For importing raw materials, we also reduced restricted ban to 1,022 Hs Code. We hope that with this ban the industry can import raw materials into the country. Director general of customs and excise will revise trade minister regulation Number 44 of 2019 and Number 72 of 2019, also head of drug and food supervisory Agency Number 30 of 2017

7. Ease of reputable trade for import and export as many as 136 authorized economic operator and 626 companies or 25 percent of the total importers. They now do not need to submit permission documents or meet, but super fast track and approval automatically.

8. Accelerated the National Logistical System that will be completed within the next three months so that exporters or importers do not need to go back and forth to input. We will test it in May. We will also collaborate on online delivery orders this March.

US$1: Rp14,000

by Linda Silaen, Email: linda.silaen@theinsiderstories.com