Finance ministry of Indonesia finally ratified the derivative rules of Government Regulation Number 63 of 2019 by issued the ministerial decree Number 53 of 2020 concerning Government Investment Procedures - Photo by the President Office

JAKARTA (TheInsiderStories) – Indonesian President asked his staff to accelerates the disbursement of government spending to boost the domestic economy at the limited meeting at his office on Tuesday (02/25). The decision has been made after the government monitored the impact of coronavirus outbreak to the global economy.

He also instructed the officials to immediately execute the village fund program, social assistance and protection programs, also other government-intensive programs to move the economy.

The Head of State also instructed his staff to immediately execute social assistance and protection programs such as the Hope Family Program and other government-intensive programs. The government, said President, will decided further another steps or fiscal policy that will be taken to boost the economy, both in terms of consumption and investment.

“I also ask the steps to reduce the current account deficit and our trade balance is carried out effectively so that we can suppress the imports,” he told the ministers a the meeting.

One sector that quite affected by the outbreak, according to him, is the tourism sector. To helped the industry, the government also aimed to boosting the tourism sector, especially in Bali, North Sulawesi, and the Riau Islands by giving a stimulus.

Related to this, the President instructed the domestic tourism industry to maximize and grow the tourism potential of Meetings, Incentives, Conferences and Exhibitions(MICE). Tourists from China who are one of the biggest contributors to foreign tourists in Indonesia are experiencing a decline after the virus outbreak.

Earlier, finance minister, Sri Mulyani Indrawati, warned the coronavirus effect could harm Indonesia and global economy. Based on her calculation, slowing demand from China will make commodity prices fall and the countries whose economies depend on commodity exports such as Indonesia will suffer.

“So if China’ economic growth fell by 1 percent, it would affect the Indonesia’ economic growth by 0.3 – 0.6 percent,” she rated.

indrawat also sees the second world largest economic growth could drops by 1 percent amid the epidemic. Indonesia, said the minister, must be vigilant because of China’ slump due to the corona virus and will bring the tourism sector sluggish. Chinese tourists account for 13 percent of the total number of tourists entering the country.

Earlier, the new World Bank’ managing director, Mari Elka Pangestu, also warned President Joko Widodo that the coronavirus has the potential to drag Indonesia’ economic growth to less than 5 percent in this year. In the 2020 State Budget, the government is targeting economic growth of 5.3 percent.

She saw, the virus outbreak will make China’ economic growth slow down up to 300 basis points. In this case, he urged the government must encourage the growth from the country itself. The main strategy must be focused on strengthening people’ purchasing power, she adds.

The coordinating minister for economic affairs, Airlangga Hartarto, also rated the virus may knock up to 0.3 percentage point off Indonesia’ economic growth by hurting tourism and the pharmaceutical sector. The assumption caused China is the biggest trading partner and a major source of direct investment for the nation.

The country imports many pharmaceutical products from China’ Wuhan city, the centre of the outbreak, he said. When chairing a limited meeting on Feb. 4, President Joko Widodo has asked his staff to carefully calculate the impact of implementing the policies adopted by the government regarding this matter.

The reasoned, China became the first export destination country with a market share of approximately 16.6 percent of Indonesia’s total exports. The second world largest economy is also known to be the largest country of origin of imports for Indonesia.

“If the corona virus still has no definitive predictions what is expected to happen. However, it is certain that the Chinese economy will definitely experience a decline in growth,” said Pangestu after meet Widodo at Bogor Palace in Feb. 11.

President himself saw the potential for exploiting export market niches in other countries that had previously imported a lot from China. Likewise, this has created momentum for the import substitution industry in the country to increase production and develop further.

“In terms of imports, the supply chain breaking because of the corona virus also means we have to find other sources or sources from within the country. Maybe it will also encourage incentives to increase investment to replace the import needs for the (domestic) industry we need,” said the former minister of tourism.

Apart from this, she hopes that national economic growth can be maintained as it is today. She believes that in the midst of global uncertainty, being able to maintain economic growth rates in the range of five percent is something that is not easy and should be grateful.

Written by Staff Editor, Email: theinsiderstories@gmail.com